The Internal Revenue Service (IRS) has recently announced that interest rates will remain the same for the calendar quarter beginning January 1, 2024.
For individuals, the rate for overpayments and underpayments will continue to be 8% per annum, compounded daily. The complete list of new rates is as follows:
- 8% for overpayments (payments made in excess of the amount owed), 7% for corporations.
- 5.5% for the portion of a corporate overpayment exceeding $10,000.
- 8% for underpayments (taxes owed but not fully paid).
- 10% for large corporate underpayments.
As per the Internal Revenue Code, these rates are determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points.
In the case of corporations, the underpayment rate is the federal short-term rate plus three percentage points, and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five percentage points, whereas 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 half a percentage point.
These interest rates are computed from the federal short-term rate determined during October 2023. More details are available in the revenue ruling.
Announced through Revenue Ruling 2023-22, these rates of interest are set to appear in Internal Revenue Bulletin 2023-49, dated December 4, 2023. The IRS’s decision to maintain the current rates provides certainty for taxpayers as they enter the new calendar year.
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