If you’re still missing your tax refund, you’ll soon receive 7% interest from the IRS — but it’s taxable

There is good news if you are still waiting for your tax refunds, as your balance may be accruing interest and the rate will go up.

The agency reported that there were 3.4 million individual returns that had not been filed.

The interest is tied to the federal short-term rate.

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The rate has more than doubled since January, when it was 3%, according to Sheneya Wilson, a certified public accountant and founder of Fola Financial.

The IRS usually has 45 days to process your return and issue a refund. Daily compounding interest accrues after that.

There is a downside to IRS interest being more than you will earn from savings accounts or Series I bonds.

The U.S. Government Accountability Office reported in April that the IRS interest payments grew to $3.3 billion in the fiscal year that ended in March.

If you're still waiting for a tax refund, the new rate of interest is a small boost.

She explained that there are penalties on top of the interest that accumulates after the tax deadline.

There is a late-filing penalty and a late payment fee for federal taxes.

You never want to be negligent when it comes to the IRS.

If you have a large tax balance, you may have options.

She said that if you have a balance of $50,000 or less, you can set up an online plan, but you have to call the IRS. Penalties and interest will remain until the balance is paid off.

If you have gone through some type of financial hardship, an offer in compromise could allow you to settle for less than you owe. She said that the remaining balance can be paid over time.