IRS interest rates increase for the third quarter of 2022

Issue Number:    IR-2022-107

Inside This Issue

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IRS interest rates increase for the third quarter of 2022

WASHINGTON — The Internal Revenue Service today announced 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 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 (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during April 2022 to take effect May 1, 2022, based on daily compounding.

Revenue Ruling 2022-11 announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2022-23, dated June 6, 2022.