By Payroll and Entitlements Editorial Staff
The IRS has announced that interest rates will decrease for the third quarter of 2020, beginning July 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-2020-113, June 4, 2010; Rev. Rul. 2020-13, IRB 2020-26, dated June 22, 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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