2021 IRS Interest Rates Unchanged

The IRS has announced that for the rest of the year, there will be no change to interest rates related to tax underpayment or overpayment. Typically, individuals and businesses must pay interest charges if they do not pay the full amount of tax they owe by the appropriate deadline. The IRS also pays interest to taxpayers whose refunds were delayed beyond the time frame that federal regulations allow for processing returns.

For individuals, the IRS can ordinarily take up to 45 days to process a tax return and issue a refund without paying interest to the taxpayer. In cases where a refund is delayed and the IRS must pay interest, the amount of interest is usually calculated from the original filing deadline or the date the return was received, whichever came later.

For individual taxpayers, the IRS currently charges interest at a 3% annual rate for tax underpayments and late payments, and pays interest at 3% on delayed refunds. The same rates generally apply for businesses other than corporations. The interest rates for corporations depend on the size of the refund or underpayment. A tax professional can help you plan your tax payments and file your returns in a timely manner to avoid paying interest.