IRS has announced that interest rates will rise for the fourth quarter of 2022 – a decision that should come as no surprise based on the current state of the economy.
Per the agency, the rates will increase for both corporate and individual overpayments and underpayments for the calendar quarter beginning Oct. 1, 2022.
New, current interest rates
The new rates will be as follows:
- 5% for corporate overpayments (any payments made more than the amount of tax owed)
- 3.5% for the portion of a corporate overpayment that exceeds $10,000
- 6% for underpayments (taxes owed but not fully paid), and
- 8% for large corporate underpayments.
Each rate is one percent higher than the current interest rates, which are:
- 4% for corporate overpayments,
- 2.5% for the portion of a corporate overpayment exceeding $10,000
- 5% for underpayments, and
- 7% for large corporate underpayments
New interest rates are calculated based on an IRS formula that takes the federal short-term interest rate into account for each coming quarter. The latest rates were calculated using the federal short-term rate from July 2022.
Disaster relief announced for KY, MO
Along with the new interest rates, IRS also recently announced tax relief for businesses in two states impacted by severe weather this summer.
Storm and flooding victims in Kentucky will have until Nov. 15, 2022, to file business tax returns and make payments that were originally due starting July 26, 2022. Those located in Breathitt, Clay, Floyd, Johnson, Knott, Leslie, Letcher, Magoffin, Martin, Owsley, Perry, Pike and Wolfe are eligible for this tax relief.
In addition, storm victims in Missouri now have until Nov. 15, 2022, to make tax payments and file business tax returns with deadlines starting July 25, 2022. Those in the Independent City of St. Louis, as well as St. Charles, Montgomery and St. Louis counties in Missouri qualify for relief.
Filing relief is automatically provided to businesses with addresses in these areas and any other areas deemed disaster areas by FEMA. If any taxpayers live outside of the disaster area, but had records necessary to make tax deadlines located in the affected areas, IRS will work with them to determine if they also are eligible for relief.