COVID-19 Relief Law - IRS to Pay Interest on Late Issued Refunds
The Internal Revenue Service ("IRS") announced today that for taxpayers receiving tax refunds late, including some who haven't even filed their tax returns yet, will receive interest payments in addition to the refund.
When refunds are delayed, the IRS pays interest rates far higher than bank accounts do: 5% compounded daily for the second quarter and 3% compounded daily starting July 1.
In a typical year, the tax code requires the IRS to start paying interest if a refund is held up for more than 45 days beyond the original tax-filing deadline. Normally, that means refunds issued after the end of May come with interest.
The tax code section governing interest payments says the 45-day period is determined from the due date without regard to extensions. So interest started accruing on April 15, not on July 15.
The IRS said the interest payments may arrive separately from tax refunds. The IRS statement didn't specify whether people who received refunds between April 15 and late May would get interest payments.
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