Tax Guru-Ker$tetter Letter

Tuesday, August 31, 2004

IRS Interest Rate Increases On October 1 - It will rise from its current four percent (4%) to five percent (5%) for at least the last three months of this year. I've updated the Quick Reference page on my main website to reflect this.

In about three months from now, we'll find out what the rate will be for the first quarter of 2005.

These figures are the nominal interest rates charged by IRS. The actual interest charged is compounded daily, so the effective rate (APR) is slightly higher. It is not, as many people believe, charged at four or five percent per day. That's reserved for loan sharks.

To show how numbers can be used to slant a story, this could accurately be reported as either a one percent increase in the rate IRS charges, or it could be stated as a 25% jump in the IRS interest rate (from four to five percent) if I want to be an alarmist.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 8/31/2004 10:26:00 AM Send this post: