The IRS is boosting interest rates for both underpayment and overpayment of taxes in a change that takes effect on April 1.
The interest rate for taxpayers and corporations that underpay their taxes will be 4%, compounded daily for second quarter of 2022. The rate on corporate underpayments that exceed $100,000 will rise to 6%.
Taxpayers who overpay and don’t receive their refund within 45 days will earn 4% interest compounded daily. Corporations will receive 3% for overpayments up to $10,000. Corporations will only receive compounded interest of 1.5% on the amount that exceeds the $10,000 threshold.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis and computed based on the federal short-term rate. For taxpayers other than corporations, the overpayment and underpayment rates are the federal short-term rate plus 3 percentage points.
The federal short-term rate during the month of January was 1% based on daily compounding.
Go here for more information on the scheduled change in IRS interest rates.
