10 years of 'temporary' tax cuts
Where to put your money, redux

Low interest rates are bad for savers, but good for those who owe the IRS

The interest rate we're getting from the bank for it to hold our money is pathetic.

Piggy bank blue with cash (2) No, despite the whiplash produced by the stock market's recent gyrations, we're still in equities. But we also try to stay diversified.

And since we think gold is a bit over valued right now, we, like lots of other folks, still have some cash stashed in certificates of deposit.

One of the CDs came up for renewal last week and we rolled it over despite the infuriatingly low interest rate. And yes, I'm too embarrassed to even tell you how minuscule that rate is.

But we like the flexibility of this particular certificate. There's no penalty for withdrawal. Not that we're thinking of cashing out and hitting the road, or at least not thinking about it seriously. Of course, if this heat and drought don't break soon, you never know.

So we grumbled and let the CD roll over.

The zero federal interest rate (thanks, Federal Reserve Open Market Committee, for literally nothing!), however, is doing some folks some good.

If you owe the Internal Revenue Service, Uncle Sam isn't getting much interest on your overdue tax bill.

Right now, the IRS is collecting 4 percent interest on underpayments by individuals. On Oct. 1, however, the rate will drop to 3 percent.

Those rates are the same that the IRS will pay taxpayers if it doesn't send out refunds for overpayments. Typically, the IRS will pay interest on taxpayer money if it holds onto it for more than 45 days after receiving a taxpayer's filing if the refund problem is because of slow processing by the IRS. A tiny piece of good news, perhaps, for folks who waited as first-time homebuyer credit chaos slowed down theri refunds.

The interest, for both under- and overpayments, is calculated for each day your balance due is not paid in full or refunded. If economic conditions warrant, the IRS reset its interest rates every quarter. The Internal Revenue Code requires that the agency's interest rate for individuals be calculated as the federal short-term rate plus 3 percentage points.

If you want to know what late taxpayers have previously owed the IRS, The Tax Almanac maintains a table of the interest rates collected by the agency going back to 1983.

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