News & Updates

For individuals, the rate for overpayments and underpayments will be 6% per year, compounded daily, up from 5% for the quarter that began on July 1. Here is a complete list of the new rates:

• 6% for overpayments (5% for corporations). (payments made in excess of the amount owed)
• 3.5% for the portion of a corporate overpayment exceeding $10,000.
• 6% for underpayments. (taxes owed but not fully paid)
• 8% 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.

Generally, for 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 today are computed from the federal short-term rate determined during July 2022.

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The IRS, state tax agencies and the tax industry – working together as the Security Summit – reminded tax professionals that they should contact the IRS immediately when there's an identity theft issue while also contacting insurance or cybersecurity experts to assist them with determining the cause and extent of the loss.

"Tax pros must be vigilant to protect their systems from identity thieves who continue to look for ways to steal data," said IRS Commissioner Chuck Rettig. "Practitioners can take simple steps to remain on the lookout for signs of data and identity theft. It's critical for tax pros to watch out for these details and to quickly take action when tell-tale signs emerge. This can be critical to protect their business as well as their clients against identity theft."

This is the third in a summer series of five Security Summit news releases aimed at raising awareness among tax professionals about data security. The special Protect Your Client; Protect Yourself campaign is designed to help protect against tax-related identity theft by increasing attention on basic security steps that tax professionals and others should take to protect sensitive information.

One common concern the IRS hears from tax professionals is that they did not immediately recognize the signs of data theft.

Summit partners are urging tax professionals to watch out for these critical signs:

• Client e-filed returns rejected because client's Social Security number was already used on another return.
• More e-file acknowledgements received than returns the tax pro filed.
• Clients responded to emails the tax pro didn't send.
• Slow or unexpected computer or network responsiveness such as:
• Software or actions take longer to process than usual,
• Computer cursor moves or changes numbers without touching the mouse or keyboard,
• Unexpectedly locked out of a network or computer.

Tax professionals should also watch for warning signs when clients report they've received:

• IRS Authentication letters (5071C, 6331C, 4883C, 5747C) even though they haven't filed a return.
• A refund even though they haven't filed a return.
• A tax transcript they didn't request.
• Emails or calls from the tax pro that they didn't initiate.
• A notice that someone created an IRS online account for the taxpayer without their consent.
• A notice the taxpayer wasn't expecting that:
• Someone accessed their IRS online account,
• The IRS disabled their online account,
• Balance due or other notices from the IRS that are not correct based on return filed or if a return had not been filed.

These are just a few examples. Tax pros should ensure they have the highest security possible and react quickly if they sense or see something amiss.

The IP PIN serves as a critical defense against identity thieves. The IRS, state tax agencies and the nation's tax industry – working together as the Security Summit – need assistance from tax professionals to let their clients know that IP PINs are now available to anyone who can verify their identity.

Sharing information about the IP PIN Opt-In Program is the first in a five-part weekly summer series sponsored by the Summit partners to highlight critical steps tax professionals can take to protect client data – and their businesses. The series is an effort to urge tax professionals to intensify efforts to secure their systems and protect client data during the summer and throughout the year. These alerts will be issued each Tuesday for five weeks to coincide with the IRS Nationwide Tax Forums, which helps educate tax professionals on security and other important topics.

"These identity protection numbers provide an extra layer of safety to protect people against tax-related fraud tied to using stolen personal information," said IRS Commissioner Chuck Rettig. "Following work by the IRS, the IP PIN program is now available to anyone who can verify their identity. We urge tax professionals to encourage their clients to protect themselves through the IP PIN program."

The Electronic Tax Administration Advisory Committee, or ETAAC, last month highlighted the importance of the IP PIN to taxpayers and tax professionals.

"The IP PIN is the number one security tool currently available to taxpayers from the IRS," the independent advisory group said in its annual report to Congress. "This tool is the key to making it more difficult for criminals to file false tax returns in the name of the taxpayer. In our view, the benefits of increased IP PIN use are many."

The ETAAC also recommended the IRS continue to highlight and promote the IP PIN through a public awareness effort. The IRS will be taking steps to do that, including building off awareness of special items including Publication 5367, IP PIN Opt-In Program for TaxpayersPDF, in English and Spanish, so that tax professionals could print and share the IP PIN information with clients. There are also special posters available in EnglishPDF and SpanishPDF.

For security reasons, tax professionals cannot obtain an IP PIN on behalf of clients. Taxpayers must obtain their own IP PIN.

Summit partners urged taxpayers and tax professionals to be careful and protect the IP PIN from identity thieves. Taxpayers should share their IP PIN only with their trusted tax prep provider. Tax professionals should never store clients' IP PINs on computer systems. Also, the IRS will never call, email or text either taxpayers or tax preparers to request the IP PIN.

Tax professionals who experience a data theft can assist clients by urging them to quickly obtain an IP PIN. Even if a thief already has filed a fraudulent return, an IP PIN would still offer protections for later years and prevent taxpayers from being repeat victims of tax-related identity theft.

Here are a few things taxpayers should know about the IP PIN:

• It's a six-digit number known only to the taxpayer and the IRS.
• The opt-in program is voluntary.
• The IP PIN should be entered onto the electronic tax return when prompted by the software product or onto a paper return next to the signature line.
• The IP PIN is valid for one calendar year; taxpayers must obtain a new IP PIN each year.
• Only taxpayers who can verify their identities may obtain an IP PIN.
• IP PIN users should never share their number with anyone but the IRS and their trusted tax preparation provider. The IRS will never call, email or text a request for the IP PIN.

To obtain an IP PIN, the best option is the Get an IP PIN, the IRS online tool. Taxpayers must validate their identities through Secure Access Digital Identity initiative (SADI) to access the tool and their IP PIN. Before attempting this rigorous process, see How to Register for Certain Online Self-Help Tools.

If taxpayers are unable to validate their identity online and if their income is below $73,000 for individuals or below $146,000 for married couples, they may file Form 15227, Application for an Identity Protection Personal Identification NumberPDF. The IRS will call the telephone number provided on Form 15227 to validate their identity. However, for security reasons, the IRS will assign an IP PIN for the next filing season. The IP PIN cannot be used for the current filing season.

Taxpayers who cannot validate their identities online, or on the phone with an IRS employee after submitting a Form 15227, or who are ineligible to file a Form 15227 may call the IRS to make an appointment at a Taxpayer Assistance Center. They will need to bring one picture identification document and another identification document to prove their identity. Once verified, the taxpayer will receive an IP PIN via U.S. Postal Service within three weeks.

The IP PIN process for confirmed victims of identity theft remains unchanged. These victims will automatically receive an IP PIN each year.

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Taxpayers who requested more time to file an accurate return have until October 17, 2022. Those who have what they need to file, however, should file as soon as possible to avoid delays in processing their return.

Taxpayers who have questions can get help with most tax issues online or by phone. The IRS.gov website has free and easy to use online tools and resources to help taxpayers get answers 24 hours a day. Voice bots help callers navigate interactive voice responses to simple payment or notice questions, and quickly get responses to Frequently Asked Questions.

The Interactive Tax Assistant is a tool that provides answers to several tax law questions specific to individual circumstances based on input. It can determine if an individual must file a tax return, their filing status, if they can claim a dependent, if an income type is taxable, and their eligibility to claim a credit or deduct certain expenses.

Electronic filing options

The IRS advises individuals who still need to file a 2021 tax return to file electronically and, if due a refund, to choose direct deposit.

Filing electronically is fast, accurate and secure, and when an individual chooses direct deposit, their refund goes directly from the IRS into their bank or financial account getting them their refund in the fastest time possible. If they have a prepaid debit card, they may be able to have their refund applied to the card by providing the account and routing number to the IRS. The IRS processes most e-filed returns and issues direct deposit refunds in less than 21 days.

Eligible individuals can use the IRS Free File program to prepare and file their 2021 federal tax return for free. Taxpayers can choose the brand-name tax preparation software company that is best for them. Some even offer free state tax return preparation. Those who earned more than $73,000 have the option to use IRS Free File Fillable Forms.

MilTax online software is also available for members of the military and certain veterans, regardless of income. This software is offered through the Department of Defense. Eligible taxpayers can use MilTax to prepare and electronically file their federal tax returns and up to three state returns for free.

Volunteer Income Tax Assistance

The IRS's Volunteer Income Tax Assistance (VITA) program offers free basic tax return preparation to people who generally make $58,000 or less and people with disabilities or limited English-speaking taxpayers. While the majority of these sites are only open through the end of the filing season, taxpayers can use the VITA Site Locator tool to see if there's a community-based site staffed by IRS-trained and certified volunteers still open near them.

Tax professionals

There are also various types of tax return preparers who can help, including certified public accountants, enrolled agents, attorneys and others who don't have a professional credential.

Taxpayers should choose a tax preparer wisely. For individuals who want help with their taxes, the IRS online directory can assist in finding a tax professional in their area.

Get current on taxes

The IRS sends correspondence to a taxpayer's last known address, usually the address from their most recently filed tax return. If the taxpayer moves and does not send a change of address to the IRS, they may not receive an IRS notice and could miss the deadline to respond.

There's no penalty for not filing a return if due a refund, but there's also no statute of limitations for assessing and collecting taxes due if no return has been filed.

Interest is charged on any tax not paid by the April due date and will accrue until paid in full. Individual taxpayers are charged the federal short-term interest rate plus 3 percentage points, currently 5% per year, compounded daily. Penalties will accrue for each month tax remains unpaid until maxed out at 25% of the unpaid tax.

Submitting a tax return and paying any amount owed as soon as possible can help taxpayers avoid further interest and penalties.

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For the final 6 months of 2022, the standard mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. The new rate for deductible medical or moving expenses (available for active-duty members of the military) will be 22 cents for the remainder of 2022, up 4 cents from the rate effective at the start of 2022. These new rates become effective July 1, 2022.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2022. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

"The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices," said IRS Commissioner Chuck Rettig. "We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step to help taxpayers, businesses and others who use this rate.”

While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

The 14 cents per mile rate for charitable organizations remains unchanged as it is set by statute.

Midyear increases in the optional mileage rates are rare, the last time the IRS made such an increase was in 2011.

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