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20.2.2.1
(11-18-2008)
Authorization
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In accordance with Internal Revenue Code section 6601(a), 6601(b) and 6611, the payment of interest is required unless specifically
prohibited by law or mutual agreement.
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IRC section 6601(a) states that if any amount of tax is not paid on or before the last date prescribed for payment, interest
on such amount at the underpayment rate established under IRC section 6621 shall be paid for the period from such last date
to the date paid.
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IRC section 6601(b) states that an extension of time to file or an installment agreement under IRC section 6159 does not
extend the time to pay.
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IRC section 6611(a) states that interest shall be allowed and paid upon any overpayment of any tax at the overpayment rate
established under IRC section 6621.
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IRC section 6621 establishes an adjustable interest rate on overpayments or underpayments of tax, tied to the Federal short-term
interest rate.
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While the above paragraphs deal mostly with "normal interest"
computations, information on "restricted interest"
and other complex interest computations can be found in later sections of IRM 20.2, Interest. The types of interest are
defined in IRM 20.2.1.6, Terminology.
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