Bipartisan legislation recently introduced in the U.S. House of Representatives would close a loophole in the tax code.
U.S. Reps. Young Kim (R-CA) and Eugene Vindman (D-VA) introduced the bill.
The Cutting Paperwork for Taxpayers Act would close a loophole that charges interest on tax refunds from the Internal Revenue Service (IRS). Under current law, when the IRS is delayed 45 days or more in issuing a tax refund, interest begins to accrue. Once the amount exceeds $10, taxpayers must report it as income by filing a separate 1099-INT form, “creating an unnecessary administrative and financial burden on taxpayers for delays outside of their control,” according to a release from Kim’s office.
The bill would code and designate IRS-paid interest on late refunds as nontaxable.
“Taxpayers shouldn’t have to foot the bill for inefficiency at the IRS,” Kim said. “I’m proud to help lead this bipartisan bill to cut red tape at the IRS and save working Americans time and money. I will always fight to ensure our federal government works for taxpayers, not against them.”
“The cost of living is too damn high, and I’m working hard to change that. This common-sense, bipartisan bill would put money back in your pocket. Families who file their taxes on time and are owed a refund should get their money hassle free,” Vindman said. “I’m proud to team up with Congresswoman Kim on this effort to make life easier.”