IRS to Add Interest to Delayed Refunds

The costs of Internal Revenue Service computer problems will begin to mount beginning today, because the agency will have to start paying 13% interest on delayed refunds.

The latest IRS figures show that the agency finally pulled ahead--by 0.5%--of where it was last year at this time in processing all tax returns and has already refunded more money than it did in 1984.

But, as of the week of May 23, the number of refunds was still running 1.4% behind last year. Because more persons filed for refunds this year than the year before, the 1.4% figure may be an understatement, the agency said.

IRS officials already expect interest costs to be greater than last year’s $209 million if only because the interest rate is higher this year and the average refund size is larger.