Interest Rates Increase for the Second Quarter of 2022
The IRS recently announced that interest rates will increase for the calendar quarter beginning April 1, 2022. The rates will be:
- 4 percent for overpayments (3 percent in the case of a corporation);
- 1.5 percent for the portion of a corporate overpayment exceeding $10,000;
- 4 percent for underpayments; and
- 6 percent 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 rates are the federal short-term rate plus 3 percentage points.
Generally, in the case of 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 rate for large corporate underpayments is the federal short-term rate plus 5 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 January 2022 to take effect Feb. 1, 2022, based on daily compounding.
Revenue Ruling 2022-05 announcing the rates of interest will appear in Internal Revenue Bulletin 2022-10, dated March 7, 2022.