Example. Individual A files a tax return for calendar year 1981 on April 15, 1982, showing a tax due of $10,000. A pays $10,000 on December 31, 1982, but A does not pay any interest with respect to this underpayment until March 1, 1983, on which date A paid all amounts of interest with respect to the $10,000 underpayment of tax. On December 31, 1982, A's unsatisfied interest liability was $1,424.66 ($10,000 * 20 percent * 260/365 days). Interest, compounded daily, accrues on this unsatisfied interest obligation beginning on January 1, 1983, until March 1, 1983, the date the total interest obligation is satisfied. On March 1, 1983, the total interest obligation is $1,462.62, computed as follows:
Item | Amount |
Unpaid tax at December 31, 1982 | 0 |
Unpaid interest at December 31, 1982 | $1,424.66 |
Total unsatisfied obligation at December 31, 1982 | 1,424.66 |
Interest from December 31, 1982, to March 1, 1983, at 16 percent per year compounded daily | 37.96 |
Total due, March 1, 1983 | 1,462.62 |
26 C.F.R. §301.6622-1