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.
