FM - Late Payment & Overpayment
Interest Tables
Years 2005 through Current Year
The Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 (RSFA), requires MMS to pay interest on federal oil and gas royalty overpayments. The RSFA also allows royalty reporters to calculate interest on royalties and to report this interest on the Report of Sales and Royalty Remittance, (Form MMS-2014).
This reporting option applies solely to federal oil and gas leases and to reports for sales months January 1997 and later. Reporters may begin reporting interest on overpayments and underpayments on Form MMS-2014 for the October 1997 report month.
Underpayment interest on solid mineral and geothermal leases is calculated as simple interest using the United States Treasury Current Value of Funds Rate. Underpayment interest on oil and gas leases is calculated as compound interest using the Internal Revenue Service underpayment rate for corporate tax payers. Overpayment interest on oil and gas leases is calculated as compound interest using the Internal Revenue Service overpayment rate for corporate tax payers.
Interest Table for Years 1997 through 1999
Interest Table for Years 2000 through 2004
The following table contains the interest rates used to calculate underpayment and overpayment interest.
Rates Used to Calculate
Interest |
| Late Payments and Underpayments |
Overpayments |
| Period |
Indian
Leases |
Solid Mineral
and Geothermal Leases * |
Federal
Oil and Gas Leases |
Federal
Oil and Gas
Leases |
01-01-2005 thru
03-31-2005 |
5.0% |
1.0% |
5.0% |
4.0% |
04-01-2005 thru
06-30-2005 |
6.0% |
1.0% |
6.0% |
5.0% |
07-01-2005 thru
09-30-2005 |
6.0% |
1.0% |
6.0% |
5.0% |
10-01-2005 thru
12-31-2005 |
7.0% |
1.0% |
7.0% |
6.0% |
01-01-2006 thru
03-31-2006 |
7.0% |
2.0% |
7.0% |
6.0% |
04-01-2006 thru
06-30-2006 |
7.0% |
2.0% |
7.0% |
6.0% |
07-01-2006 thru
09-30-2006 |
8.0% |
2.0% |
8.0% |
7.0% |
10-01-2006 thru
12-31-2006 |
8.0% |
4.0% |
8.0% |
7.0% |
01-01-2007 thru
03-31-2007 |
8.0% |
4.0% |
8.0% |
7.0% |
04-01-2007 thru
06-30-2007 |
8.0% |
4.0% |
8.0% |
7.0% |
07-01-2007 thru
09-30-2007 |
8.0% |
4.0% |
8.0% |
7.0% |
10-01-2007 thru
12-31-2007 |
8.0% |
4.0% |
8.0% |
7.0% |
01-01-2008 thru
03-31-2008 |
7.0% |
5.0% |
7.0% |
6.0% |
04-01-2008 thru
06-30-2008 |
6.0% |
5.0% |
6.0% |
5.0% |
07-01-2008 thru
09-30-2008 |
5.0% |
3.0% |
5.0% |
4.0% |
10-01-2008 thru
12-31-2008 |
6.0% |
3.0% |
6.0% |
5.0% |
01-01-2009 thru
03-31-2009 |
5.0% |
3.0% |
5.0% |
4.0% |
* Solid Minerals interest rates are calculated as simple interest.
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The interest rates may be used with the following formula to calculate interest for any period. The formula calculates the interest factor which is then multiplied by the assessment amount to compute the interest due.
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I = Interest due
A = Assessment amount
R = Annual interest rate
N = Number of days in the year
n = Number of days (compounding periods) late |
For interest owed to MMS, calculate that interest from the due date of the sales month to the date MMS received the payment. For interest MMS owes you, calculate that interest from the due date of the sales month, without regard to an extended due date because of an estimate, to the date MMS receives Form MMS-2014 recouping the overpayment. The overpayment interest rate is currently one percent less than the underpayment interest rate. Both rates are compounded daily.
COMPOUNDED DAILY INTEREST FORMULA EXAMPLE
USING TWO INTEREST PERIODS
Interest Amount = Assessment amount x ((1 + Annual interest rate/Days per year) No. of days late - 1)
Calculate interest on $1,382.62 for 60 days at 9%
$20.60 = $1,382.62 x ((1 +.09/365)60 -1)
| Step 1: |
.09/365 = .0002465753 (rounded to 10 decimal places) |
| Step 2: |
1 + .0002465753 = 1.0002465753 |
| Step 3: |
1.000246575360 = 1.01490265027797 (rounded to 14 decimal places) |
| Step 4: |
1.01490265027797 - 1 = .01490265027797 |
| Step 5: |
$1,382.62 x.01490265027797 = $20.60 |
To calculate interest on $1,382.62 for 60 days at 9% and then 90 days at 11%, follow Steps 1 through 5, then:
| Step 6: |
.11/365 = .0003013699 (rounded to 10 decimal places) |
| Step 7: |
1 + .0003013699 = 1.0003013699 |
| Step 8: |
1.000301369990 = 1.02749027376513 (rounded to 14 decimal places) |
| Step 9: |
1.02749027376513 - 1 = .02749027376513 |
| Step 10: |
$1,382.62 + $20.60 = $1,403.22 |
| Step 11: |
$1,403.22 x .02749027376513 = $38.57 |
Total interest due is $59.17 ($20.60 + $38.57)
Please note that the $20.60 interest calculated at 9% is added to the $1,382.62 assessment amount before multiplying by the 11% factor for the subsequent interest period. The calculated interest for each period must be added to the assessment amount and becomes the new assessment amount for each additional interest period.
If you have interest calculation questions, please call Financial Management Services at: 1-800-433-9801. |
