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IRS Interest on 2019 Refunds

Taxpayers who received refunds on their 2019 federal personal income tax returns will receive interest from the IRS, if the refunds were paid after April 15, 2020, due to a federal law that requires interest to be paid on refunds that are delayed due to a federally-declared disaster.

Most taxpayers will receive the interest payment separately from the payment of their refunds; however, some taxpayers who filed their returns very close to the July 15, 2020 due date will receive their refunds with the interest added the refund amount.  Practitioners should expect that some clients will have questions about these interest payments. 

Additional payments of interest will generally be directly deposited to the same account used for the direct deposit of the original refund amount.  (If the account is closed, the IRS will send the interest payment by check.)

Interest is computed at 5%, compounded daily, for the quarter that ended on June 30, 2020, and it will be computed at 3%, compounded daily, effective on July 1, 2020.

Such interest payments are taxable for the 2020 tax year, and the IRS will issue Forms 1099-INT to taxpayers who receive at least $10 of such interest.

The information provided herein is provided with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional service. As such, M + O = CPE, Inc. and the author disclaim any responsibility or liability for the information supplied herein or the application of said information.