The applicable federal rate (AFR) is the minimum interest rate that the Internal Revenue Service (IRS) allows for private loans. The IRS publishes three AFRs: short-term, mid-term, and long-term. If the interest on a loan is lower than the applicable AFR, it may result in a taxable event for the parties involved. Download a free AFR report by month and year. PPC’s 1040 Deskbook provides detailed, easy-to-understand, and affordable tax return focused guidance, complete with real-life examples and illustrations of filled-in forms, so owners and/or staff can quickly and easily resolve the key issues encountered when preparing individual tax returns. There are rates for "short-term," "mid-term," and "long-term" instruments. Short-term covers demand loans and instruments extending up to three years. Mid-term covers loans cover instruments of over three years up to nine years.