Understanding “IRS Interest,” INT REF deposits, transcript codes, delayed refunds, and why taxpayers sometimes receive additional money years later.
Many taxpayers are surprised when their bank account shows a deposit labeled IRS TREAS 310 INT REF or IRS TREAS 310 TAX REF + Interest. These deposits frequently arrive unexpectedly and may not correspond to the refund amount originally stated on the tax return.
This extra money is an interest payment—compensation the IRS pays when your refund is delayed beyond the legally allowed timeframe. Interest deposits might occur weeks, months, or even years after your initial return, causing reasonable uncertainty for taxpayers who are unsure whether the payment is legal.
This guide explains why the IRS pays interest, how the amounts are calculated, what the transcript codes mean, and when you should expect these payments.
Why the IRS Pays Interest on Refunds
Federal law compels the IRS to pay interest on refunds if they are issued more than 45 days after the return due date (typically April 15). Interest also applies. when:
- Your return is adjusted or corrected
- You file an amended return
- Identity verification delays your refund
- IRS wage data or credit mismatches take months to resolve
- IRS backlogs push your return beyond normal processing windows
Interest is effectively reimbursement for the period the government held your money after it was supposed to be paid.
How IRS Interest Payments Are Calculated
Interest amounts vary widely because they depend on several factors.
IRS Quarterly Interest Rates
The IRS adjusts interest rates quarterly. Rates typically vary from 3% to 8% per year, depending on economic conditions.
Length of the Delay
The longer the IRS takes to process your refund, the more interest accrues. Delays involving fraud checks, manual review, or amended returns can significantly increase the accrued interest.
Adjusted Refund Amount
Interest is applied to whatever amount the IRS owes you after adjustments, including:
- Credit corrections
- Income recalculations
- Dependent claim changes
- Amended return modifications
Daily Compounding Rules
IRS interest compounds daily, which means even short delays generate higher amounts over time. While interest payments are often minor, greater refunds or extended delays can result in much higher interest payments.
You May Receive IRS Interest Payments Years Later
One of the most perplexing aspects of IRS interest is timing. Interest payments are not usually delivered with your original return.
You may receive:
- A refund in the current year
- An interest payment months later
- A second or corrected interest payment in a future year
This can happen when:
- The IRS makes late adjustments
- Amended returns complete long after filing
- Identity verification delays carry over multiple cycles
- Wage mismatches take months to resolve
- Audits conclude after the original refund
Receiving an “INT REF” years later is normal and often expected if the IRS finalized adjustments much later than usual.
IRS Transcript Codes Related to Interest Payments
If you receive an interest deposit, your IRS transcript will typically show these codes.
Code 776 — Interest Credit
This code confirms the amount of interest added to your refund.
Code 846 — Refund Issued
Indicates when the refund or interest payment was released.
Code 971 — Notice Issued
Shows that the IRS mailed an informational letter explaining the action.
Code 776 is the primary indicator that the payment is valid, and it indicates IRS-calculated interest depending on delays.
Do Interest Payments Mean Something Was Wrong?
No. An interest payment does not mean your return contained errors. In most cases, it simply reflects processing delays such as:
- IRS backlogs
- Identity verification holds
- Dependent claim reviews
- Credit recalculations
- Wage data mismatches
- Slow amended return processing
Interest is calculated automatically and is not a penalty or an indicator of a problem.
Are IRS Interest Payments Taxable?
Yes. Interest received from the IRS is considered taxable income during the year you received it.
If the interest totals $10 or more, the IRS will issue Form 1099-INT, which must be reported on your next tax return. Even if you do not receive the form owing to mailing challenges, the interest is still taxed under the law.
Why Some Taxpayers Receive IRS TREAS 310 INT REF Without Explanation
It is fairly usual to collect an interest deposit before receiving written notification. This occurs because:
- IRS systems issue payments before notices are printed
- Mailed notices arrive weeks later
- Taxpayers sometimes overlook small notices
- Notices may go to old addresses
A follow-up message usually occurs between 7-21 days and confirms the information.
Common Scenarios That Cause IRS Interest Deposits
Taxpayers often receive interest when:
- Their return required manual review
- IRS identity verification took weeks or months
- Credit recalculations delayed processing
- A dependent dispute was resolved later
- Wage correction updates took long
- An amended return took extra time
- The IRS backlog pushed refunds into later quarters
These circumstances are exceedingly typical and have become more prevalent as a result of the IRS’s heavy workload and system modernization.
Final Thoughts
Interest payments such as IRS TREAS 310 INT REF are legitimate and often appear without advance notice. They do not indicate misconduct or penalties; rather, they represent the IRS compensating taxpayers for delayed refunds or adjustments that were settled long after the original filing.
The best approach to validate the payment’s purpose is to check your IRS transcript for Code 776 and analyze any subsequent sent mailings.