Making IRS Interest Payments on Tax Refunds Tax-Free.
This bill ensures that interest paid by the IRS to taxpayers on overpayments is exempt from gross income, provided the taxpayer prevailed in an audit or litigation. Citizens will no longer have to pay income tax on the interest they receive as compensation for the government's delay in refunding their money. The change aims to ensure that the full amount of compensation for wrongful delay goes directly to the taxpayer.
Key points
Interest paid by the IRS on tax overpayments following a successful audit or litigation is excluded from taxable gross income.
Taxpayers keep the full amount of interest received for delayed refunds, increasing their net financial benefit.
This change applies to taxable years beginning after December 31, 2025.
Status:
Introduced
Civic Will
Why does your vote on bills matter?
It creates raw, undeniable proof. Civic Will provides the permanent data to verify the Government's loyalty towards its citizens
(explained here).
Start recording it now.