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Published Wednesday, August 19, 2020
13.9 million U.S. citizens to receive
IRS tax refund
By the A.M. Costa Rica wire services
This week the Treasury Department and the Internal Revenue Service (IRS) will send interest payments to about 13.9 million individual taxpayers who filed their 2019 federal income tax returns on time.
According to the IRS, the interest payments, averaging about $18, will be made to individual taxpayers who filed a 2019 return by this year's July 15 deadline and either received a refund in the past three months or will receive a refund. Most interest payments will be issued separately from tax refunds.
In most cases, taxpayers who received their refund by direct deposit will have their interest payment deposited in the same account. About 12 million of these payments will be direct deposit, they said.
Everyone else will receive a check. A notation on the check saying, "INT Amount" will identify it as a refund interest payment and indicate the interest amount.
By law, these interest payments are taxable and taxpayers who receive them must report the interest on the 2020 federal income tax return they file next year. In January 2021, the IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10. The form is used to report interest income.
This provision is different from the long-standing 45-day rule, generally requiring the IRS to add interest to refunds on timely-filed refund claims issued more than 45 days after the return due date.
According to the IRS, this year's covid-19-related July 15 due date is classified as a disaster-related postponement of the filing deadline. Where a disaster-related postponement exists, the IRS is required by law to pay interest, calculated from the original April 15 filing deadline, as long as an individual filed a 2019 federal income tax return by the postponed deadline − July 15, 2020, in this instance. This refund interest requirement only applies to individual income tax filers − businesses are not eligible.
Interest is paid at the legally prescribed rate that is adjusted quarterly. The rate for the second quarter ending June 30 was 5%, compounded daily. Effective July 1, the rate for the third quarter dropped to 3%, compounded daily.
Where the calculation period spans quarters, a blended rate applies, consisting of the number of days falling in each calendar quarter. No interest will be added to any refund issued before the original April 15 deadline, the IRS said in its statement.
For more information on tax refunds visit IRS.gov.
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