Effective October 1, 2022, the Internal Revenue Service (IRS) will increase interest rates for the calendar quarter. For individuals, the rate for overpayments and underpayments will be 6% per year, compounded daily, up from 5% for the quarter that began on July 1. For corporations, rates vary.
Here are the new rates.
- 6% for overpayments for individuals (payments made in excess of the amount owed)
- 5% for corporations (payments made in excess of the amount owed)
- 3.5% for the portion of a corporate overpayment exceeding $10,000
- 6% for underpayments (taxes owed but not fully paid)
- 8% for large corporate underpayments
Generally, for a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points, and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point. The interest rates announced today are computed from the federal short-term rate determined during July 2022.
For guidance on how this may affect your situation, reach out to one of our tax advisors at CironeFriedberg. You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford) or email us at email@example.com.