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Provides a comprehensive and detailed explanation for the federal old-age, survivor's and disability insurance segments of the Social Security program.
The Internal Revenue Service has announced that interest rates will drop another percentage point for the calendar quarter beginning July 1, 2008. The interest rates are as follows: five percent for overpayments (four percent in the case of a corporation); five percent for underpayments; seven percent for large corporate underpayments; and two and one-half percent for the portion of a corporate overpayment exceeding $10,000.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half of a percentage point.
These interest rates are computed from the federal short-term rate based on daily compounding determined during April 2008 (IR-2008-76, June 2, 2008; Rev. Rul. 2008-27, I.R.B. No. 2008-26, June 30, 2008).
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