COLUMBUS, Ohio Due to the pandemic, the Internal Revenue Service continues to experience delays in processing tax returns. Some people are still waiting to receive their refunds. The number of overdue returns is still in the tens of millions, and it skyrocketed during the pandemic when the IRS closed facilities and diverted resources to manage benefits such as the child tax credit. Meanwhile, Republicans are concerned that the increase in funding for the IRS will lead to tens of thousands more federal employees focusing on tax enforcement.
If you are being paid interest on a delayed refund, you can expect to receive Form 1099-INT from the IRS, which should be included in your tax return, he said. Some Democrats have advocated for more funding from the IRS and, at the same time, have accused Republicans of hindering the agency to preserve the de FACTO tax benefits derived from uneven enforcement. The agency will also pay 4 percent interest for overdue corporate tax returns, 5 percent for underpayments of tax returns and 7 percent for corporate “large underpayments”, the IRS reported Friday. However, the delay should be resolved before the end of the year, IRS Commissioner Charles Rettig told lawmakers during an appearance before the House Ways and Means Committee in March.
The IRS will begin paying 5 percent in guaranteed interest to people with overdue tax returns starting in July, one percentage point higher than the last interest rate hike that took effect in April. Since the average traditional savings account pays well below 1%, IRS interest may seem attractive. He said that delays in tax refunds and interest payments demonstrate the importance of filing a return without errors to avoid processing delays. The IRS generally has 45 days to process your tax return and issue a refund before interest begins to accrue.
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