The U.S. Department of the Treasury and the IRS are planning to send out interest payments totaling $18 on average to 13.9 million Americans who filed their tax returns in the last few months, according to a press release.
The interest payments are intended for those who made a tax filing by the deadline on July 15 and received a refund in the last three months or will receive one soon.
The moving of the end date to July, due to the pandemic, is classified as a disaster-related postponement, the release stated. In any such incident, where the date is postponed from its usual April 15 deadline, the IRS is required to pay interest.
Interest is paid at the legally prescribed rate, adjusted quarterly, according to the release. The rate for the second quarter was 5 percent, but after the quarter ended June 30, the rate dropped to 3 percent.
"Where the calculation period spans quarters, a blended rate applies, consisting of the number of days falling in each calendar quarter," the release stated.
The interest payments will be separate from the tax refunds, and they only apply to individual income filers; businesses will not be granted interest payments, the release stated.
Those who get an interest payment of at least $10 will have to file it on next year's taxes, the release stated, and the IRS plans to send a Form 1099-INT to those people.
The payments will be made in a variety of ways, including direct deposit for around 12 million people and paper check for everyone else. The direct deposits will be made in the same account as the person's refund, while the checks will be marked with "INT Amount" to identify them as interest payments, according to the release.
The IRS got a hefty challenge this year as it had to deal rapidly with the $1,200 individual stimulus checks mandated as part of the CARES Act in March. Amid that process, the normal refunds were sidelined, due in one part to the antiquated paper processes and another part to the closing of physical IRS locations during lockdowns.