IRS interest rates jumping in Q4

The interest rates that the Internal Revenue Service uses will rise for the quarter beginning Oct. 1, the agency said.

For individuals, the rate for overpayments and underpayments will be 8% per year, compounded daily.

Other new rates include:

• 8% for overpayments (exceeding the amount owed);
• 7% for corporations, or 5.5% for the portion of a corporate overpayment exceeding $10,000;
• 8% for underpayments; and,
• 10% for large corporate underpayments.

The rate of interest is determined quarterly. 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 (0.5) a percentage point.

Revenue Ruling 2023-17, announcing the rates of interest, will appear in Internal Revenue Bulletin 2023-37, dated Sept. 11, 2023.