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    • Section 6166(b)10)
    • Section 6324A
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    • Section 6402
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    • Section 6621
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    • Regulations
    • Estate Tax Part 20 Regulations (xml)
    • Estate Tax Part 20. Regulations in e-CFR
    • Estate Tax Part 22 Temporary Regulations (e-CFR)
    • Estate Tax Part 25 Gift Tax Regulations (e-CFR)
    • Estate Tax Part 26 GST Regulations (e-CFR)
    • Procedural Part 301. Regulations in e-CFR
    • Reg 20.6018-1
    • Reg 20.6018-2
    • Reg 20.6018-3
    • Reg 20.6018-4
    • Reg 20.6075-1
    • Reg 20.6081-1
    • Reg 20.6151-1
    • Reg 20.6161-1
    • Reg 20.6161-2
    • Reg 20.6163-1
    • Reg 20.6165-1
    • Reg 20.6166-1
    • Reg 20.6166A-1
    • Reg 20.6166A-2
    • Reg 20.6166A-3
    • Reg 20.6166A-4
    • Reg 20.6324A-1
    • Reg 20.6324B-1
    • Reg 20.6601-1
    • Reg 301.6501(a)-1
    • Reg 301.6501(b)-1
    • Reg 301.6501(c)-1
    • Reg 301.6501(d)-1
    • Reg 301.6511(a)-1
    • Reg 301.6511(b)-1
    • Reg 301.6511(c)-1
    • Reg. 301.6601-1
    • Reg 301.9100-1
    • Reg 301.9100-2
    • Reg 301.9100-3
  • Bifurcated 6166 Elections
    • Bifurcated 6166 Elections
    • Section 6166 Bifurcation Concepts
    • Section 6166 Bifurcation Computations
  • 6166 Computation Packages
    • 6166 Computation Packages
    • Original 706 Computations
    • IRS Examination Computations
    • Supplemental Return Computations
    • Tax Litigation Computations
    • Complete Tax Computation Packages
  • Non-6166 Computations
    • Non-6166 Computations
    • Interrelated Marital and Charitable Deductions
    • Interrelated Section 6161 Computations
    • Interrelated Section 6163 Computations
  • About
    • About
    • About Us
    • About Section 6166
    • About the Computations

Section 6166 - Extension of Time for Payment of Estate Tax - General Concepts - Estate Tax Installment Payments - Covid-19 Changes

Background

  • Section 6166 - Statute
  • Section 6166 - Regulations
  • Background of Section 6166
  • Which Taxes Can Be Deferred
  • Who is Eligible
  • Active Trade or Business Requirement
  • The 4 Types of Section 6166 Deferrals - With a Note About LLCs
  • Publicly Traded Stock Qualifies for the Section 6166 Election

Computations

  • About the Computations
  • TABLE: Calculating the 2% Portion of Deferred Tax 1998 - 2021
  • The Annual Installment
  • Section 2013 Credit for Tax on Prior Transfers
  • Notice 2020-23 Covid-19 Automatic Extension of Time to Pay a Section 6166 Installment - Computation Example 1
  • Notice 2020-23 Covid-19 Automatic Extension - Late 6166 Installment Payment With 6166(g)(3) and 6651(a)(2) Penalties - Computation Example 2
  • Notice 2020-23 Covid-19 Automatic Extensions of Time to Pay 6166 and 6161 Installments - Computation Example 3
  • Notice 2020-23 Covid-19 Automatic Extensions of Time to Pay Recalculated Sections 6166 and 6161 Installments After a Supplemental 706 - Computation Example 4

IRS Procedures

  • Return Due Date For Interest Computation Purposes
  • Filing The Original Estate Tax Return
  • Supplemental Estate Tax Returns
  • Very Limited 9100 Relief for Late-Filed 6166 Elections
  • Cincinnati Letters and Forms
  • Form 4349
  • General Pipeline Processing
  • IRS Examinations, Appeals, and Tax Court Cases
  • Section 7481(d) and Tax Court cases

Recent Cases

  • North Carolina Department of Revenue v. Kimberely Rice Kaestner 1992 Family Trust (Supreme Court 2019)
  • Baldwin v. US (2019 - 9th Circuit)
  • Romano-Murphy v. Commissioner (Tax Court 2019)
    • Romano-Murphy v. Commissioner (11th Circuit 2016 - remanded)
  • United States v. Mary Carol S. Johnson, et al - Analysis (D. Utah, Central Div.)
    • US v. Mary Carol S. Johnson et al (2019 - 10th Circuit)
    • US v. Mary Carol S. Johnson et al (2018)
    • US v. Mary Carol S. Johnson et al (2016)
    • US v. Mary Carol S. Johnson et al (2013)
    • US v. Mary Carol S. Johnson, et al (2012)
  • Robert H. Tilden v. Commissioner (7th Circuit 2017)
    • Robert H. Tilden v. Commissioner (Tax Court 2015)
  • United States v. F. Gordon Spoor et al (11th Circuit 2016)
    • F. Gordon Spoor v. Commissioner (Tax Court Memo June 2011)
    • F. Gordon Spoor v. Commissioner (Tax Court Memo October 2011)
  • Commissioner v. Estate of Travis L. Sanders (11th Circuit 2016)
    • Estate of Travis L. Sanders v. Commissioner (Tax Court 2015)
  • US v. Godley (2015)
  • Davidson v. Commissioner (2015)
  • McNeely v. United States and Adell v. Commissioner (2014)
  • Woodbury v. Commissioner (2014)
  • Langan v. US (2013)
  • Winford v. US (2012)
  • US v. Kulhanek (2010)

Recent Cases - Computation Examples

  • US v. Godley - Computation Exhibit 1 (2015)
  • Adell v. Commissioner (2014)
    • Estate Computation of Deferred Tax vs. the IRS Computation
    • Adell 1999 Form 709
    • Adell 2006 Form 709
    • Adell Form 706, Pages 1-3
  • McNeely v. United States (2014)
  • Woodbury v. Commissioner (2014)

Section 6166(a) - 5-Year Deferral; 10-Year Installment Payment (The Regular 14-Year Election)

  • Section 6166(a) Overview
    • Section 6166(a)(1) – In general
    • Section 6166(a)(2) – Limitation
    • Section 6166(a)(3) - Date for payment of installments
  • Section 6166(a) Computation Examples
    • Section 6166(a) Underpayment of Non-Deferred Tax
    • Section 6166(a) Overpayment of Non-Deferred Tax - Maximum Deferral Election
    • Section 6166(a) Overpayment of Non-Deferred Tax - Minimum Deferral Election

Section 6166(b)(1) – Interest in a Closely Held Business

  • Section 6166(b)(1) – Interest in Closely Held Business
    • Section 6166(b)(1)(A) – Interest as a proprietor in a trade or business
    • Section 6166(b)(1)(B) – Interest as a partner in a partnership
    • Section 6166(b)(1)(C) – Stock in a corporation carrying on a trade or business
  • Section 6166(b)(1) Computation Examples
    • Section 6166(b)(1)(C) Computation Examples (list of Examples with narrative descriptions)

Section 6166(b)(2) - Rules for Applying Paragraph (1)

  • Section 6166(b)(2) – Rules for Applying Paragraph (1)
    • Section 6166(b)(2)(A) – Time for testing
    • Section 6166(b)(2)(B) – Certain interests held by husband and wife
    • Section 6166(b)(2)(C) – Indirect ownership
    • Section 6166(b)(2)(D) – Certain interests held by members of decedent’s family
  • Section 6166(b)(2) Computation Examples
    • Section 6166(b)(2)(B) Computation Examples (list of Examples with narrative descriptions)
    • Section 6166(b)(2)(C) Computation Examples (list of Examples with narrative descriptions)

Section 6166(b)(3) – Farmhouses and Certain Other Structures

  • Section 6166(b)(3) Overview

Section 6166(b)(4) – Value

  • Section 6166(b)(4) Overview

Section 6166(b)(5) – Closely Held Business Amount

  • Section 6166(b)(5) Overview

Section 6166(b)(6) - Adjusted Gross Estate

  • Section 6166(b)(6) Overview - The Adjusted Gross Estate
  • Section 6166(b)(6) Computation Examples (list of Examples with narrative descriptions)
    • Section 6166(b)(6) Adjusted Gross Estate Computation Example 1
    • Section 6166(b)(6) Adjusted Gross Estate Computation Example 2
    • Section 6166(b)(6) Adjusted Gross Estate Computation Example 3

Section 6166(b)(7) - Partnership Interests and Stock Which is Not Readily Tradable (The Family Attribution Election)

  • Section 6166(b)(7) Overview
  • Section 6166(b)(7) Computation Examples
    • Section 6166(b)(7) Underpayment of Non-Deferred Tax
    • Section 6166(b)(7) Overpayment of Non-Deferred Tax - Maximum Deferral Election
    • Section 6166(b)(7) Overpayment of Non-Deferred Tax - Minimum Deferral Election

Section 6166(b)(8) - Stock in Holding Company Treated as Business Company Stock in Certain Cases (The Holding Company Election)

  • Section 6166(b)(8) Overview
  • Section 6166(b)(8) Computation Examples
    • Section 6166(b)(8) Underpayment of Non-Deferred Tax
    • Section 6166(b)(8) Overpayment of Non-Deferred Tax - Maximum Deferral Election
    • Section 6166(b)(8) Overpayment of Non-Deferred Tax - Minimum Deferral Election

Section 6166(b)(9) – Deferral Not Available for Passive Assets

  • Section 6166(b)(9) Overview
  • Section 6166(b)(9) Passive Asset Rules Do Not Apply After Date of Death for Purposes of the 35% Test

Section 6166(b)(10) - Stock in Qualifying Lending and Finance Business Treated as Stock in An Active Trade or Business Company

  • Section 6166(b)(10) Overview
  • Section 6166(b)(10) Computation Examples
    • Section 6166(b)(10) Underpayment of Non-Deferred Tax
    • Section 6166(b)(10) Overpayment of Non-Deferred Tax - Maximum Deferral Election
    • Section 6166(b)(10) Overpayment of Non-Deferred Tax - Minimum Deferral Election

Section 6166(c) - Interest in 2 or More Closely Held Businesses

  • Section 6166(c) Overview
  • Section 6166(c) Computation Examples (list of Examples with narrative descriptions)
    • Section 6166(c) Example 1
    • Section 6166(c) Example 2
    • Section 6166(c) Example 3
    • Section 6166(c) Example 4
    • Section 6166(c) Example 5 - link to Section 6166(b)(2)(B), Example 2

Section 6166(d) – Election

  • Section 6166(d) Overview

Section 6166(e) – Proration of Deficiency to Installments

  • Section 6166(e) Overview

Section 6166(f) – Time for Payment of Interest

  • Section 6166(f) Overview
    • Section 6166(f) Example 1

Section 6166(g) - Section 6166 Penalties and Acceleration

  • Section 6166(g) Overview
  • Section 6166(g)(1)
    • Section 6166(g)(1)(A)
      • Exercise of Option to Purchase is a Sale
      • Sale of Business
    • Section 6166(g)(1)(B)
    • Section 6166(g)(1)(C)
    • Section 6166(g)(1)(D)
    • Sections 6166(g)(1)(E) and 6166(g)(1)(F)
  • Section 6166(g)(2)

Section 6166(h) - Election on a Deficiency

  • Section 6166(h) Overview
    • PLR 8846001 - Determination of the amount of a deficiency payable in installments
    • PLR 8846001 Computation Illustration 1 - Interest is not interrelated with the estate tax
    • PLR 8846001 Computation Illustration 2 - Interest is interrelated with the estate tax
    • PLR 8846001 Computation Illustration 3 - The Estate's calculation of deferred tax and the annual installments payable
    • PLR 8846001 Computation Illustration 4 - The IRS calculation of the deferred portion of the deficiency and annual installment
  • Section 6166(h) Computation Examples
    • Section 6166(h) Example 1 - Deficiency generated entirely by a 6166 value increase where zero tax was originally assessed
    • Section 6166(h) Example 2 - Part of a deficiency is attributable to an increase in non-6166 asset values
    • Section 6166(h) Example 3 - Multiple changes including a Schedule K decrease and a Long Form apportionment of deficiency
    • Section 6166(h) Example 4 - CCA 201302037 illustration where no part of a deficiency is eligible for a section 6166(h) election

Section 6166(i) – Special Rule for Certain Direct Skips

  • Section 6166(i) Overview

Section 6166(j) – Regulations

  • Section 6166(j) Overview

Section 6166(k)(1) – Security - Section 6165

  • Section 6166(k)(1) Overview

Section 6166(k)(2) – Lien - Section 6324A

  • Section 6166(k)(2) Overview - Section 6324A
  • 6324A Lien Procedures

Section 6166(k)(3) – Period of Limitation - Section 6503(d)

  • Section 6166(k)(3) Overview - Section 6503(d)

Section 6166(k)(4) – Interest - Section 6601(j)

  • Section 6166(k)(4) Overview - Section 6601(j)
  • Section 6601(j) Computation Examples
    • Section 6601(j) Example 1
    • Section 6601(j) Example 2
    • Section 6601(j) Example 3
    • Section 6601(j) Example 4
    • Section 6601(j) Example 5

Section 6166(k)(5) – Transfers Within 3 Years of Death - Section 2035(c)(2)

  • Overview - Section 6166(k)(5) and Section 2035(c)(2)
  • Section 6166(k)(5) Computation Examples
    • Section 6166(k)(5) Example 1 - Minnesota Computation 3

IRS Information

  • IRS Contact Number
  • IRS Internet Resources
  • Document 6209 - IRS Processing Codes and Information
  • Document 11734 - IRS Transaction Codes Pocket Guide
  • Document 12990 - Records Control Schedules
  • IRS Electronic Reading Room
  • IRS Link - Resources for Tax Law Changes
  • IRS Tax Statistics Home Page
    • Estate Tax Statistics - Index
    • Estate Tax Returns Filed for Wealthy Decedents 2006 - 2015 - Chart
    • Estate Tax Returns Filed From 1995 to 2017 - Data

IRS Resources

Forms and Instructions

  • IRS Forms, Instructions, and Publications Search Page
  • Where to File Forms Beginning With the Number 7
  • IRS Draft Forms and Instructions - 2012 to date
  • Form 56
  • Form 56 Instructions
  • Form 706
  • Form 706 Instructions
  • Form 706-A
  • Form 706-A Instructions
  • Form 706-CE
  • Form 706-D
  • Form 706-D Instructions
  • Form 706-GS(D)
  • Form 706-GS(D) Instructions
  • Form 706-GS(D-1)
  • Form 706-GS(D-1) Instructions
  • Form 706-GS(T)
  • Form 706-GS(T) Instructions
  • Form 706-NA
  • Form 706-NA Instructions
  • Form 706-QDT
  • Form 706-QDT Instructions
  • Form 709
  • Form 709 Instructions
  • Form 712
  • Form 843
  • Form 843 Instructions
  • Form 1041
  • Form 1041 Instructions
  • Form 2848
  • Form 2848 Instructions
  • Form 3520
  • Form 3520 Instructions
  • Form 3520-A
  • Form 3520-A Instructions
  • Form 4349 (Rev 12-2016)
  • Form 4349 Description
  • Form 4421
  • Form 4422
  • Form 4506
  • Form 4506-T
  • Form 4768
  • Form 4768 Instructions
  • Form 4810
  • Form 5495
  • Form 7004
  • Form 7004 Instructions
  • Form 8821
  • Form 8821 Instructions
  • Form 8855
  • Form 8960
  • Form 8960 Instructions
  • Form 8971
  • Form 8971 Instructions
  • Form 13925

IRMs

  • IRM Table of Contents - Part 1 - Part 39
  • IRM Part 4 - Examining Process Index, IRM 4.1 - 4.119 (Includes Estate Tax IRMs 4.25.1 - 4.25.14)
  • IRM 4.25.1 - Estate and Gift Tax Examinations
  • IRM 4.25.2 - Campus Procedures for Estate Tax
  • IRM 4.25.3 - Estate and Gift Tax Planning, Classification, and Selection
  • IRM 4.25.4 - International Estate and Gift Tax Examinations
  • IRM 4.25.5 - Technical Guidelines for Estate and Gift Tax Issues
  • IRM 4.25.6 - Report Writing Guide for Estate and Gift Tax Examinations
  • IRM 4.25.7 - Estate and Gift Tax Penalty and Fraud Procedures
  • IRM 4.25.8 - Estate and Gift Tax Delinquent Returns and SFR Procedures
  • IRM 4.25.9 - Requests for Abatement, Claims for Refund, and Doubt as to Liability in Estate and Gift Tax Cases
  • IRM 4.25.10 - Estate and Gift Tax Case Closing Procedures
  • IRM 4.25.11 - Estate and Gift Tax Special Examination Procedures
  • IRM 4.25.12 - Estate and Gift Tax Valuation Assistance
  • IRM 4.25.13 - Estate and Gift Tax Appeals, Mediation, and Settlement Procedures
  • IRM 4.25.14 - Estate and Gift Tax Miscellaneous Procedures
  • IRM 5.5.6 - Collection on Accounts with Special Estate Tax Elections
  • IRM 8.7.4 - Appeals Estate and Gift Tax Cases
  • IRM 25.6.1 - Statute of Limitations Processes and Procedures

Miscellaneous

  • Reg. 601.504(b) - Power of Attorney
  • Tax Policy Center Estimate of Estate Tax Returns and Liability Under Current Law 2011-2022
  • GAO Report on Appraisals - June 2012

IRS Rulings

CCAs

  • IRS Searchable list of CCAs, TAMs, and PLRs (1999 to date)
  • CCA 201650017
  • CCA 201645013
  • CCA 201643020
  • CCA 201631011
  • CCA 201622032
  • CCA 201621014
  • CCA 201614036
  • CCA 201536020
  • CCA 201509033
  • CCA 201304006
  • CCA 201302037
  • CCA 201226027
  • CCA 201144027

PLRs

  • IRS Searchable list of CCAs, TAMs, and PLRs (1999 to date)
  • PLR 201702004
  • PLR 201403012
  • PLR 201343004
  • PLR 201015003
  • PLR 200939003
  • PLR 200842012
  • PLR 200613020
  • PLR 200529006
  • PLR 200339043
  • PLR 200321006
  • PLR 200043031
  • PLR 200006034
  • PLR 199929025
  • PLR 8527003
  • PLR 8813047
  • PLR 8846001
    • PLR 8846001 Computation Illustration 1
    • PLR 8846001 Computation Illustration 2
    • PLR 8846001 Computation Illustration 3
    • PLR 8846001 Computation Illustration 4
  • PLR 6612073550A

Revenue Procedures

  • Rev. Proc. 2016-49
  • Rev. Proc. 2016-42
  • Rev. Proc. 2015-53
  • Rev. Proc. 2014-61
  • Rev. Proc. 2013-35
  • Rev. Proc. 2012-41
  • Rev. Proc. 2011-52
  • Rev. Proc. 95-17 and Rev. Proc. 83-7

Revenue Rulings

  • Rev. Rul. 67-110
  • Rev. Rul. 67-161
  • Rev Rul 74-499
  • Rev Rul 76-51
    • Rev Rul 76-51, amplifying Rev Rul 74-499, Illustrated
  • Rev. Rul. 81-294
    • Rev. Rul. 81-294 Illustrated

FAAs, LMs, GCMs, Notices, Information Letters

  • IRS Searchable list of Information Letters (2000 to date)
  • Notice 2017-12
  • Info. Ltr. 2016-0038
  • Notice 2016-19
  • Notice 2015-38
  • Notice 2007-90
  • FAA 20152201F
  • LM 201429023
  • FAA 20124602F

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Website Updates

Website Updates

Dec-04-2020 - IRS interest rates remain the same for the first quarter of 2021. See Revenue Ruling 2020-28. 

Nov-11-2020 -  The page, Form 4349 - Computation of Estate Tax Due With Return and Annual Installment, has been revised to incorporate the December 2016 revision and current Appeals IRM references. Some explanatory comment has been added to our page text. The only difference between the 2016 revision and the earlier revision was to remove references to repealed section 6166A. The mathematics otherwise remain as before, since IRS practice had been to substitute sections 6166(b)(7), 6166(b)(8), or 6166(b)(10) amounts due on line 8a. (A link to a blank Form 4349 is added to the list of Forms and Instructions under IRS Resources.)

Nov-04-2020 -  Our page Selected Public Laws Affecting Estate Tax is updated with links to PL 93-625, the 1975 Act amending tariff schedules, and PL 85-866, the Technical Amendments Act of 1958, section 206 of which (at page 1681) added Section 6166 to the Internal Revenue Code of 1954.

Oct-27-2020 -  A link to Rev. Proc. 2020-45 is placed under our table, Calculating the 2% Portion of Deferred Tax. Items .41 and .51 of the Revenue Procedure confirm the projected 2021 figures posted in our table.

Sep-15-2020 -  Our table, Calculating the 2% Portion of Deferred Tax, is updated with the projected figures for 2021. The portion of tax deferred at 2% will be $636,000.

Read more

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Legal and Procedural Updates

Legal and Procedural Updates

Dec-31-2020 - IRS has published proposed regulations establishing a new user fee for requesting issuance of an Estate Tax Closing Letter (IRS Letter 627). The proposed user fee is $67. Written or electronic comments must be received by March 1, 2021.

Dec-28-2020 -  The IRS announced in a Memorandum that it will temporarily accept digital signatures on certain forms that cannot be electronically filed, including Forms 706, 706-NA, and 709. All of the forms listed can be digitally signed if postmarked from January 1, 2021 through June 30, 2021.

Oct-27-2020 - Rev. Proc. 2020-45 provides the 2021 inflation-adjusted amounts for various Internal Revenue Code provisions. The section 6601(j) dollar amount for determining the  "2-percent portion" of tax deferred under a section 6166 election is $1,590,000 (item .51) and the 2021 basic exclusion amount is $11,700,000 (item .41). 

Sep-11-2020 - In IR-2020-206 the IRS announced that it will temporarily accept digital signatures on 6 more forms that cannot be electronically filed, including Forms 706, 706-NA, and 709. All of the forms listed can be digitally signed if mailed by December 31, 2020.

Sep-04-2020 - TIGTA published a report, Sensitive Tax Records Could Not Always Be Located or Timely Provided, describing how paper tax returns and examination files cannot always be found, noting that Forms 706 and 709 cannot be filed electronically. Reference is made to IRS Document 12990, IRS Records Control Schedules (a 583-page PDF file). Item 156 provides that Forms 706 (and associated Forms 709) are retained for 75 years.

Apr-20-2020 -  IRS is requesting comments regarding the section 6324A Special Lien for estate tax extended under a section 6166 election. Written comments should be received on or before June 19, 2020 to be assured of consideration. See federalregister.gov/d/2020-08203.

Apr-10-2020 -  Notice 2020-23 provides Covid-19 filing extensions to July 15, 2020 for Forms 706 and section 6166 installment payments otherwise due on or after April 1, 2020 and before July 15, 2020, and other extension provisions.

Dec-03-2019 - Final regulations captioned Estate and Gift Taxes; Difference in the Basic Exclusion Amount (TD 9884), with a new entry for Reg. section  20.2010-1(c), were published on Nov-26-2019.

Read more

Interest Rates

IRS interest rates remain the same for the first quarter of 2021 beginning January 1. See Revenue Ruling 2020-28. The regular non-corporate underpayment and overpayment interest rates remain 3%. IRS personnel often refer to the regular underpayment or overpayment interest rate as "R% interest" or "stat interest", to encompass the different quarterly regular underpayment or overpayment interest rates that might apply within a specific interest computation period.

Note About the Computations

Many computation examples on this site use projected future regular underpayment interest rates based on those in effect at the time the computations were run. As time passed, however, some of those older computations used projected interest rates that did not match the subsequently determined interest rates, so please bear this in mind.

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