Rising interest rates across the board have been a fact of life lately. Therefore, it should be no surprise that the Service announced more interest rate bumps for Q1 2023 in Rev. Ruling 2022-23.
Effective January 1, 2023, the new interest rates will be:
- 6% for corporate overpayments of tax
- 4.5% for the portion of a corporate overpayment that exceeds $10,000
- 7% for underpayments (taxes owed but not fully paid), and
- 9% for large corporate underpayments.
Interest rates are typically computed from the federal short-term rate based on daily compounding. The rate determined during October 2022, and effective November 1, 2022, is 4%. The underpayment rate for corporations is generally this rate plus three percentage points, and the overpayment rate is this rate plus two percentage points.
Five percentage points are added to the federal short-term rate to create the rate for large corporate underpayments, and half a percentage point is added to this rate to come up with the rate on corporate overpayments that exceed $10,000.
Compare to the current interest rates
- 5% for corporate overpayments
- 3.5% for the portion of corporate overpayments over $10,000
- 6% for underpayments, and
- 8% for large corporate underpayments.
Because it’s important for your Finance team to stay on top of these interest rates – especially since they continue to go up each quarter – now’s a great time to pass along the updated rates.
Speaking of taxes …
With the hustle and bustle of year-end tax season preparation going on, IRS is reminding business taxpayers like you to be vigilant because this is the time cyberthieves will be targeting Finance departments to steal identifiable data and file fake business tax returns. The Service recommended following Federal Trade Commission best practices to minimize fraud risk, including:
- Ensuring your wireless networks are secure by using at least WPA2 encryption (double-check with IT)
- Using email authentication technology which makes it harder for a scammer to send phishing emails that look like they’re from your company, and
- Watching out for emails that ask you to click a link, open an attachment, or provide your network password, business bank account numbers or other sensitive information. If there’s a suspicious email that claims to be from IRS, report it by contacting email@example.com.