By Payroll and Entitlements Editorial Staff
The IRS has announced that interest rates will remain the same for the fourth quarter of 2020, beginning October 1, 2020. The interest rates will be 3% for overpayments (2% in the case of a corporation) and 3% for underpayments, (5% for large corporate underpayments) and 0.5% for the portion of a corporate overpayment exceeding $10,000. (IRS News Release IR-2020-202, September 10, 2020; Rev. Rul. 2020-18, IRB 2020-39, dated 09/21/2020).
The states of Alabama and South Carolina follow the federal underpayment rate. Pennsylvania follows the federal rate in effect as of January 1 of the calendar year, without regard to quarterly changes. Illinois follows the federal underpayment rate as of January 1 and July 1 of the calendar year. Additionally, Virginia's interest rate on tax underpayments is the federal interest rate plus 2%, while Arizona's is the federal short-term rate plus three percentage points.
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