Interest Payments Cut Almost in Half

WASHINGTON - Improved processing of individual income tax returns in 1990 made it possible for the Internal Revenue Service to cut almost in half interest payments on refunds for tax returns that could not be processed within 45 days of the filing deadline.

The IRS said it paid interest of $4.7 million in 1990, compared to $8.2 million in 1989, a 43-percent decrease. The total number of refund returns filed in 1990 increased from 70 million last year to 72 million this year. But the number of interest-bearing refunds decreased almost 40 percent -- from 741,000 to 452,000.

In general, if the IRS takes more than 45 days to process a return that was filed on time, it must pay interest on the refund the taxpayer receives. The current interest rate the IRS must pay for 1990 on such refunds is 10 percent.

According to the IRS, about 70 percent of taxpayers received refunds. The average refund in 1990 is $882.

The IRS also said that about 80 percent of taxpayers receive refunds. The average refund in 1990 is $882.

The IRS also said that about 80 percent of returns filed by taxpayers who received the automatic four-month extension of time to file are refund returns.

This year 5 million taxpayers received an automatic extension of time until August 15 to file their 1989 federal individual income tax returns. To receive the extension, taxpayers had to file Form 4888 with the IRS by the April 16, 1990, and had to pay any tax due by April 16.

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