We’re entering the new year and first quarter on a high note concerning IRS interest rates – but whether that’s a good or bad thing is a matter of perspective (are you owed money, or do you owe it?). At this point, you’ve likely acclimated to IRS interest rates pushing precipitously toward double digits (although thankfully, we’re not there yet), but will this trend continue? It doesn’t seem likely.
Who’s In Charge Here?
You may be wondering just who is responsible for setting the current interest rate for over and underpayments in the 4th Quarter was at 8% and the answer would be the Internal Revenue Code. According to the Internal Revenue Code, the IRS determines interest rates for individuals quarterly – and that rate is the federal short-term rate plus 3 percent.
Suppose you’ve ever owed back taxes, penalties, additions to tax, or interest. In that case, you’re probably very familiar with how this works, with interest occurring on any unpaid tax or penalty from the due date until it’s paid – in full – or no extension.
The current landscape would have us believe we’ll bear more cost in the long run. But how long of a run are we looking at here? What’s over the horizon? While we can’t claim a crystal ball, we can make reasonable predictions by closely examining what the Federal Reserve does since IRS rates follow the same pattern.
The good news is the interest rates seem to be coming back down, albeit slowly.
We Know When to Hold ‘Em
When the Fed hikes interest rates, the IRS follows suit. We want to see interest rates adjusted down so we can help you hang on to as much of your hard-earned money as possible.
So, while the current news isn’t ideal, we have options that save our clients money, regardless of the ups and downs of interest rates. By evaluating your assets and disposable income, we can help you develop an offer for less than you owe – one the IRS can’t refuse.