Judging from the likes of food, gasoline and other staples, it should come as no surprise that the Internal Revenue Service is revising its interest rates, starting in the second quarter of this year.
The Internal Revenue Code dictates that interest rates are to be determined quarterly, and beginning next quarter, those rates are going up. The IRS says the new rates will be:
- 4% for overpayments (3% in the case of a corporation);
- 5% for the portion of a corporate overpayment exceeding $10,000;
- 4% for underpayments; and
- 6% for large corporate underpayments.
Normally, for those taxpayers who aren’t corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.
For those taxpayers who are corporations, the standard underpayment rate has generally been the federal short-term rate plus 3 percentage points, while the overpayment rate was the federal short-term rate plus 2 points.
Big corporations, though, have had to shell out the federal short-term rate plus 5 percentage points for underpayment of tax. The rate for overpayment has been the federal short-term rate plus half a percentage point (0.5), levied on the part of a corporate overpayment that exceeds $10,000 for a taxable period.
The IRS says all the new rates were calculated from the federal short-term rate that took effect on February 1, based on daily compounding.
For more information on the new rates, look for the official announcement, Revenue Ruling 2022-05, that will be dated March 7, 2022 in the Internal Revenue Bulletin 2022-10.
Source: IR-2022-42
Trussell Tax