Title 26 — Internal Revenue Code
Chapter 67 — Interest
§ 6621. Determination of rate of interest
Statutory text
General rule
Overpayment rate
The overpayment rate established under this section shall be the sum of—
the Federal short-term rate determined under subsection (b), plus
3 percentage points (2 percentage points in the case of a corporation).
To the extent that an overpayment of tax by a corporation for any taxable period (as defined in subsection (c)(3), applied by substituting “overpayment” for “underpayment”) exceeds $10,000, subparagraph (B) shall be applied by substituting “0.5 percentage point” for “2 percentage points”.
Underpayment rate
The underpayment rate established under this section shall be the sum of—
the Federal short-term rate determined under subsection (b), plus
3 percentage points.
Federal short-term rate
For purposes of this section—
General rule
The Secretary shall determine the Federal short-term rate for the first month in each calendar quarter.
Period during which rate applies
In general
Except as provided in subparagraph (B), the Federal short-term rate determined under paragraph (1) for any month shall apply during the first calendar quarter beginning after such month.
Special rule for individual estimated tax
In determining the addition to tax under section 6654 for failure to pay estimated tax for any taxable year, the Federal short-term rate which applies during the 3rd month following such taxable year shall also apply during the first 15 days of the 4th month following such taxable year.
Federal short-term rate
The Federal short-term rate for any month shall be the Federal short-term rate determined during such month by the Secretary in accordance with section 1274(d). Any such rate shall be rounded to the nearest full percent (or, if a multiple of ½ of 1 percent, such rate shall be increased to the next highest full percent).
Increase in underpayment rate for large corporate underpayments
In general
For purposes of determining the amount of interest payable under section 6601 on any large corporate underpayment for periods after the applicable date, paragraph (2) of subsection (a) shall be applied by substituting “5 percentage points” for “3 percentage points”.
Applicable date
For purposes of this subsection—
In general
The applicable date is the 30th day after the earlier of—
the date on which the 1st letter of proposed deficiency which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Independent Office of Appeals is sent, or
the date on which the deficiency notice under section 6212 is sent.
The preceding sentence shall be applied without regard to any such letter or notice which is withdrawn by the Secretary.
Special rules
Nondeficiency procedures
In the case of any underpayment of any tax imposed by this title to which the deficiency procedures do not apply, subparagraph (A) shall be applied by taking into account any letter or notice provided by the Secretary which notifies the taxpayer of the assessment or proposed assessment of the tax.
Exception where amounts paid in full
For purposes of subparagraph (A), a letter or notice shall be disregarded if, during the 30-day period beginning on the day on which it was sent, the taxpayer makes a payment equal to the amount shown as due in such letter or notice, as the case may be.
Exception for letters or notices involving small amounts
For purposes of this paragraph, any letter or notice shall be disregarded if the amount of the deficiency or proposed deficiency (or the assessment or proposed assessment) set forth in such letter or notice is not greater than $100,000 (determined by not taking into account any interest, penalties, or additions to tax).
Large corporate underpayment
For purposes of this subsection—
In general
The term “large corporate underpayment” means any underpayment of a tax by a C corporation for any taxable period if the amount of such underpayment for such period exceeds $100,000.
Taxable period
For purposes of subparagraph (A), the term “taxable period” means—
in the case of any tax imposed by subtitle A, the taxable year, or
in the case of any other tax, the period to which the underpayment relates.
Elimination of interest on overlapping periods of tax overpayments and underpayments
To the extent that, for any period, interest is payable under subchapter A and allowable under subchapter B on equivalent underpayments and overpayments by the same taxpayer of tax imposed by this title, the net rate of interest under this section on such amounts shall be zero for such period.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Pub. L. 93–625 § 7(a)(1) · 88 Stat. 2108
Enacted · 26 U.S.C. § 6621
Added Pub. L. 93–625, § 7(a)(1), Jan. 3, 1975, 88 Stat. 2114
Source evidence
Code source credit
Added Pub. L. 93–625, § 7(a)(1), Jan. 3, 1975, 88 Stat. 2114Enacted provision · exact public law section
(1) Chapter 67 (relating to interest) is amended by adding at the end thereof the following new subchapter: “Subchapter C— Determination of interest rate “Sec. 6621. Determination of rate of interest. 26 USC 6601, 6602, 6611, 6332, 7426.“SEC. 6621. DETERMINATION OF RATE OF INTEREST. “(a) In General.— The rate of interest under sections 6601(a), Ante, p. 2114 6602, 6611(a), 6332(c) (1), and 7426(g) of this title, and under section 2411 (a) of title 28 is 9 percent per annum, or such adjusted rate as is established by the Secretary or his delegate under subsection (b). “(b) Adjustment of Interest Rate.— The Secretary or his delegate shall establish an adjusted rate of interest for the purpose of subsection (a) not later than October 15 of any year if the adjusted prime rate charged by banks during September of that year, rounded to the nearest full percent, is at least a full percentage point more or less than the interest rate which is then in effect. Any such adjusted rate of interest shall be equal to the adjusted prime rate charged by banks, rounded to the nearest full percent, and shall become effective on February 1 of the immediately succeeding year. An adjustment provided for under this subsection may not be made prior to the expiration of 23 months following the date of any preceding adjustment under this subsection which changes the rate of interest. “(c) Definition of Prime Rate.— For purposes of subsection (b), the term ‘adjusted prime rate charged by banks’ means 90 percent of the average predominant prime rate quoted by commercial banks to large businesses, as determined by the Board of Governors of the Federal Reserve System.”Pub. L. 94–455 title XIX § 1906(b)(13)(A) · 90 Stat. 1520
Struck · 26 U.S.C. § 6621(a); 26 U.S.C. § 6621(b)
Pub. L. 94–455 struck out “or his delegate” after “Secretary”
Source evidence
Code amendment note
Subsecs. (a), (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.Enacted provision · exact public law section
(A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.Pub. L. 96–167 § 4(b) · 93 Stat. 1275
Substituted · 26 U.S.C. § 6621(a)
Pub. L. 96–167 substituted provisions setting the annual rate established under this section to be such adjusted rate as is established by the Secretary under subsec. (b) of this section for provision that the rate of interest under sections 6601(a), 6602, 6611(a), 6332(c)(1), and 7426(g) of this title, and under section 2411(a) of title 28 was to be 9 percent per annum, or such adjusted rate as was established by the Secretary under subsection (b)
Source evidence
Code amendment note
Subsec. (a). Pub. L. 96–167 substituted provisions setting the annual rate established under this section to be such adjusted rate as is established by the Secretary under subsec. (b) of this section for provision that the rate of interest under sections 6601(a), 6602, 6611(a), 6332(c)(1), and 7426(g) of this title, and under section 2411(a) of title 28 was to be 9 percent per annum, or such adjusted rate as was established by the Secretary under subsection (b).Enacted provision · exact public law section
(b) Technical Amendment.— Subsection (a) of section 6621 of such Code is amended to read as follows: “(a) In General.— The annual rate established under this section shall be such adjusted rate as is established by the Secretary under subsection (b).”Economic Recovery Tax Act of 1981
Pub. L. 97–34 § 711(a) · 95 Stat. 175
Struck · 26 U.S.C. § 6621(b)
Pub. L. 97–34, § 711(a), struck out provision that an adjustment provided for under this subsection not be made prior to the expiration of 23 months following the date of any preceding adjustment under this subsection which changes the rate of interest
Source evidence
Code amendment note
Subsec. (b). Pub. L. 97–34, § 711(a), struck out provision that an adjustment provided for under this subsection not be made prior to the expiration of 23 months following the date of any preceding adjustment under this subsection which changes the rate of interest.Enacted provision · exact public law section
(a) Annual Adjustment to Rate of Interest.— Subsection (b) of 26 USC 6621. section 6621 (relating to adjustment of interest rate) is amended by striking out the last sentence thereof.Economic Recovery Tax Act of 1981
Pub. L. 97–34 § 711(c) · 95 Stat. 175
Substituted · 26 U.S.C. § 6621(b)
Pub. L. 97–34, § 711(c), substituted “January 1” for “February 1”
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 97–34, § 711(c), substituted “January 1” for “February 1”.Enacted provision · exact public law section
(c) New Rate To Take Effect on January 1 of Each Year After 1982.— Subsection (b) of section 6621 is amended by striking out “February 1” and inserting in lieu thereof “January 1”.Economic Recovery Tax Act of 1981
Pub. L. 97–34 § 711(b) · 95 Stat. 175
Struck · 26 U.S.C. § 6621(c)
Pub. L. 97–34, § 711(b), struck out “90 percent of” before “the average predominant prime rate”
Source evidence
Code amendment note
Subsec. (c). Pub. L. 97–34, § 711(b), struck out “90 percent of” before “the average predominant prime rate”.Enacted provision · exact public law section
(b) Rate of Interest To Be Based on 100 Percent Of Prime Rate.— Subsection (c) of section 6621 is amended by striking out “90 percent of”.Pub. L. 97–248 title III § 345(a) · 96 Stat. 324
Substituted · 26 U.S.C. § 6621(b)
Pub. L. 97–248 substituted provisions that if the adjusted prime rate charged by banks (rounded to the nearest full percent) during the 6-month period ending on September 30 of any calendar year, or during the 6-month period ending on March 31 of any calendar year, differs from the interest rate in effect under this section on either such date, respectively, then the Secretary shall establish, within 15 days after the close of the applicable 6-month period, an adjusted rate of interest equal to such adjusted prime rate, and that any adjusted rate of interest established under paragraph (1) shall become effective on January 1 of the succeeding year in the case of an adjustment attributable to paragraph (1)(A), and on July 1 of the same year in the case of an adjustment attributable to paragraph (1)(B), for provisions that the Secretary was to establish an adjusted rate of interest for the purpose of subsection (a) not later than October 15 of any year if the adjusted prime rate charged by banks during September of that year, rounded to the nearest full percent, was at least a full percentage point more or less than the interest rate which was then in effect, and that any such adjusted rate of interest would be equal to the adjusted prime rate charged by banks, rounded to the nearest full percent, and would become effective on January 1 of the immediately succeeding year
Source evidence
Code amendment note
Subsec. (b). Pub. L. 97–248 substituted provisions that if the adjusted prime rate charged by banks (rounded to the nearest full percent) during the 6-month period ending on September 30 of any calendar year, or during the 6-month period ending on March 31 of any calendar year, differs from the interest rate in effect under this section on either such date, respectively, then the Secretary shall establish, within 15 days after the close of the applicable 6-month period, an adjusted rate of interest equal to such adjusted prime rate, and that any adjusted rate of interest established under paragraph (1) shall become effective on January 1 of the succeeding year in the case of an adjustment attributable to paragraph (1)(A), and on July 1 of the same year in the case of an adjustment attributable to paragraph (1)(B), for provisions that the Secretary was to establish an adjusted rate of interest for the purpose of subsection (a) not later than October 15 of any year if the adjusted prime rate charged by banks during September of that year, rounded to the nearest full percent, was at least a full percentage point more or less than the interest rate which was then in effect, and that any such adjusted rate of interest would be equal to the adjusted prime rate charged by banks, rounded to the nearest full percent, and would become effective on January 1 of the immediately succeeding year.Enacted provision · exact public law section
(a) In General.— Subsection (b) of section 6621 (relating to determination 26 USC 6621. of rate of interest) is amended to read as follows: “(b) Adjustment of Interest Rate.— “(1) Establishment of adjusted rate.— If the adjusted prime rate charged by banks (rounded to the nearest full percent)— “(A) during the 6-month period ending on September 30 of any calendar year, or “(B) during the 6-month period ending on March 31 of any calendar year, differs from the interest rate in effect under this section on either such date, respectively, then the Secretary shall establish, within 15 days after the close of the applicable 6-month period, an adjusted rate of interest equal to such adjusted prime rate. “(2) Effective date of adjustment.— Any adjusted rate of interest established under paragraph (1) shall become effective— “(A) on January 1 of the succeeding year in the case of an adjustment attributable to paragraph (1)(A), and “(B) on July 1 of the same year in the case of an adjustment attributable to paragraph(l)(B).”Tax Reform Act of 1984
Pub. L. 98–369 div. A title I § 144(a) · 98 Stat. 494
Added · 26 U.S.C. § 6621(d)
Pub. L. 98–369 added subsec. (d)
Source evidence
Code amendment note
Subsec. (d). Pub. L. 98–369 added subsec. (d).Enacted provision · exact public law section
(a) General Rule.— Section 6621 (relating to determination of rate of interest) is amended by adding at the end thereof the following new subsection: “(d) Interest on Substantial Underpayments Attributable to Tax Motivated Transactions.— “(1) In general.— In the case of interest payable under section 6601 with respect to any substantial underpayment attributable to tax motivated transactions, the annual rate of interest established under this section shall be 120 percent of the adjusted rate established under subsection (b). “(2) Substantial underpayment attributable to tax motivated transactions.— For purposes of this subsection, the term ‘substantial underpayment attributable to tax motivated transactions’ means any underpayment of taxes imposed by subtitle A for any taxable year which is attributable to 1 or more tax motivated transactions if the amount of the underpayment for such year so attributable exceeds $1,000. “(3) Tax motivated transactions.— “(A) In general.— For purposes of this subsection, the term ‘tax motivated transaction’ means— “(i) any valuation overstatement (within the meaning of section 6659(c)), Post, p. 693. “(ii) any loss disallowed by reason of section 465(a) and any credit disallowed under section 46(c)(8), “(iii) any straddle (as defined in section 1092(c) without regard to subsections (d) and (e) of section 1092), and “(iv) any use of an accounting method specified in regulations prescribed by the Secretary as a use which may result in a substantial distortion of income for any period. “(B) Regulatory authority.— The Secretary may by regulations specify other types of transactions which will be treated as tax motivated for purposes of this subsection and may by regulations provide that specified transactions being treated as tax motivated will no longer be so treated. In prescribing regulations under the preceding sentence, the Secretary shall take into account— “(i) the ratio of tax benefits to cash invested, “(ii) the methods of promoting the use of this type of transaction, and Post, pp. 805, 810. “(iii) other relevant considerations. “(C) Effective date for regulations.— Any regulations prescribed under subparagraph (A)(iv) or (B) shall apply only to interest accruing after a date (specified in such regulations) which is after the date on which such regulations are prescribed. “(4) Jurisdiction of tax court.— In the case of any proceeding in the Tax Court for a redetermihation of a deficiency, the Tax Court shall also have jurisdiction to determine the portion (if any) of such deficiency which is a substantial underpayment attributable to tax motivated transactions.”Tax Reform Act of 1986
Pub. L. 99–514 § 1511(a) · 100 Stat. 2085
Added · 26 U.S.C. § 6621(a)
Pub. L. 99–514, § 1511(a), added subsec. (a)
Struck · 26 U.S.C. § 6621(a)
Pub. L. 99–514, § 1511(a), struck out former subsec. (a) which read as follows: “The annual rate established under this section shall be such adjusted rate as is established by the Secretary under subsection (b).”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 99–514, § 1511(a), added subsec. (a) and struck out former subsec. (a) which read as follows: “The annual rate established under this section shall be such adjusted rate as is established by the Secretary under subsection (b).”Enacted provision · exact public law section
(a) General Rule.— Section 6621 (relating to determination of rate of interest) is amended by striking out subsections (a), (b), and (c) and inserting in lieu thereof the following: “(a) General Rule.— “(1) Overpayment rate.— The overpayment rate established under this section shall be the sum of— “(A) the short-term Federal rate determined under subsection (b), plus “(B) 2 percentage points. “(2) Underpayment rate.— The underpayment rate established under this section shall be the sum of— “(A) the short-term Federal rate determined under subsection (b), plus “(B) 3 percentage points. “(b) Short-Term Federal Rate.— For purposes of this section— “(1) General rule.— The Secretary shall determine the short-term Federal rate for the first month in each calendar quarter. “(2) Period during which rate applies.— “(A) In general.— Except as provided in subparagraph (B), the Federal short-term rate determined under paragraph (1) for any month shall apply during the first calendar quarter beginning after such month. “(B) Special rule for individual estimated tax.— In determining the addition to tax under section 6654 for failure to pay estimated tax for any taxable year, the Federal short-term rate which applies during the 3rd month following such taxable year shall also apply during the first 15 days of the 4th month following such taxable year. “(3) Federal short-term rate.— The Federal short-term rate for any month shall be the Federal short-term rate determined during such month by the Secretary in accordance with section 1274(d). Any such rate shall be rounded to the nearest full percent (or, if a multiple of (4 of 1 percent, such rate shall be increased to the next highest full percent).”Tax Reform Act of 1986
Pub. L. 99–514 § 1511(a) · 100 Stat. 2085
Added · 26 U.S.C. § 6621(b)
Pub. L. 99–514, § 1511(a), added subsec. (b) relating to determination of Federal short-term rate
Struck · 26 U.S.C. § 6621(b)
Pub. L. 99–514, § 1511(a), struck out former subsec. (b) which related to interest rate adjustments and establishment of adjusted rates
Source evidence
Code amendment note
Subsec. (b). Pub. L. 99–514, § 1511(a), added subsec. (b) relating to determination of Federal short-term rate and struck out former subsec. (b) which related to interest rate adjustments and establishment of adjusted rates.Enacted provision · exact public law section
(a) General Rule.— Section 6621 (relating to determination of rate of interest) is amended by striking out subsections (a), (b), and (c) and inserting in lieu thereof the following: “(a) General Rule.— “(1) Overpayment rate.— The overpayment rate established under this section shall be the sum of— “(A) the short-term Federal rate determined under subsection (b), plus “(B) 2 percentage points. “(2) Underpayment rate.— The underpayment rate established under this section shall be the sum of— “(A) the short-term Federal rate determined under subsection (b), plus “(B) 3 percentage points. “(b) Short-Term Federal Rate.— For purposes of this section— “(1) General rule.— The Secretary shall determine the short-term Federal rate for the first month in each calendar quarter. “(2) Period during which rate applies.— “(A) In general.— Except as provided in subparagraph (B), the Federal short-term rate determined under paragraph (1) for any month shall apply during the first calendar quarter beginning after such month. “(B) Special rule for individual estimated tax.— In determining the addition to tax under section 6654 for failure to pay estimated tax for any taxable year, the Federal short-term rate which applies during the 3rd month following such taxable year shall also apply during the first 15 days of the 4th month following such taxable year. “(3) Federal short-term rate.— The Federal short-term rate for any month shall be the Federal short-term rate determined during such month by the Secretary in accordance with section 1274(d). Any such rate shall be rounded to the nearest full percent (or, if a multiple of (4 of 1 percent, such rate shall be increased to the next highest full percent).”Tax Reform Act of 1986
Pub. L. 99–514 § 1511(a) · 100 Stat. 2085
Redesignated · 26 U.S.C. § 6621(c)
Pub. L. 99–514, § 1511(a), (c)(1), redesignated subsec. (d) as (c), in par. (1)
Struck · 26 U.S.C. § 6621(c)
Pub. L. 99–514, § 1511(a), (c)(1), struck out “annual” before “rate of interest”
Substituted · 26 U.S.C. § 6621(c)
Pub. L. 99–514, § 1511(a), (c)(1), substituted “the underpayment rate established under this section” for “the adjusted rate established under subsection (b)”
Struck · 26 U.S.C. § 6621(c)
Pub. L. 99–514, § 1511(a), (c)(1), struck out former subsec. (c) definition of prime rate, which read as follows: “For purposes of subsection (b), the term ‘adjusted prime rate charged by banks’ means the average predominant prime rate quoted by commercial banks to large businesses, as determined by the Board of Governors of the Federal Reserve System.”
Source evidence
Code amendment note
Subsec. (c). Pub. L. 99–514, § 1511(a), (c)(1), redesignated subsec. (d) as (c), in par. (1), struck out “annual” before “rate of interest” and substituted “the underpayment rate established under this section” for “the adjusted rate established under subsection (b)”, and struck out former subsec. (c) definition of prime rate, which read as follows: “For purposes of subsection (b), the term ‘adjusted prime rate charged by banks’ means the average predominant prime rate quoted by commercial banks to large businesses, as determined by the Board of Governors of the Federal Reserve System.”Enacted provision · exact public law section
(a) General Rule.— Section 6621 (relating to determination of rate of interest) is amended by striking out subsections (a), (b), and (c) and inserting in lieu thereof the following: “(a) General Rule.— “(1) Overpayment rate.— The overpayment rate established under this section shall be the sum of— “(A) the short-term Federal rate determined under subsection (b), plus “(B) 2 percentage points. “(2) Underpayment rate.— The underpayment rate established under this section shall be the sum of— “(A) the short-term Federal rate determined under subsection (b), plus “(B) 3 percentage points. “(b) Short-Term Federal Rate.— For purposes of this section— “(1) General rule.— The Secretary shall determine the short-term Federal rate for the first month in each calendar quarter. “(2) Period during which rate applies.— “(A) In general.— Except as provided in subparagraph (B), the Federal short-term rate determined under paragraph (1) for any month shall apply during the first calendar quarter beginning after such month. “(B) Special rule for individual estimated tax.— In determining the addition to tax under section 6654 for failure to pay estimated tax for any taxable year, the Federal short-term rate which applies during the 3rd month following such taxable year shall also apply during the first 15 days of the 4th month following such taxable year. “(3) Federal short-term rate.— The Federal short-term rate for any month shall be the Federal short-term rate determined during such month by the Secretary in accordance with section 1274(d). Any such rate shall be rounded to the nearest full percent (or, if a multiple of (4 of 1 percent, such rate shall be increased to the next highest full percent).”Tax Reform Act of 1986
Pub. L. 99–514 § 1535(a) · 100 Stat. 2085
Added · 26 U.S.C. § 6621(c)(3)(A)(v)
Pub. L. 99–514, § 1535(a), added cl. (v)
Source evidence
Code amendment note
Subsec. (c)(3)(A)(v). Pub. L. 99–514, § 1535(a), added cl. (v).Enacted provision · exact public law section
(a) Clarification of Treatment of Sham or Fraudulent Transactions.— Subparagraph (A) of section 6621(c)(3) (as so redesignated) is amended by striking out “and” at the end of clause (iii), by striking out the period at the end of clause (iv) and inserting in lieu thereof “, and”, and by adding at the end thereof the following new clause: “(v) any sham or fraudulent transaction.”Tax Reform Act of 1986
Pub. L. 99–514 § 1511(c)(1)(A) · 100 Stat. 2085
Redesignated · 26 U.S.C. § 6621(d)
Pub. L. 99–514, § 1511(c)(1)(A), redesignated subsec. (d) as (c)
Source evidence
Code amendment note
Subsec. (d). Pub. L. 99–514, § 1511(c)(1)(A), redesignated subsec. (d) as (c).Enacted provision · exact public law section
(A) by redesignating subsection (d) as subsection (c), andTechnical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1015(d)(1) · 102 Stat. 3342
Substituted · 26 U.S.C. § 6621(a)(1)(A); 26 U.S.C. § 6621(a)(2)(A)
Pub. L. 100–647, § 1015(d)(1), substituted “Federal short-term” for “short-term Federal”
Source evidence
Code amendment note
Subsec. (a)(1)(A), (2)(A). Pub. L. 100–647, § 1015(d)(1), substituted “Federal short-term” for “short-term Federal”.Enacted provision · exact public law section
(1) by striking out “short-term Federal rate” each place it appears in subsections (a) and (b)(1) and inserting in lieu thereof “Federal short-term rate”, andTechnical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1015(d)(2) · 102 Stat. 3342
Substituted · 26 U.S.C. § 6621(b)
Pub. L. 100–647, § 1015(d)(2), substituted “Federal short-term” for “short-term Federal” in heading
Source evidence
Code amendment note
Subsec. (b). Pub. L. 100–647, § 1015(d)(2), substituted “Federal short-term” for “short-term Federal” in heading.Enacted provision · exact public law section
(2) by striking out “Short-Term Federal Rate” in the heading of subsection (b) and inserting in lieu thereof “Federal Short-Term Rate”.Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1015(d)(1) · 102 Stat. 3342
Substituted · 26 U.S.C. § 6621(b)(1)
Pub. L. 100–647, § 1015(d)(1), substituted “Federal short-term” for “short-term Federal”
Source evidence
Code amendment note
Subsec. (b)(1). Pub. L. 100–647, § 1015(d)(1), substituted “Federal short-term” for “short-term Federal”.Enacted provision · exact public law section
(1) by striking out “short-term Federal rate” each place it appears in subsections (a) and (b)(1) and inserting in lieu thereof “Federal short-term rate”, andImproved Penalty Administration and Compliance Tax Act
Pub. L. 101–239 title VII § 7721(b) · 103 Stat. 2106
Repealed · 26 U.S.C. § 6621(c)
Pub. L. 101–239 repealed subsec. (c) which related to attribution of interest on substantial underpayments to tax motivated transactions
Source evidence
Code amendment note
Subsec. (c). Pub. L. 101–239 repealed subsec. (c) which related to attribution of interest on substantial underpayments to tax motivated transactions.Enacted provision · exact public law section
(b) Repeal of Increase in Interest on Certain Substantial Underpayments.— Subsection (c) of section 6621 (relating to interest on substantial underpayments attributable to tax motivated transactions) is hereby repealed.Revenue Reconciliation Act of 1990
Pub. L. 101–508 title XI § 11341(a) · 104 Stat. 1388
Added · 26 U.S.C. § 6621(c)
Pub. L. 101–508 added subsec. (c)
Source evidence
Code amendment note
Subsec. (c). Pub. L. 101–508 added subsec. (c).Enacted provision · exact public law section
(a) General Rule.— Section 6621 (relating to determination of rate of interest) is amended by adding at the end thereof the following new subsection: “(c) Increase in Underpayment Rate for Large Corporate Underpayments.— “(1) In general.— For purposes of determining the amount of interest payable under section 6601 on any large corporate underpayment for periods after the applicable date, paragraph (2) of subsection (a) shall be applied by substituting ‘5 percent-age points’ for ‘3 percentage points’. “(2) Applicable date.— For purposes of this subsection— “(A) In general.— The applicable date is the 30th day after the earlier of— “(i) the date on which the 1st letter of proposed deficiency which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Office of Appeals is sent, or “(ii) the date on which the deficiency notice under section 6212 is sent. “(B) Special rules.— “(i) Nondeficiency procedures.— In the case of any underpayment of any tax imposed by this subtitle to which the deficiency procedures do not apply, subparagraph (A) shall be applied by taking into account any letter or notice provided by the Secretary which notifies the taxpayer of the assessment or proposed assessment of the tax. “(ii) Exception where amounts paid in full.— For purposes of subparagraph (A), a letter or notice shall be disregarded if, during the 30-day period beginning on the day on which it was sent, the taxpayer makes a payment equal to the amount shown as due in such letter or notice, as the case may be. “(3) Large corporate underpayment.— For purposes of this subsection— “(A) In general.— The term ‘large corporate underpayment’ means any underpayment of a tax by a C corporation for any taxable period if the amount of such underpayment for such period exceeds $100,000. “(B) Taxable period.— For purposes of subparagraph (A), the term ‘taxable period’ means— “(i) in the case of any tax imposed by subtitle A, the taxable year, or “(ii) in the case of any other tax, the period to which the underpayment relates.”Pub. L. 103–465 title VII § 713(a) · 108 Stat. 4809
Inserted · 26 U.S.C. § 6621(a)(1)
Pub. L. 103–465 inserted concluding provisions
Source evidence
Code amendment note
Subsec. (a)(1). Pub. L. 103–465 inserted concluding provisions.Enacted provision · exact public law section
(a) In General.— Paragraph (1) of section 6621(a) (defining overpayment rate) is amended oy adding at the end the following new flush sentence: “To the extent that an overpayment of tax by a corporation for any taxable period (as defined in subsection (c)(3)) exceeds $10,000, subparagraph (B) shall be applied by substituting ‘0.5 percentage point’ for ‘2 percentage points’.”Small Business Job Protection Act of 1996
Pub. L. 104–188 § 1702(c)(6) · 110 Stat. 1755
Inserted · 26 U.S.C. § 6621(c)(2)(A)
Pub. L. 104–188, § 1702(c)(6), inserted closing provisions “The preceding sentence shall be applied without regard to any such letter or notice which is withdrawn by the Secretary.”
Source evidence
Code amendment note
Subsec. (c)(2)(A). Pub. L. 104–188, § 1702(c)(6), inserted closing provisions “The preceding sentence shall be applied without regard to any such letter or notice which is withdrawn by the Secretary.”Enacted provision · exact public law section
(6) Subparagraph (A) of section 6621(c)(2) is amended by adding at the end thereof the following new flush sentence: “The preceding sentence shall be applied without regard to any such letter or notice which is withdrawn by the Secretary.”.Small Business Job Protection Act of 1996
Pub. L. 104–188 § 1702(c)(7) · 110 Stat. 1755
Substituted · 26 U.S.C. § 6621(c)(2)(B)(i)
Pub. L. 104–188, § 1702(c)(7), substituted “this title” for “this subtitle”
Source evidence
Code amendment note
Subsec. (c)(2)(B)(i). Pub. L. 104–188, § 1702(c)(7), substituted “this title” for “this subtitle”.Enacted provision · exact public law section
(7) Clause (i) of section 6621(c)(2)(B) is amended by striking “this subtitle” and inserting “this title”.Pub. L. 105–34 § 1604(b)(1) · 111 Stat. 788
Substituted · 26 U.S.C. § 6621(a)(1)
Pub. L. 105–34, § 1604(b)(1), substituted “subsection (c)(3), applied by substituting ‘overpayment’ for ‘underpayment’)” for “subsection (c)(3))” in concluding provisions
Source evidence
Code amendment note
Subsec. (a)(1). Pub. L. 105–34, § 1604(b)(1), substituted “subsection (c)(3), applied by substituting ‘overpayment’ for ‘underpayment’)” for “subsection (c)(3))” in concluding provisions.Enacted provision · exact public law section
(1) Paragraph (1) of section 6621(a) is amended in the last sentence by striking “subsection (c)(3))” and inserting “subsection (c)(3), applied by substituting ‘overpayment’ for ‘underpayment’)”.Pub. L. 105–34 § 1463(a) · 111 Stat. 788
Added · 26 U.S.C. § 6621(c)(2)(B)(iii)
Pub. L. 105–34, § 1463(a), added cl. (iii)
Source evidence
Code amendment note
Subsec. (c)(2)(B)(iii). Pub. L. 105–34, § 1463(a), added cl. (iii).Enacted provision · exact public law section
(a) General Rule.— Subparagraph (B) of section 6621(c)(2) (defining applicable date) is amended by adding at the end the following new clause: “(iii) Exception for letters or notices involving small amounts.— For purposes of this paragraph, any letter or notice shall be disregarded if the amount of the deficiency or proposed deficiency (or the assessment or proposed assessment) set forth in such letter or notice is not greater than $100,000 (determined by not taking into account any interest, penalties, or additions to tax).”.Taxpayer Bill of Rights 3
Pub. L. 105–206 § 3302(a) · 112 Stat. 685
Amended · 26 U.S.C. § 6621(a)(1)(B)
Pub. L. 105–206, § 3302(a), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “2 percentage points.”
Source evidence
Code amendment note
Subsec. (a)(1)(B). Pub. L. 105–206, § 3302(a), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “2 percentage points.”Enacted provision · exact public law section
(a) In General.— Subparagraph (B) of section 6621(a)(1) (defining overpayment rate) is amended to read as follows: “(B) 3 percentage points (2 percentage points in the case of a corporation).”.Effective date note
Amendment by section 3301(a) of Pub. L. 105–206 applicable to interest for periods beginning after July 22, 1998, and, subject to applicable statutes of limitation, to interest for periods beginning before July 22, 1998, if taxpayer reasonably identifies and establishes periods of overpayments and underpayments for which zero rate applies, and not later than Dec. 31, 1999, requests application of subsec. (d) of this section to such periods, see section 3301(c) of Pub. L. 105–206, set out as a note under section 6601 of this title. Pub. L. 105–206, title III, § 3302(b), July 22, 1998, 112 Stat. 742, provided that: “The amendment made by this section [amending this section] shall apply to interest for the second and succeeding calendar quarters beginning after the date of the enactment of this Act [July 22, 1998].”Taxpayer Bill of Rights 3
Pub. L. 105–206 § 3301(a) · 112 Stat. 685
Added · 26 U.S.C. § 6621(d)
Pub. L. 105–206, § 3301(a), added subsec. (d)
Source evidence
Code amendment note
Subsec. (d). Pub. L. 105–206, § 3301(a), added subsec. (d).Enacted provision · exact public law section
(a) In General.— Section 6621 (relating to determination of rate of interest) is amended by adding at the end the following new subsection: “(d) Elimination of Interest on Overlapping Periods of Tax Overpayments and Underpayments.— To the extent that, for any period, interest is payable under subchapter A and allowable under subchapter B on equivalent underpayments and overpayments by the same taxpayer of tax imposed by this title, the net rate of interest under this section on such amounts shall be zero for such period.”.Effective date note
Amendment by section 3301(a) of Pub. L. 105–206 applicable to interest for periods beginning after July 22, 1998, and, subject to applicable statutes of limitation, to interest for periods beginning before July 22, 1998, if taxpayer reasonably identifies and establishes periods of overpayments and underpayments for which zero rate applies, and not later than Dec. 31, 1999, requests application of subsec. (d) of this section to such periods, see section 3301(c) of Pub. L. 105–206, set out as a note under section 6601 of this title. Pub. L. 105–206, title III, § 3302(b), July 22, 1998, 112 Stat. 742, provided that: “The amendment made by this section [amending this section] shall apply to interest for the second and succeeding calendar quarters beginning after the date of the enactment of this Act [July 22, 1998].”Taxpayer First Act
Pub. L. 116–25 title I § 1001(b)(1)(E) · 133 Stat. 981
Substituted · 26 U.S.C. § 6621(c)(2)(A)(i)
Pub. L. 116–25 substituted “Internal Revenue Service Independent Office of Appeals” for “Internal Revenue Service Office of Appeals”
Source evidence
Code amendment note
Subsec. (c)(2)(A)(i). Pub. L. 116–25 substituted “Internal Revenue Service Independent Office of Appeals” for “Internal Revenue Service Office of Appeals”.Enacted provision · exact public law section
(E) Section 6621(c)(2)(A)(i).
31 of 31 references resolved to an enrolled provision
Editorial Notes
Amendments1976–2019 · 14 rounds
2019
Subsec. (c)(2)(A)(i). Pub. L. 116–25 substituted “Internal Revenue Service Independent Office of Appeals” for “Internal Revenue Service Office of Appeals”.
1998
Subsec. (a)(1)(B). Pub. L. 105–206, § 3302(a), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “2 percentage points.”
Subsec. (d). Pub. L. 105–206, § 3301(a), added subsec. (d).
1997
Subsec. (a)(1). Pub. L. 105–34, § 1604(b)(1), substituted “subsection (c)(3), applied by substituting ‘overpayment’ for ‘underpayment’)” for “subsection (c)(3))” in concluding provisions.
Subsec. (c)(2)(B)(iii). Pub. L. 105–34, § 1463(a), added cl. (iii).
1996
Subsec. (c)(2)(A). Pub. L. 104–188, § 1702(c)(6), inserted closing provisions “The preceding sentence shall be applied without regard to any such letter or notice which is withdrawn by the Secretary.”
Subsec. (c)(2)(B)(i). Pub. L. 104–188, § 1702(c)(7), substituted “this title” for “this subtitle”.
1994
Subsec. (a)(1). Pub. L. 103–465 inserted concluding provisions.
1990
Subsec. (c). Pub. L. 101–508 added subsec. (c).
1989
Subsec. (c). Pub. L. 101–239 repealed subsec. (c) which related to attribution of interest on substantial underpayments to tax motivated transactions.
1988
Subsec. (a)(1)(A), (2)(A). Pub. L. 100–647, § 1015(d)(1), substituted “Federal short-term” for “short-term Federal”.
Subsec. (b). Pub. L. 100–647, § 1015(d)(2), substituted “Federal short-term” for “short-term Federal” in heading.
Subsec. (b)(1). Pub. L. 100–647, § 1015(d)(1), substituted “Federal short-term” for “short-term Federal”.
1986
Subsec. (a). Pub. L. 99–514, § 1511(a), added subsec. (a) and struck out former subsec. (a) which read as follows: “The annual rate established under this section shall be such adjusted rate as is established by the Secretary under subsection (b).”
Subsec. (b). Pub. L. 99–514, § 1511(a), added subsec. (b) relating to determination of Federal short-term rate and struck out former subsec. (b) which related to interest rate adjustments and establishment of adjusted rates.
Subsec. (c). Pub. L. 99–514, § 1511(a), (c)(1), redesignated subsec. (d) as (c), in par. (1), struck out “annual” before “rate of interest” and substituted “the underpayment rate established under this section” for “the adjusted rate established under subsection (b)”, and struck out former subsec. (c) definition of prime rate, which read as follows: “For purposes of subsection (b), the term ‘adjusted prime rate charged by banks’ means the average predominant prime rate quoted by commercial banks to large businesses, as determined by the Board of Governors of the Federal Reserve System.”
Subsec. (c)(3)(A)(v). Pub. L. 99–514, § 1535(a), added cl. (v).
Subsec. (d). Pub. L. 99–514, § 1511(c)(1)(A), redesignated subsec. (d) as (c).
1984
Subsec. (d). Pub. L. 98–369 added subsec. (d).
1982
Subsec. (b). Pub. L. 97–248 substituted provisions that if the adjusted prime rate charged by banks (rounded to the nearest full percent) during the 6-month period ending on September 30 of any calendar year, or during the 6-month period ending on March 31 of any calendar year, differs from the interest rate in effect under this section on either such date, respectively, then the Secretary shall establish, within 15 days after the close of the applicable 6-month period, an adjusted rate of interest equal to such adjusted prime rate, and that any adjusted rate of interest established under paragraph (1) shall become effective on January 1 of the succeeding year in the case of an adjustment attributable to paragraph (1)(A), and on July 1 of the same year in the case of an adjustment attributable to paragraph (1)(B), for provisions that the Secretary was to establish an adjusted rate of interest for the purpose of subsection (a) not later than October 15 of any year if the adjusted prime rate charged by banks during September of that year, rounded to the nearest full percent, was at least a full percentage point more or less than the interest rate which was then in effect, and that any such adjusted rate of interest would be equal to the adjusted prime rate charged by banks, rounded to the nearest full percent, and would become effective on January 1 of the immediately succeeding year.
1981
Subsec. (b). Pub. L. 97–34, § 711(a), struck out provision that an adjustment provided for under this subsection not be made prior to the expiration of 23 months following the date of any preceding adjustment under this subsection which changes the rate of interest.
Pub. L. 97–34, § 711(c), substituted “January 1” for “February 1”.
Subsec. (c). Pub. L. 97–34, § 711(b), struck out “90 percent of” before “the average predominant prime rate”.
1979
Subsec. (a). Pub. L. 96–167 substituted provisions setting the annual rate established under this section to be such adjusted rate as is established by the Secretary under subsec. (b) of this section for provision that the rate of interest under sections 6601(a), 6602, 6611(a), 6332(c)(1), and 7426(g) of this title, and under section 2411(a) of title 28 was to be 9 percent per annum, or such adjusted rate as was established by the Secretary under subsection (b).
1976
Subsecs. (a), (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by section 3301(a) of Pub. L. 105–206 applicable to interest for periods beginning after , and, subject to applicable statutes of limitation, to interest for periods beginning before , if taxpayer reasonably identifies and establishes periods of overpayments and underpayments for which zero rate applies, and not later than , requests application of subsec. (d) of this section to such periods, see section 3301(c) of Pub. L. 105–206, set out as a note under section 6601 of this title.
Pub. L. 105–206, title III, § 3302(b), , 112 Stat. 742, provided that: “The amendment made by this section [amending this section] shall apply to interest for the second and succeeding calendar quarters beginning after the date of the enactment of this Act [].”
Effective Date of 1997 Amendment
Pub. L. 105–34, title XIV, § 1463(b), , 111 Stat. 1058, provided that: “The amendment made by subsection (a) [amending this section] shall apply for purposes of determining interest for periods after .”
Amendment by section 1604(b)(1) of Pub. L. 105–34 effective as if included in the sections of the Uruguay Round Agreements Act, Pub. L. 103–465, to which it relates, see section 1604(b)(4) of Pub. L. 105–34, set out as a note under section 412 of this title.
Effective Date of 1996 Amendment
Amendment by Pub. L. 104–188 effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) of Pub. L. 104–188, set out as a note under section 38 of this title.
Effective Date of 1994 Amendment
Pub. L. 103–465, title VII, § 713(b), , 108 Stat. 5002, provided that: “The amendment made by this section [amending this section] shall apply for purposes of determining interest for periods after .”
Effective Date of 1990 Amendment
Pub. L. 101–508, title XI, § 11341(b), , 104 Stat. 1388–471, provided that: “The amendment made by subsection (a) [amending this section] shall apply for purposes of determining interest for periods after .”
Effective Date of 1989 Amendment
Amendment by Pub. L. 101–239 applicable to returns the due date for which (determined without regard to extensions) is after , see section 7721(d) of Pub. L. 101–239, set out as a note under section 461 of this title.
Effective Date of 1988 Amendment
Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Effective Date of 1986 Amendment
Amendment by section 1511(a), (c)(1) of Pub. L. 99–514 applicable for purposes of determining interest for periods after , see section 1511(d) of Pub. L. 99–514, set out as a note under section 47 of this title.
Pub. L. 99–514, title XV, § 1535(b), , 100 Stat. 2750, provided that: “The amendment made by subsection (a) [amending this section] shall apply to interest accruing after ; except that such amendment shall not apply in the case of any underpayment with respect to which there was a final court decision before the date of the enactment of this Act [].”
Effective Date of 1984 Amendment
Pub. L. 98–369, div. A, title I, § 144(c), , 98 Stat. 684, provided that: “The amendments made by this section [amending this section and section 6214 of this title] shall apply with respect to interest accruing after .”
Effective Date of 1982 Amendment
Pub. L. 97–248, title III, § 345(b), , 96 Stat. 636, as amended by Pub. L. 98–369, div. A, title VII, § 714(m), , 98 Stat. 963, provided that: “The amendment made by this section [amending this section] shall apply to adjustments taking effect on or after .”
Effective Date of 1981 Amendment
Pub. L. 97–34, title VII, § 711(d), , 95 Stat. 340, provided that:
“(1) For subsections (a) and (b).—
The amendments made by subsections (a) and (b) [amending this section] shall apply to adjustments made after the date of the enactment of this Act [].
“(2) For subsection (c).—
The amendment made by subsection (c) [amending this section] shall apply to adjustments made for periods after 1982.”
Effective Date of 1979 Amendment
Pub. L. 96–167, § 4(c)(2), , 93 Stat. 1276, provided that: “The amendment made by subsection (b) [amending this section] shall take effect on the date of the enactment of this Act [].”
Effective Date
Pub. L. 93–625, § 7(e), , 88 Stat. 2116, provided that: “The amendments made by this section [enacting this section and amending sections 514, 6163, 6166, 6167, 6332, 6504, 6601, 6602, 6611, 6654, 6655, and 7426 of this title and section 2411 of Title 28, Judiciary and Judicial Procedure] shall take effect on , and apply to amounts outstanding on such date or arising thereafter.”
Regulations
Pub. L. 99–514, title XV, § 1511(b), , 100 Stat. 2744, provided that: “The Secretary of the Treasury or his delegate may issue regulations to coordinate section 6621 of the Internal Revenue Code of 1954 [now 1986] (as amended by this section) with section 6601(f) of such Code. Such regulations shall not apply to any period after the date 3 years after the date of the enactment of this Act [].”
Credits
1975–2019 · 15 acts
- 1975Added Pub. L. 93–625, § 7(a)(1), , 88 Stat. 2114
- 1976amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), , 90 Stat. 1834
- 1979Pub. L. 96–167, § 4(b), , 93 Stat. 1275
- 1981Pub. L. 97–34, title VII, § 711(a)–(c), , 95 Stat. 340
- 1982Pub. L. 97–248, title III, § 345(a), , 96 Stat. 636
- 1984Pub. L. 98–369, div. A, title I, § 144(a), , 98 Stat. 682
- 1986Pub. L. 99–514, title XV, §§ 1511(a), (c)(1), 1535(a), , 100 Stat. 2744, 2750
- 1988Pub. L. 100–647, title I, § 1015(d), , 102 Stat. 3569
- 1989Pub. L. 101–239, title VII, § 7721(b), , 103 Stat. 2399
- 1990Pub. L. 101–508, title XI, § 11341(a), , 104 Stat. 1388–470
- 1994Pub. L. 103–465, title VII, § 713(a), , 108 Stat. 5001
- 1996Pub. L. 104–188, title I, § 1702(c)(6), (7), , 110 Stat. 1870
- 1997Pub. L. 105–34, title XIV, § 1463(a), title XVI, § 1604(b)(1), , 111 Stat. 1057, 1097
- 1998Pub. L. 105–206, title III, §§ 3301(a), 3302(a), , 112 Stat. 741
- 2019Pub. L. 116–25, title I, § 1001(b)(1)(E), , 133 Stat. 985.
Show as published
(Added Pub. L. 93–625, § 7(a)(1), , 88 Stat. 2114; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), , 90 Stat. 1834; Pub. L. 96–167, § 4(b), , 93 Stat. 1275; Pub. L. 97–34, title VII, § 711(a)–(c), , 95 Stat. 340; Pub. L. 97–248, title III, § 345(a), , 96 Stat. 636; Pub. L. 98–369, div. A, title I, § 144(a), , 98 Stat. 682; Pub. L. 99–514, title XV, §§ 1511(a), (c)(1), 1535(a), , 100 Stat. 2744, 2750; Pub. L. 100–647, title I, § 1015(d), , 102 Stat. 3569; Pub. L. 101–239, title VII, § 7721(b), , 103 Stat. 2399; Pub. L. 101–508, title XI, § 11341(a), , 104 Stat. 1388–470; Pub. L. 103–465, title VII, § 713(a), , 108 Stat. 5001; Pub. L. 104–188, title I, § 1702(c)(6), (7), , 110 Stat. 1870; Pub. L. 105–34, title XIV, § 1463(a), title XVI, § 1604(b)(1), , 111 Stat. 1057, 1097; Pub. L. 105–206, title III, §§ 3301(a), 3302(a), , 112 Stat. 741; Pub. L. 116–25, title I, § 1001(b)(1)(E), , 133 Stat. 985.)