The Internal Revenue Service announced that interest rates will remain the same for the calendar quarter beginning Jan. 1, 2022. The rates will be:
- 3% for overpayments (two (2) percent in the case of a corporation),
- 0.5% for the portion of a corporate overpayment exceeding $10,000,
- 3% for underpayments, and
- 5% for large corporate underpayments.
Under the Internal Revenue 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 3 percentage points, according to a news release.
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) of a percentage point.
The interest rates announced are computed from the federal short-term rate determined during October 2021 to take effect Nov. 1, 2021, based on daily compounding.
Revenue Ruling 2021-24 announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2021-50, dated Dec. 13, 2021, according to the news release.
Privacy and Protection
One of the IRS’s top priorities is protecting the privacy of America’s taxpayers. The agency takes this so seriously that the right to privacy is one of 10 rights the Taxpayer Bill of Rights gives all taxpayers.
Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary. Taxpayers can also expect that the IRS will respect all due process rights, including search and seizure protections, and will provide, where applicable, a collection due process hearing, according to a news release.
Here are a Few More Details About What a Taxpayer’s Right to Privacy Means:
- The IRS cannot seize certain personal items, such as schoolbooks, clothing, and undelivered mail.
- The IRS cannot seize a personal residence without first getting court approval, and the agency must show there is no reasonable alternative for collecting the tax debt.
- Sometimes, taxpayers submit offers to settle their tax debt that relate only to how much they owe. This is formally known as a Doubt as to Liability Offer in Compromise. Taxpayers who make this offer do not need to submit any financial documentation.
- During an audit, if the IRS finds no reasonable indication that a taxpayer has no unreported income, the agency will not seek intrusive and extraneous information about the taxpayer’s lifestyle.
- A taxpayer can expect that the IRS’s collection actions are no more intrusive than necessary. During a collection due to process hearing, the Office of Appeals must balance that expectation with the IRS’s proposed collection action and the overall need for efficient tax collection.