Revenue Ruling 2004-111

Rev. Rul. 2004-111
Rev. Rul. 2004-111, 2004-51 I.R.B. 989
                       Internal Revenue Service (I.R.S.)
                                 Revenue Ruling
                 INTEREST RATES; UNDERPAYMENTS AND OVERPAYMENTS
                           Released: December 2, 2004
                          Published: December 20, 2004

 Section 6621.–Determination of Rate of Interest, 26 CFR 301.6621-1: Interest rate.

  Interest rates; underpayments and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning January 1, 2005, will be 5 percent for overpayments (4 percent in the case of a corporation), 5 percent for underpayments, and 7 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 2.5 percent.

  Section 6621 of the Internal Revenue Code establishes the rates for interest on tax overpayments and tax underpayments. Under section 6621(a)(1), the overpayment rate is the sum of the federal short-term rate plus 3 percentage points (2 percentage points in the case of a corporation), except the rate for the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus 0.5 of a percentage point for interest computations made after December 31, 1994. Under section 6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points.

  Section 6621(c) provides that for purposes of interest payable under section 6601 on any large corporate underpayment, the underpayment rate under section 6621(a)(2) is determined by substituting “5 percentage points” for “3 percentage points.” See section 6621(c) and section 301.6621-3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable date. Section 6621(c) and section 301.6621-3 are generally effective for periods after December 31, 1990.

  Section 6621(b)(1) provides that the Secretary will determine the federal short-term rate for the first month in each calendar quarter.

  Section 6621(b)(2)(A) provides that the federal short-term rate determined under section 6621(b)(1) for any month applies during the first calendar quarter beginning after such month.

  Section 6621(b)(2)(B) provides that in determining the addition to tax under section 6654 for failure to pay estimated tax for any taxable year, the federal short-term rate that applies during the third month following such taxable year also applies during the first 15 days of the fourth month following such taxable year.

  Section 6621(b)(3) provides that the federal short-term rate for any month is the federal short-term rate determined during such month by the Secretary in accordance with s 1274(d), rounded to the nearest full percent (or, if a multiple of 1/2 of 1 percent, the rate is increased to the next highest full percent).

  Notice 88-59, 1988-1 C.B. 546, announced that, in determining the quarterly interest rates to be used for overpayments and underpayments of tax under section 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with section 6621 which, pursuant to section 6622, is subject to daily compounding.

  Rounded to the nearest full percent, the federal short-term rate based on daily compounding determined during the month of October 2004 is 2 percent. Accordingly, an overpayment rate of 5 percent (4 percent in the case of a corporation) and an underpayment rate of 5 percent are established for the calendar quarter beginning January 1, 2005. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning January 1, 2005, is 2.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning January 1, 2005, is 7 percent. These rates apply to amounts bearing interest during that calendar quarter.

  The 5 percent rate also applies to estimated tax underpayments for the first calendar quarter in 2005 and for the first 15 days in April 2005.

  Interest factors for daily compound interest for annual rates of 2.5 percent, 4 percent, 5 percent, and 7 percent are published in Tables 10, 13, 15, and 19 of Rev. Proc. 95-17, 1995-1 C.B. 556, 564, 567, 569, and 573.

  Annual interest rates to be compounded daily pursuant to section 6622 that apply for prior periods are set forth in the tables accompanying this revenue  ruling.

DRAFTING INFORMATION

  The principal author of this revenue ruling is Crystal Foster of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this revenue ruling, contact Ms. Foster at (202) 622- 7326 (not a toll-free call).

————————————————————–
                   TABLE OF INTEREST RATES
  PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986
                OVERPAYMENTS AND UNDERPAYMENTS

                                              In 1995-1 C.B.
PERIOD                            RATE       DAILY RATE TABLE
Before Jul. 1, 1975                      6%  Table 2, pg. 557
Jul. 1, 1975–Jan. 31, 1976              9%  Table 4, pg. 559
Feb. 1, 1976–Jan. 31, 1978              7%  Table 3, pg. 558
Feb. 1, 1978–Jan. 31, 1980              6%  Table 2, pg. 557
Feb. 1, 1980–Jan. 31, 1982             12%  Table 5, pg. 560
Feb. 1, 1982–Dec. 31, 1982             20%  Table 6, pg. 560
Jan. 1, 1983–Jun. 30, 1983             16%  Table 37, pg. 591
Jul. 1, 1983–Dec. 31, 1983             11%  Table 27, pg. 581
Jan. 1, 1984–Jun. 30, 1984             11%  Table 75, pg. 629
Jul. 1, 1984–Dec. 31, 1984             11%  Table 75, pg. 629
Jan. 1, 1985–Jun. 30, 1985             13%  Table 31, pg. 585
Jul. 1, 1985–Dec. 31, 1985             11%  Table 27, pg. 581
Jan. 1, 1986–Jun. 30, 1986             10%  Table 25, pg. 579
Jul. 1, 1986–Dec. 31, 1986              9%  Table 23, pg. 577
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—————————————————————-
                    TABLE OF INTEREST RATES
               FROM JAN. 1, 1987 - Dec. 31, 1998
                               OVERPAYMENTS      UNDERPAYMENTS
                             ———————————–
                               1995-1 C.B.        1995-1 C.B.
                             RATE  TABLE  PG   RATE  TABLE   PG
Jan. 1, 1987–Mar. 31, 1987    8%     21  575    9%     23   577
Apr. 1, 1987–Jun. 30, 1987    8%     21  575    9%     23   577
Jul. 1, 1987–Sep. 30, 1987    8%     21  575    9%     23   577
Oct. 1, 1987–Dec. 31, 1987    9%     23  577   10%     25   579
Jan. 1, 1988–Mar. 31, 1988   10%     73  627   11%     75   629
Apr. 1, 1988–Jun. 30, 1988    9%     71  625   10%     73   627
Jul. 1, 1988–Sep. 30, 1988    9%     71  625   10%     73   627
Oct. 1, 1988–Dec. 31, 1988   10%     73  627   11%     75   629
Jan. 1, 1989–Mar. 31, 1989   10%     25  579   11%     27   581
Apr. 1, 1989–Jun. 30, 1989   11%     27  581   12%     29   583
Jul. 1, 1989–Sep. 30, 1989   11%     27  581   12%     29   583
Oct. 1, 1989–Dec. 31, 1989   10%     25  579   11%     27   581
Jan. 1, 1990–Mar. 31, 1990   10%     25  579   11%     27   581
Apr. 1, 1990–Jun. 30, 1990   10%     25  579   11%     27   581
Jul. 1, 1990–Sep. 30, 1990   10%     25  579   11%     27   581
Oct. 1, 1990–Dec. 31, 1990   10%     25  579   11%     27   581
Jan. 1, 1991–Mar. 31, 1991   10%     25  579   11%     27   581
Apr. 1, 1991–Jun. 30, 1991    9%     23  577   10%     25   579
Jul. 1, 1991–Sep. 30, 1991    9%     23  577   10%     25   579
Oct. 1, 1991–Dec. 31, 1991    9%     23  577   10%     25   579
Jan. 1, 1992–Mar. 31, 1992    8%     69  623    9%     71   625
Apr. 1, 1992–Jun. 30, 1992    7%     67  621    8%     69   623
Jul. 1, 1992–Sep. 30, 1992    7%     67  621    8%     69   623
Oct. 1, 1992–Dec. 31, 1992    6%     65  619    7%     67   621
Jan. 1, 1993–Mar. 31, 1993    6%     17  571    7%     19   573
Apr. 1, 1993–Jun. 30, 1993    6%     17  571    7%     19   573
Jul. 1, 1993–Sep. 30, 1993    6%     17  571    7%     19   573
Oct. 1, 1993–Dec. 31, 1993    6%     17  571    7%     19   573
Jan. 1, 1994–Mar. 31, 1994    6%     17  571    7%     19   573
Apr. 1, 1994–Jun. 30, 1994    6%     17  571    7%     19   573
Jul. 1, 1994–Sep. 30, 1994    7%     19  573    8%     21   575
Oct. 1, 1994–Dec. 31, 1994    8%     21  575    9%     23   577
Jan. 1, 1995–Mar. 31, 1995    8%     21  575    9%     23   577
Apr. 1, 1995–Jun. 30, 1995    9%     23  577   10%     25   579
Jul. 1, 1995–Sep. 30, 1995    8%     21  575    9%     23   577

Oct. 1, 1995–Dec. 31, 1995    8%     21  575    9%     23   577
Jan. 1, 1996–Mar. 31, 1996    8%     69  623    9%     71   625
Apr. 1, 1996–Jun. 30, 1996    7%     67  621    8%     69   623
Jul. 1, 1996–Sep. 30, 1996    8%     69  623    9%     71   625
Oct. 1, 1996–Dec. 31, 1996    8%     69  623    9%     71   625
Jan. 1, 1997–Mar. 31, 1997    8%     21  575    9%     23   577
Apr. 1, 1997–Jun. 30, 1997    8%     21  575    9%     23   577
Jul. 1, 1997–Sep. 30, 1997    8%     21  575    9%     23   577
Oct. 1, 1997–Dec. 31, 1997    8%     21  575    9%     23   577
Jan. 1, 1998–Mar. 31, 1998    8%     21  575    9%     23   577
Apr. 1, 1998–Jun. 30, 1998    7%     19  573    8%     21   575
Jul. 1, 1998–Sep. 30, 1998    7%     19  573    8%     21   575
Oct. 1, 1998–Dec. 31, 1998    7%     19  573    8%     21   575
—————————————————————-

—————————————————
              TABLE OF INTEREST RATES
          FROM JANUARY 1, 1999 - PRESENT
    NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
                                   1995-1 C.B.
                             RATE     TABLE     PG
Jan. 1, 1999–Mar. 31, 1999   7%       19       573
Apr. 1, 1999–Jun. 30, 1999   8%       21       575
Jul. 1, 1999–Sep. 30, 1999   8%       21       575
Oct. 1, 1999–Dec. 31, 1999   8%       21       575
Jan. 1, 2000–Mar. 31, 2000   8%       69       623
Apr. 1, 2000–Jun. 30, 2000   9%       71       625
Jul. 1, 2000–Sep. 30, 2000   9%       71       625
Oct. 1, 2000–Dec. 31, 2000   9%       71       625
Jan. 1, 2001–Mar. 31, 2001   9%       23       577
Apr. 1, 2001–Jun. 30, 2001   8%       21       575
Jul. 1, 2001–Sep. 30, 2001   7%       19       573
Oct. 1, 2001–Dec. 31, 2001   7%       19       573
Jan. 1, 2002–Mar. 31, 2002   6%       17       571
Apr. 1, 2002–Jun. 30, 2002   6%       17       571
Jul. 1, 2002–Sep. 30, 2002   6%       17       571
Oct. 1, 2002–Dec. 31, 2002   6%       17       571
Jan. 1, 2003–Mar. 31, 2003   5%       15       569
Apr. 1, 2003–Jun. 30, 2003   5%       15       569
Jul. 1, 2003–Sep. 30, 2003   5%       15       569
Oct. 1, 2003–Dec. 31, 2003   4%       13       567
Jan. 1, 2004–Mar. 31, 2004   4%       61       615
Apr. 1, 2004–Jun. 30, 2004   5%       63       617
Jul. 1, 2004–Sep. 30, 2004   4%       61       615
Oct. 1, 2004–Dec. 31, 2004   5%       63       617
Jan. 1, 2005–Mar. 31, 2005   5%       15       569
—————————————————

—————————————————————-
                    TABLE OF INTEREST RATES
                 FROM JANUARY 1, 1999 - PRESENT
            CORPORATE OVERPAYMENTS AND UNDERPAYMENTS
                               OVERPAYMENTS      UNDERPAYMENTS
                             ———————————–
                               1995-1 C.B.        1995-1 C.B.
                             RATE  TABLE  PG   RATE  TABLE   PG

Jan. 1, 1999–Mar. 31, 1999   6%    17    571   7%    19    573
Apr. 1, 1999–Jun. 30, 1999   7%    19    573   8%    21    575
Jul. 1, 1999–Sep. 30, 1999   7%    19    573   8%    21    575
Oct. 1, 1999–Dec. 31, 1999   7%    19    573   8%    21    575
Jan. 1, 2000–Mar. 31, 2000   7%    67    621   8%    69    623
Apr. 1, 2000–Jun. 30, 2000   8%    69    623   9%    71    625
Jul. 1, 2000–Sep. 30, 2000   8%    69    623   9%    71    625
Oct. 1, 2000–Dec. 31, 2000   8%    69    623   9%    71    625
Jan. 1, 2001–Mar. 31, 2001   8%    21    575   9%    23    577
Apr. 1, 2001–Jun. 30, 2001   7%    19    573   8%    21    575
Jul. 1, 2001–Sep. 30, 2001   6%    17    571   7%    19    573
Oct. 1, 2001–Dec. 31, 2001   6%    17    571   7%    19    573
Jan. 1, 2002–Mar. 31, 2002   5%    15    569   6%    17    571
Apr. 1, 2002–Jun. 30, 2002   5%    15    569   6%    17    571
Jul. 1, 2002–Sep. 30, 2002   5%    15    569   6%    17    571
Oct. 1, 2002–Dec. 31, 2002   5%    15    569   6%    17    571
Jan. 1, 2003–Mar. 31, 2003   4%    13    567   5%    15    569
Apr. 1, 2003–Jun. 30, 2003   4%    13    567   5%    15    569
Jul. 1, 2003–Sep. 30, 2003   4%    13    567   5%    15    569
Oct. 1, 2003–Dec. 31, 2003   3%    11    565   4%    13    567
Jan. 1, 2004–Mar. 31, 2004   3%    59    613   4%    61    615
Apr. 1, 2004–Jun. 30, 2004   4%    61    615   5%    63    617
Jul. 1, 2004–Sep. 30, 2004   3%    59    613   4%    61    615
Oct. 1, 2004–Dec. 31, 2004   4%    61    615   5%    63    617
Jan. 1, 2005–Mar. 31, 2005   4%    13    567   5%    15    569
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—————————————————————
   TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS
                FROM JANUARY 1, 1991 - PRESENT
                                         1995-1 C.B.
                                RATE        TABLE        PG
Jan. 1, 1991–Mar. 31, 1991         13%           31        585
Apr. 1, 1991–Jun. 30, 1991         12%           29        583
Jul. 1, 1991–Sep. 30, 1991         12%           29        583
Oct. 1, 1991–Dec. 31, 1991         12%           29        583
Jan. 1, 1992–Mar. 31, 1992         11%           75        629
Apr. 1, 1992–Jun. 30, 1992         10%           73        627
Jul. 1, 1992–Sep. 30, 1992         10%           73        627
Oct. 1, 1992–Dec. 31, 1992          9%           71        625
Jan. 1, 1993–Mar. 31, 1993          9%           23        577
Apr. 1, 1993–Jun. 30, 1993          9%           23        577
Jul. 1, 1993–Sep. 30, 1993          9%           23        577
Oct. 1, 1993–Dec. 31, 1993          9%           23        577
Jan. 1, 1994–Mar. 31, 1994          9%           23        577
Apr. 1, 1994–Jun. 30, 1994          9%           23        577
Jul. 1, 1994–Sep. 30, 1994         10%           25        579
Oct. 1, 1994–Dec. 31, 1994         11%           27        581
Jan. 1, 1995–Mar. 31, 1995         11%           27        581
Apr. 1, 1995–Jun. 30, 1995         12%           29        583
Jul. 1, 1995–Sep. 30, 1995         11%           27        581
Oct. 1, 1995–Dec. 31, 1995         11%           27        581
Jan. 1, 1996–Mar. 31, 1996         11%           75        629
Apr. 1, 1996–Jun. 30, 1996         10%           73        627
Jul. 1, 1996–Sep. 30, 1996         11%           75        629
Oct. 1, 1996–Dec. 31, 1996         11%           75        629
Jan. 1, 1997–Mar. 31, 1997         11%           27        581
Apr. 1, 1997–Jun. 30, 1997         11%           27        581
Jul. 1, 1997–Sep. 30, 1997         11%           27        581
Oct. 1, 1997–Dec. 31, 1997         11%           27        581
Jan. 1, 1998–Mar. 31, 1998         11%           27        581
Apr. 1, 1998–Jun. 30, 1998         10%           25        579

Jul. 1, 1998–Sep. 30, 1998         10%           25        579
Oct. 1, 1998–Dec. 31, 1998         10%           25        579
Jan. 1, 1999–Mar. 31, 1999          9%           23        577
Apr. 1, 1999–Jun. 30, 1999         10%           25        579
Jul. 1, 1999–Sep. 30, 1999         10%           25        579
Oct. 1, 1999–Dec. 31, 1999         10%           25        579
Jan. 1, 2000–Mar. 31, 2000         10%           73        627
Apr. 1, 2000–Jun. 30, 2000         11%           75        629
Jul. 1, 2000–Sep. 30, 2000         11%           75        629
Oct. 1, 2000–Dec. 31, 2000         11%           75        629
Jan. 1, 2001–Mar. 31, 2001         11%           27        581
Apr. 1, 2001–Jun. 30, 2001         10%           25        579
Jul. 1, 2001–Sep. 30, 2001          9%           23        577
Oct. 1, 2001–Dec. 31, 2001          9%           23        577
Jan. 1, 2002–Mar. 31, 2002          8%           21        575
Apr. 1, 2002–Jun. 30, 2002          8%           21        575
Jul. 1, 2002–Sep. 30, 2002          8%           21        575
Oct. 1, 2002–Dec. 30, 2002          8%           21        575
Jan. 1, 2003–Mar. 31, 2003          7%           19        573
Apr. 1, 2003–Jun. 30, 2003          7%           19        573
Jul. 1, 2003–Sep. 30, 2003          7%           19        573
Oct. 1, 2003–Dec. 31, 2003          6%           17        571
Jan. 1, 2004–Mar. 31, 2004          6%           65        619
Apr. 1, 2004–Jun. 30, 2004          7%           67        621
Jul. 1, 2004–Sep. 30, 2004          6%           65        619
Oct. 1, 2004–Dec. 31, 2004          7%           67        621
Jan. 1, 2005–Mar. 31, 2005          7%           19        573
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————————————————————————–
   TABLE OF INTEREST RATES FOR CORPORATE OVERPAYMENTS EXCEEDING $10,000
                      FROM JANUARY 1, 1995 - PRESENT
                                              1995-1 C.B.
                                  RATE           TABLE            PG
Jan. 1, 1995–Mar. 31, 1995       6.5%             18             572
Apr. 1, 1995–Jun. 30, 1995       7.5%             20             574
Jul. 1, 1995–Sep. 30, 1995       6.5%             18             572
Oct. 1, 1995–Dec. 31, 1995       6.5%             18             572
Jan. 1, 1996–Mar. 31, 1996       6.5%             66             620
Apr. 1, 1996–Jun. 30, 1996       5.5%             64             618
Jul. 1, 1996–Sep. 30, 1996       6.5%             66             620
Oct. 1, 1996–Dec. 31, 1996       6.5%             66             620
Jan. 1, 1997–Mar. 31, 1997       6.5%             18             572
Apr. 1, 1997–Jun. 30, 1997       6.5%             18             572
Jul. 1, 1997–Sep. 30, 1997       6.5%             18             572
Oct. 1, 1997–Dec. 31, 1997       6.5%             18             572
Jan. 1, 1998–Mar. 31, 1998       6.5%             18             572
Apr. 1, 1998–Jun. 30, 1998       5.5%             16             570
Jul. 1, 1998–Sep. 30, 1998       5.5%             16             570
Oct. 1, 1998–Dec. 31, 1998       5.5%             16             570
Jan. 1, 1999–Mar. 31, 1999       4.5%             14             568
Apr. 1, 1999–Jun. 30, 1999       5.5%             16             570
Jul. 1, 1999–Sep. 30, 1999       5.5%             16             570
Oct. 1, 1999–Dec. 31, 1999       5.5%             16             570
Jan. 1, 2000–Mar. 31, 2000       5.5%             64             618
Apr. 1, 2000–Jun. 30, 2000       6.5%             66             620
Jul. 1, 2000–Sep. 30, 2000       6.5%             66             620
Oct. 1, 2000–Dec. 31, 2000       6.5%             66             620
Jan. 1, 2001–Mar. 31, 2001       6.5%             18             572
Apr. 1, 2001–Jun. 30, 2001       5.5%             16             570
Jul. 1, 2001–Sep. 30, 2001       4.5%             14             568
Oct. 1, 2001–Dec. 31, 2001       4.5%             14             568

Jan. 1, 2002–Mar. 31, 2002       3.5%             12             566
Apr. 1, 2002–Jun. 30, 2002       3.5%             12             566
Jul. 1, 2002–Sep. 30, 2002       3.5%             12             566
Oct. 1, 2002–Dec. 31, 2002       3.5%             12             566
Jan. 1, 2003–Mar. 31, 2003       2.5%             10             564
Apr. 1, 2003–Jun. 30, 2003       2.5%             10             564
Jul. 1, 2003–Sep. 30, 2003       2.5%             10             564
Oct. 1, 2003–Dec. 31, 2003       1.5%             8              562
Jan. 1, 2004–Mar. 31, 2004       1.5%             56             610
Apr. 1, 2004–Jun. 30, 2004       2.5%             58             612
Jul. 1, 2004–Sep. 30, 2004       1.5%             56             610
Oct. 1, 2004–Dec. 31, 2004       2.5%             58             612
Jan. 1, 2005–Mar. 31, 2005       2.5%             10             564
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