IRS sets interest rate on tax debts at 8%

The Internal Revenue Service announced an increase for interest rates on tax debts and delayed refunds. Beginning July 1, 2006, the IRS will asses 8% interest on unpaid tax debts, up from the 7% rate which has been in effect since October 1, 2005. The IRS assesses interest on unpaid balances. The IRS also pays interest on tax refunds if there has been a significant delay in processing your refund.

More information:

• IRS Announcement (IR-2006-89): Interest Rates Rise for the Third Quarter of 2006,
• Revenue Ruling 2006-30 (PDF, 9 pages),
• IRS Penalties and Interest
• Pay off the IRS: essential information for setting up payment plans and getting out of tax debt.