Former Chairman of the Council of Economic Advisers Kevin Hassett discusses the IRS postponing its tax rule on Venmo and PayPal payments over $600 and concerns of overreach on ‘Kudlow.’
The IRS is raising the interest rate for underpayments and overpayments for the first quarter of 2023 starting Jan. 1.
IRS headquarters in Washington, D.C., Feb. 25, 2022. (Al Drago/Bloomberg via Getty Images / Getty Images)
The rate for payments made by individuals in excess of the amount owed as well as on taxes owed but not fully paid will be 7% per year compounded daily, up from 6% in the third quarter.
The federal tax collection agency said the interest rate for overpayments by corporations will be 6%, and 4.5% for any corporate overpayment over $10,000.
IRS DELAYS NEW TAX-REPORTING RULE ON VENMO, PAYPAL PAYMENTS OVER $600
IRS 1040 Individual Income Tax forms (Daniel Acker/Bloomberg via Getty Images / Getty Images)
The interest rate for large corporate underpayments will be 9%.
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The IRS determines its rates of interest on a quarterly basis under the Internal Revenue Code, and the rates for individuals are set at the federal short-term rate, plus three percentage points.
The homepage of the IRS website seen on a computer screen through a magnifying glass (Photo illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images / Getty Images)
Underpayment rates for corporations are generally the same as for individuals, while overpayment rates for companies are two points higher than the federal short-term rates.
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The new rates were calculated from the federal short-term rate from October.