Interest Rates to Increase
The IRS has announced that interest rates will increase again, beginning October 1, 2022. Individuals will see an increase of 1% as compared to the quarter that began in July, with 6% as the rate for underpayments (taxes owed but not yet paid) and overpayments (payments made in excess of the amount owed). Other rates are as follows:
- 6% for overpayments (5% for corporations).
- 3.5% for the portion of a corporate overpayment exceeding $10,000.
- 6% for underpayments.
- 8% for large corporate underpayments.
These interest rates are computed from the federal short-term rate determined during July 2022.
Pandemic-Related Penalty Relief
The IRS has issued a notice which provides penalty relief to most people and businesses who file certain 2019 or 2020 returns late. In addition, the IRS will be issuing more than $1.2 billion in refunds and credits to those who already paid these penalties, nearly 1.6 million taxpayers. They say this aims to allow the IRS to focus resources on processing backlogged tax returns and other correspondence before next year’s filing season. The relief will be automatic for those who qualify, so no action is required on the part of businesses or individuals. To qualify for this relief, however, tax returns for those years must be filed on or before September 30, 2022.
Reminder to Extension Filers
The IRS reminds taxpayers who haven’t filed their 2021 tax return to make sure they take advantage of available entitlements and to file electronically as soon as possible. These tax benefits include Earned Income Tax Credit, Child Tax Credit, Child and Dependent Care Credit, Charitable Giving Deduction, and others. Taxpayers will need to have their year-end statements available, as well as the letters issued by the IRS showing advance Child Tax Credit payments and third round Economic Impact Payments.
The IRS is requesting input from both taxpayers and tax professionals regarding its best practices for conducting video conferences with those who have cases pending before Appeals. During the COVID-19 pandemic, video conferences were expanded. These allowed taxpayers to be seen and heard and be able to visually share documents without going in-person to an Appeals office. This garnered positive feedback, so Appeals will continue to offer video conferences as an option. Public input is sought for permanent guidance regarding scheduling and conducting the conferences, procedures for verification, and recommendations for establishing a professional meeting environment. Public comments can be sent to firstname.lastname@example.org by Wednesday, November 16, 2022.