Late Payment & Overpayment Interest Tables

Years 2015 through Current Year

The Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 (RSFA), requires ONRR 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 ONRR-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 ONRR-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 Federal short-term rate plus 1 percentage point.

Effective December 5, 2015, ONRR is no longer authorized to pay overpayment interest. On this date, H.R. 22, "Fixing America's Surface Transportation Act," was signed into law. Any bills issued after this date do not contain overpayment interest regardless of the sales month/year. The "FAST" act amended the Federal Oil and Gas Royalty Management Act of 1982, eliminating overpayment interest.

The following table contains the interest rates used to calculate underpayment and overpayment interest.

Content

The following formula may be used to calculate interest for any period.

 


interest formula

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 ONRR, calculate interest from the due date of the sales month to the date ONRR received the payment. For interest ONRR owes you, calculate interest from the due date of the sales month, without regard to an extended due date because of an estimate, to the date ONRR received Form ONRR-2014 recouping the overpayment. The overpayment interest rate is currently one percentage point less than the underpayment interest rate. Both rates are compounded daily.

EXAMPLE: COMPUTING INTEREST FOR
TWO INTEREST PERIODS

Principal = $1,382.62
Interest Rates = 60 days at 9% and 90 days at 11%

Step 1: R/N

.09/365 = .000246575342466 (rounded to 15 decimal places)
Step 2: 1 + R/N

1 + .0002465753 = 1.000246575342466
Step 3: (1 + R/N)n

(1.000246575342466)60 = 1.014902650305980 (rounded to 15 decimal places)
Step 4: (1 + R/N)n - 1

1.014902650305980 - 1 = .014902650305980
Step 5: A((1 + R/N)n – 1)

$1,382.62 x .014902650305980 = $20.60
Step 6: R/N

.11/365 = .000301369863014 (rounded to 15 decimal places)
Step 7: 1 + R/N

1 + .000301369863014 = 1.000301369863014
Step 8: (1 + R/N)n

(1.000301369863014)90 = 1.02749027376513 (rounded to 15 decimal places)
Step 9: (1 + R/N)n - 1

1.02749027376513 - 1 = .027490273764810
Step 10: Principal + interest from 1st period

$1,382.62 + $20.60 = $1,403.22
Step 11: A((1 + R/N)n – 1)

$1,403.22 x .02749027376513 = $38.57
Step 12: Total interest due: $20.60 + $38.57 = $59.17

Please note that the calculated interest for each period is added to the assessment amount and becomes the new assessment amount for each additional interest period. In this example the $20.60 interest calculated for the first 60 days at a 9% interest rate is added to the $1,382.62 assessment base and the result, $1,403.22, becomes the new assessment base for the 11% interest rate for the next 90 days.


Interest Calculator
Interest Table for Years 1997 through 1999
Interest Table for Years 2000 through 2004
Interest Table for Years 2005 through 2009
Interest Table for Years 2010 through 2014

Rates Used to Calculate Interest
Late Payments and Underpayments Overpayments
  Period Indian
Oil & Gas
Leases
Federal and Indian
Solid Mineral
and Geothermal Leases *
 Federal
Oil and Gas Leases
 Federal
Oil and Gas
Leases
1/1/2015 - 3/31/2015 3.0% 1.0% 3.0% 1.0%
4/1/2015 - 6/30/2015 3.0% 1.0% 3.0% 1.0%
7/1/2015 - 9/30/2015 3.0% 1.0% 3.0% 1.0%
10/1/2015 - 12/4/2015 3.0% 1.0% 3.0% 1.0%
12/5/2015 - 12/31/2015** 3.0% 1.0% 3.0% 0.0%
1/1/2016 - 3/31/2016 3.0% 1.0% 3.0% 0.0%
4/1/2016 - 6/30/2016 4.0% 1.0% 4.0% 0.0%
7/1/2016 - 9/30/2016 4.0% 1.0% 4.0% 0.0%
10/1/2016 - 12/31/2016 4.0% 1.0% 4.0% 0.0%

* Solid Mineral interest rates are calculated as simple interest based on the US Treasury Current Value of Funds Rate shown in this column.

**Effective December 5, 2015, ONRR is no longer authorized to pay overpayment interest. On this date, H.R. 22, "Fixing America's Surface Transportation Act," was signed into law. Any bills issued after this date do not contain overpayment interest regardless of the sales month/year. The "FAST" act amended the Federal Oil and Gas Royalty Management Act of 1982, eliminating overpayment interest.

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Last Updated: November 7, 2016