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Show Pay Tax Early and Save "Pay now and you will save!" This bit of advice was given by Internal Revenue Service Director for Utah, Carol M. Fay. The Salt Lake District Director was referring to people who are delinquent in their taxes and who are currently paying 12 percent interest plus penalties. Mrs. Fay pointed out that the new interest rate of 20 percent on unpaid taxes will go into effect Feb. 1. "Some taxpayers were in a sense using the government to float a loan for themselves at 12 percent interest by deferring payment of taxes owed," Director Fay stat-'ed. She said that these individuals or businesses were actually paying . more than 12 percent because there were late filing and-or failure' to pay penalties also assessed. Still the amount was less than the prime lending rate. Congress amended the Internal Revenue Code through the Economic Recovery Tax Act of 1981 so that it would not pay for individuals or businesses to use the government to "float a loan." "The new law provides that the interest rate is set by Oct. 15 of each year for the following Jan. 1, and it is based on 100 percent of the prime interest rate for Sep tember," Mrs. noted. She explained that this will change every year now instead of every other year as in the past. The rate had been at 90 percent of "prime"; now it is based on 100 percent of the September prime rate. "The rate on the underpayment of individual and corporate estimated taxes and most other tax provisions Imposing interest will also be set at 20 percent," the Salt Lake City District Director said. |