Under the Tax Code, the rate of interest is 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.
Generally, in the case of a corporation, 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. 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 of a percentage
point.
The interest rates announced Thursday are figured from the federal
short-term rate determined during April 2022 to take effect May 1,
2022, based on daily compounding.
In conjunction with the announcement, the IRS issued Revenue Ruling 2022-11.