IRS Raises Interest Rates for Third Quarter of 2022
Angela Lawrence, Paraprofessional at Klatzkin, contributed to this post.
On May 20, 2022, the IRS announced that interest rates on overpayments and underpayments of tax will increase for the third quarter of 2022, which begins on July 1. The new rates will be:
- 5% for overpayments (4% for corporations)
- 5% for the portion of a corporate overpayment above $10,000
- 5% for underpayments
- 7% for large corporate underpayments
The interest rate is determined on a quarterly basis under the Internal Revenue Code. The overpayment/underpayment rate is the federal short-term rate plus three percentage points for taxpayers other than corporations. For corporations, the rate is generally determined in a slightly different way:
- The underpayment rate is the federal short-term rate plus three percentage points
- The overpayment rate is the federal short-term rate plus two percentage points
- For large corporate underpayments, the rate is the federal short-term rate plus five percentage points
- For corporate overpayments of tax exceeding $10,000, the rate is the federal short-term rate plus 0.5 percentage points
The federal short-term rate of 2%, which these newly-announced rates are computed from, was determined in April 2022 and took effect on May 1, 2022. For more information, see Revenue Ruling 2022-11.
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©2022 Klatzkin & Company LLP. The above represents our best understanding and interpretation of the material covered as of this post’s date and should not be construed as accounting, tax, or financial advice. Please consult your tax advisor concerning your specific situation.