The Internal Revenue Service announced that interest rates will increase for the calendar quarter beginning July 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.
The interest rate is determined on a quarterly basis per the Internal Revenue Code. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points.
Per the IR-2022-107: “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 (0.5) of a percentage point.”
The interest rates are computed based on daily compounding from the federal short-term rate determined during April 2022 to take effect May 1, 2022.
