IRS Interest Rates Increase for the Third Quarter of 2022
The IRS recently issued Revenue Ruling 2022-11, announcing that interest rates will increase for the calendar quarter beginning July 1, 2022.
The rates will be:
- 5% for overpayments (4% in the case of a corporation)
- 2.5% for the portion of a corporate overpayment exceeding $10,000
- 5% for underpayments
- 7% 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 three percentage points.
Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points, and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five 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 of a percentage point.
The recently announced interest rates are computed from the federal short-term rate determined during April 2022 to take effect May 1, 2022, based on daily compounding.