The Internal Revenue Service says its interest rates will hold at previous levels for the second quarter of 2021.

The IRS says the interest rates will be:

• 3% for overpayments (2% in the case of a corporation);
• 0.5% for the portion of a corporate overpayment exceeding $10,000;
• 3% for underpayments; and
• 5% for large corporate underpayments.

The Internal Revenue Code declares that the rate of interest is determined on a quarterly basis. For taxpayers who aren’t corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

In the case of a corporation, the underpayment rate is generally the federal short-term rate plus 3 percentage points. The corporate overpayment rate is the federal short-term rate plus 2 percentage points.

However, when the underpayment is large, the rate increases to the federal short-term rate plus 5 percentage points.

The rate on the portion of a corporate overpayment of tax that exceeds $10,000 for a taxable period is the federal short-term rate plus half of a percentage point.

The new interest rates are calculated from the federal short-term rate that was determined during January 2021 and took effect Feb. 1.

The rates of interest are contained in Revenue Ruling 2021-6, and will appear in Internal Revenue Bulletin 2021-12, Dated March 22, 2021.

Source: IR-2021-50