IRS to Hike Interest Rates for Q4

The Internal Revenue Service said late Monday that it would raise its interest rates for the fourth quarter of 2022,  with the rate for individuals’ overpayments and underpayments to be 6% per year, compounded daily, up from 5% for the quarter that began on July 1.

The new rates for overpayment and underpayment, explained in Revenue Ruling 2022-15, are as follows:

• 6% for overpayments (5% for corporations);
• 3.5% for the portion of a corporate overpayment exceeding $10,000;
• 6% for underpayments (taxes owed but not fully paid); and
• 8% for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.

For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points, the IRS said.

“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 IRS states.