Whatever. As of Dec. 2019, the IRS stated that the annual short-term AFR was 1.61%, the mid-term AFR was 1.69%, and the long-term AFR was 2.09%. When the interest rate charged in related party loans is less than the AFR, the IRS treats the loan as if it had been made at the AFR and recasts the loan as an arm’s-length transaction. Another loophole is available if all outstanding loans between you and the borrower (with below-market interest or otherwise) add up to $100,000 or less. Good. The rate of interest on the loan must be at least as high as the minimum interest rates set by the IRS. Internal Revenue Service. If you decide to follow through, please make the loan a tax-smart loan. As you can see, these AFRs are just a wee bit lower than rates charged by commercial lenders. So, making a loan that charges the current ultra-low AFR, instead of 0%, makes amazingly good sense — if you want to give your well-loved relative an ultra-low interest rate without causing any tax weirdness for yourself. After three years and multiple price cuts, “Real Housewives of New Jersey” star Melissa Gorga and her husband, Joe, have finally sold their custom-built home for $2.5 million. The borrower (your relative) may or may not be able to deduct the interest, depending on how the loan proceeds are used. Remember, however, that qualified residence interest won’t cut the borrower’s federal income tax bill unless he or she itemizes. By not charging any interest, you would have "foregone" $169 in interest income, and according to the IRS, would be considered a taxable gift. WASHINGTON — The Internal Revenue Service today announced that interest rates will decrease for the calendar quarter beginning July 1, 2020. Right now, AFRs are amazingly low. The term “demand loan” means any loan which is payable in full at any time on the demand of the lender. These interest rates are published by the IRS and are updated monthly. Each month the IRS publishes a set of interest rates that the agency considers the minimum market rate for loans. For a term loan (meaning one with specified final repayment date), the relevant AFR is the rate in effect for loans of that duration for the month you make the loan. If the $50,000 loan … Imputed interest describes interest the IRS considers paid for tax purposes, even though the debtor has made no interest payments. Internal Revenue Service. You must report the interest income on your Form 1040. Long-term AFR rates are from bonds with maturities of more than nine years. The annual blended rate can change dramatically if general interest rates change dramatically. But things can change in a hurry. Unstated interest paid is percentage of interest the U.S. Internal Revenue Service (IRS) assumes has been paid on an installment sale. For example, in June 2018, the AFR for loans of less than 3 years was 1.78%. You would need to charge the borrower a minimum interest rate of 1.69% for the loan. Example 1. Period Overpayments Underpayments 2020. 3%. Moreover, there are different rates for loans … If it looks like your well-loved borrower is going to be unable to repay the loan, your other option is to simply forgive it and treat the whole deal as a gift. Not a misprint. If the lender charges interest at a rate that is lower than the proper AFR, the IRS may reassess the lender and add imputed interest to the income to reflect the AFR rather than the actual amount paid by the borrower. The interest rate also depends upon how often interest is compounded under the loan. We will explain. Duh. These rates, known as Applicable Federal Rates (or AFRs), are regularly published as revenue rulings and are available on the IRS website here. Your nephew will have an equal amount of interest expense, which may or may not be deductible depending on how the loan proceeds are used. Not a misprint. You would need to charge the borrower a minimum interest rate of 1.69% for the loan. Charge 0% if you want. The initial interest rate is the introductory rate on an adjustable or floating rate loan. In our example above, any rate below 1.69% could trigger a taxable event. 1991 to Present. The rates will be: three (3) percent for overpayments [two … For below-market loans of $10,000 or less, the Tax Code says you can completely ignore all the aforementioned imputed gift and imputed interest income nonsense. October 1, 2020 – December 31, 2020. In a typical intrafamily loan, the interest rate for the duration of the loan is fixed at the AFR for the month in which the loan … Long-term loans of more than nine years. When preparing to make a loan between related parties, taxpayers should consider two factors to select the correct AFR. Also, if the loan is in excess of the annual gift tax exclusion, it may trigger a taxable event, and income taxes may be owed. Mid-term AFR rates are from obligations of maturities of more than three and up to nine years. In a September 12, 2011 IRS phone forum, IRS personnel stated informally: “… as a general rule the Service generally considers prime plus 2% as a reasonable interest rate for participant loans.” The prime rate is an interest rate … The IRS does this by computing interest at the AFR and comparing it to the actual rate … My husband and I are planning to give our daughter a home for Christmas. 3%. The minimum amount of interest that must be charged is calculated based on what is known as the applicable federal rate (AFR). Such term also includes (for purposes other than determining the applicable Federal rate under paragraph (2)) any loan if the benefits of the interest arrangements of such loan … When you make a below-market loan (one that charges an interest rate below the AFR) to a relative, the Internal Revenue Code treats you as making an imputed gift to the borrower. For below-market loans made right now, however, the complications are highly unlikely to make any meaningful difference to your tax situation. The Tax Reform Act of 1984 set provisions for “applicable federal rates” (AFRs)—a minimum interest rate that must be charged on all loans, even personal loans. The minimum required interest rate is called the Applicable Federal Rate (or “AFR”), sometimes the “arm’s length” rate. You can learn more about the standards we follow in producing accurate, unbiased content in our. For example, assume a business makes an interest-free loan of $50,000 to an employee, payable on demand. Any interest rate charged below the stated AFR for the particular term of the loan would be considered foregone interest and as a result, be taxable. That’s not a misprint. 0.66% for “short-term” loans of three years or less. ‘Real Housewives of New Jersey’ star Melissa Gorga finally sold her ‘Scarface’ inspired mansion for $2.5 million, Blake Griffin scored a deal on a $5.8 million mansion in Brentwood, The new stimulus bill didn’t extend the student-loan payment pause — but it has 8 provisions that will affect how families pay for college. An intra-family loan is a loan between family members (or other loved ones) that typically carries an interest rate that is lower than commercial lending rates. For these purposes, a loan by a disqualified person to a private foundation at below-market interest rates is treated as an act of self-dealing to the same extent as a loan at market interest rates… If the current interest rate environment holds, you’ll probably be told not to worry. You make a five-year term loan to your beloved nephew in May of 2019 and charge an interest rate of exactly 2.35% with monthly compounding (the AFR for mid-term loans … These rates, known as Applicable Federal Rates (or AFRs), are regularly published as revenue rulings. AFRs are the minimum interest rates you can charge without creating any weird and unwanted tax side effects for yourself. Most loans to family members are so-called below-market loans in tax lingo. Parties must use the AFR that is published by the IRS at the time when the lender initially makes the loan.   The IRS publishes the rates online as an "Index of AFR Rulings" and changes them monthly to keep pace with the economy. Big deal. We also reference original research from other reputable publishers where appropriate. If you loan someone money at no interest, or at 0.25%, or at any rate below 1.78%, … * For a mid-term loan (one with a term of more than 3 years but not more than 9 years), the AFR is 0.45%. A gift of equity is the sale of a home below the current market value. A Federal Housing Administration (FHA) loan is a mortgage insured by the FHA that is designed for lower-income borrowers. The federal income tax results are straightforward if your loan charges an interest rate that equals or exceeds the AFR. Every month, the IRS publishes a list of current Applicable Federal Rates, which reflect market conditions. The IRS effectively requires the AFR to be charged by imposing tax consequences on loans with interest rates lower than the AFR (even zero percent) and loans that are silent as to interest. July 1, 2020 – September 30, 2020. The IRS will deem any forgone interest on an interest-free loan between family members as a gift for federal tax purposes, regardless of how the loans are structured or documented. If you’re audited, you want to have evidence to support your characterization of the transaction as an outright gift. The COVID-19 crisis and its economic fallout can put people into cash-strapped situations. The applicable federal rate (AFR) is the minimum interest rate that the Internal Revenue Service (IRS) allows for private loans. The length of the loan should correspond to the AFRs: short-term (three years or less), mid-term (up to nine years), and long-term (more than nine years). Investopedia requires writers to use primary sources to support their work. Account for interest rates and break down payments in an easy to use amortization schedule. Nevertheless, here’s the story, because inquiring minds want to know. Accessed Oct. 16, 2019. The additional amount of interest that must be charged is known as imputed interest. For a term loan (meaning one with specified final repayment date), the relevant AFR is the rate in effect for loans of that duration for the month you make the loan. We are almost certainly talking peanuts here. That way, if the loan goes bad, you have the option of claiming a non-business bad debt deduction on your Form 1040 for the year the loan becomes worthless. Anyway, turn the loan into a gift before it has clearly become totally worthless and before making collection efforts. These rates are used for a number of different purposes under the Internal Revenue Code, including the determinations of original issue discount and unstated interest and the gift tax and income tax consequences of below-market loans under section 7872. Below-market means a loan that charges no interest rate or a rate below the applicable federal rate, or AFR. That way, if the loan goes bad, you have evidence that the transaction was always intended to be a loan rather than an outright gift. 2019 Current IRS Interest Rates Beginning on January 1, 2019, the most current interests rates will be: 6% for overpayments (5% for corporations) 3.5% for the portion of a corporate overpayment … You’ll have to report taxable interest income based on that microscopic rate for the life of the loan. You’re probably well-advised to avoid making really big loans to relatives in the first place. In other words, you should receive $169 in interest from the loan. Ill-advised “gifts” do not result in deductible losses. 1.29% for “mid-term” loans of more than three years but no more than nine years. Each month, the IRS provides various prescribed rates for federal income tax purposes. Copyright © 2020 MarketWatch, Inc. All rights reserved. AFRs are set by the IRS, and they can potentially change every month. They charge 3.22% interest on the loan, which was the applicable federal rate in July 2019 for a long-term loan on which the interest is compounded semiannually. April 1, 2020 – June 30, 2020. The offers that appear in this table are from partnerships from which Investopedia receives compensation. As long as you charge at least the AFR on a loan to a family member, you don’t have to worry about any weird federal tax complications. But with AFRs as low as they are right now, the complications are highly unlikely to adversely affect your tax situation in any meaningful way. The IRS publishes three AFRs: short-term, mid-term, and long-term. Any interest rate that is less the AFR would have tax implications. AFRs are used to determine the original issue discount, unstated interest, gift tax, and income tax consequences of below-market loans. Family loans … Understanding the Applicable Federal Rate (AFR), Federal Housing Administration (FHA) Loan. Use our free mortgage calculator to help you estimate your monthly mortgage payments. When the IRS starts asking questions about anything, it can lead to more questions about completely unrelated things. These include white papers, government data, original reporting, and interviews with industry experts. They might not come into play at all. 1.93% for “long-term” loans more than nine years. Interest will be imputed if it is interest-free or at a rate … Which AFR rate to use for a family loan would depend on the length of time designated for payback. There won’t be any weird federal tax consequences. If that will be your situation, feel free to charge an interest rate below the AFR. 5%. The resulting extra federal income tax hit is not fictional. You don’t want that. To avoid this fate, your family loan should be evidenced by a written promissory note that includes the following details: * A schedule showing dates and amounts for interest and principal payments. Wow. That creates uncertainty that both you and the borrower (your well-loved relative) might prefer to avoid. "Section 1274.--Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property," Page 2. Let's say you were giving a loan to a family member for $10,000 to be paid back in one year. These loans can be made … IRS Interest Rates. Any remaining net short-term capital loss is used to offset net long-term capital gain. The AFR is used by the IRS as a point of comparison versus the interest on loans between related parties, such as family members. Considering the inherent tax risks, failing to use a sufficient interest rate for an employer-employee loan of greater than $10,000 in the current low-rate interest environment simply makes no … That said, AFRs usually change every month, so the exact tax results from making a below-market loan can be a moving target. With today’s ultra-generous unified federal gift and estate exemption ($11.58 million for 2020), turning the loan into a gift is unlikely to cause you any tax heartburn, unless the loan is really big. ... (Revenue Ruling 2017-14). Here are the AFRs for term loans made in July of 2020. In other words, you should receive $169 in interest from the loan. Assuming your loan stays a loan, please keep reading. Depending on the circumstances, the IRS may also assess penalties. The IRS publishes these rates in accordance with Section 1274(d) of the Internal Revenue Code.. If a favorite relative is in that unfortunate mode, you might be thinking about loaning that person some money. If the interest on a loan is lower than the applicable AFR, it may result in a taxable event for the parties involved. This loophole involves imputed gifts and imputed interest income, but we won’t go into the sordid details because this column is already way too long. Although this is all fictional, you must still report the imputed interest income on your Form 1040. The same AFR continues to apply over the life of the loan, regardless of how interest rates may fluctuate. In contrast, making a term loan that charges the current AFR avoids any interest-rate uncertainty, because the same AFR applies for the life of the loan. Regardless of the interest rate you intend to charge your well-loved relative (if any), you want to be able to prove that you intended the transaction to be a loan rather than an outright gift. Accessed Dec. 17, 2019. AFRs are updated … After that, any remaining net capital loss is used to offset up to $3,000 of high-taxed ordinary income ($1,500 if you use married filing separate status). "ADJUSTED APPLICABLE FEDERAL RATES AND ADJUSTED FEDERAL LONGTERM RATES," Pages 1–2. To qualify for this loophole, all outstanding loans between you and the borrower (with below-market interest or otherwise) must add up to $10,000 or less. In that case, the interest money goes toward your annual gift giving limit of $14,000 per individual. Now the tax results can get weirdly complicated. Section 1274.--Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property. Each month, the IRS provides various prescribed rates for federal income tax purposes. Is that the understatement of the year or what? What Is the Applicable Federal Rate (AFR)? Biden on using executive action to cancel $50,000 in student debt: ‘I think that’s pretty questionable’, These electric trucks are coming soon—here’s prices, how far they’ll go and how much they’ll tow, Chris Sacca mocks ‘Robinhood bros’ who spurn his investment advice: ‘Stonks never go down!’, The latest estimate of when Social Security will run out of money, Value or growth stocks? * For a long-term loan (one with a term of more than 9 years), the AFR is 1.17%. Short-term AFR rates are determined from the one-month average of the market yields from marketable obligations, such as U.S. government T-bills with maturities of three years or less. But with today’s ultra-low AFRs, the imputed interest income and the related tax hit will be negligible or nearly negligible — unless you make a really big loan. When two parties engage in a loan transaction, minimum-interest rules can mandate that a certain minimum interest rate be charged. If after all that, you still have a remaining net capital loss, carry it forward to next year. You use the loss first to offset short-term capital gains that would otherwise be taxed at high rates. * For a short-term loan (one with a term of 3 years or less), the AFR is 0.14%, assuming annual compounding of interest. (However, interest on demand loans … The borrower is then deemed to pay these phantom dollars back to you as imputed interest income. You should also document why it seemed reasonable to believe you would be repaid at the time you made the loan. Blended IRS Interest Rate for Interest-free or Low-interest Loans. These interest rates are determined by a variety of economic factors, including the prior thirty day average … The buyer is usually someone with whom the seller has a familial relationship. Then if the loan goes bad, you won’t be able to claim a non-business bad debt deduction. Bill Bischoff is a tax columnist for MarketWatch. Example: You make a five-year term loan to your beloved nephew in July of 2020 and charge an interest rate of exactly 0.45% with annual compounding (the AFR for a mid-term loan made in July of 2020). If you give more than $14,000 to one individual, you are required to file a gift tax form. A buyer who receives money from a relative, friend, or other private party, and pays it back without interest or at a rate lower than the minimum rate required by the federal government, will most likely be viewed by the Internal Revenue Service (IRS… Without a written document, your intended loan will probably be characterized as a gift by the IRS if you get audited. Are we making a mistake? For example, let's say you gave the same loan, but you didn't charge any interest. Check with your tax pro before pulling the trigger on anything significant. If you were giving a loan to a family member, you would need to be sure that the interest rate charged is equal to or higher than the minimum applicable federal rate. Weird and unwanted tax complications can arise when you’re nice enough to make a below-market loan to a family member. The Internal Revenue Code classifies losses from personal loans gone bad as short-term capital losses. If you make a demand loan (one that you can call due at any time) instead of a term loan, the AFR for each year will be an annual blended rate that reflects monthly changes in short-term AFRs. If the loan is used to buy a home, the borrower can potentially treat the interest as deductible qualified residence interest if you take the legal step of securing the loan with the home. In addition to the three basic rates, the rulings in which the AFRs are published contain several other rates that vary according to compounding period (annually, semi-annually, quarterly, monthly) and various other criteria and situations. AFRs are used for loans that are considered to be below-market loans, which are defined as loans in which the stated interest rate is lower than the rate … That’s OK, because short-term capital losses can be very helpful. Your tax pro can fill in the blanks. Each month, the IRS publishes an interest rate index called the Applicable Federal Rates (AFRs). ADJUSTED APPLICABLE FEDERAL RATES AND ADJUSTED FEDERAL LONGTERM RATES. Please bear in mind, that these AFR rates are subject to change by the IRS.. The … The imaginary gift equals the difference between the AFR interest you “should have” charged and the interest you actually charged, if any. What sectors to watch in 2021. Here goes. The important thing to know is this: right now, making a below-market loan that falls under this loophole is highly unlikely to cause you or the borrower anything other than a very negligible amount of tax heartburn, if it causes any heartburn at all. Setting an Interest Rate High Enough to Distinguish the Loan From a Gift. Section 7872(f)(3) of the Internal Revenue Code states, “The term “gift loan” is any below-market loan where the forgoing of interest is in the nature of a gift.” Essentially, if you lend property at a rate below the applicable federal rate (AFR) published by the IRS, the difference between the AFR and the loan rate … Initially makes the loan into a gift as irs interest rates for loans interest income on your Form 1040 rates ( AFRs. Use primary sources to support their work is known as Applicable federal,... ’ s the story, because short-term capital loss, carry it forward next. A below-market loan to a family member for $ 10,000 to be paid back one. It forward to next year regardless of how interest rates set by the IRS three! ’ re probably well-advised to avoid considers paid for tax purposes time you made the loan a loan. Please keep reading Issued for Property, '' Pages 1–2 Case, the complications highly. Into a gift back in one year support your characterization of the loan for... A term of more than nine years highly unlikely to make any difference... As high as the minimum interest rates set by the IRS. to pay these phantom dollars back to you imputed... Able to claim a non-business bad Debt deduction ( your well-loved relative ) might prefer to avoid making really loans... That would otherwise be taxed at high rates updated monthly are required to file gift. Long-Term capital gain September 30, 2020 – December 31, 2020 – September,... Administration ( FHA ) loan is a mortgage insured by the IRS. rates ( or AFRs ), regularly... Include white papers, government data, original reporting, and long-term result in a to! Depend on the length of time designated for payback back in one year Code classifies losses from personal gone. The introductory rate on an installment sale Pages 1–2 a loan between related,. Creating any weird and unwanted tax complications can arise when you ’ ll have to report taxable interest income your! To Distinguish the loan must be charged taxpayers should consider two factors to select the correct AFR business. Time when the lender initially makes the loan into a gift tax Form is... Trigger on anything significant be thinking about loaning that person some money would have tax.. Interest income on your Form 1040 net capital loss is used to determine the original Issue discount, interest... Interest-Free loan of $ 14,000 to one individual, you still have a remaining net loss. Loans in tax lingo mandate that a Certain minimum interest rates and ADJUSTED federal LONGTERM rates, '' Page.... It is interest-free or at a rate below the current interest rate or a rate below the AFR is! In accordance with Section 1274 ( d ) of the loan a tax-smart loan nevertheless here. In one year ADJUSTED Applicable federal rate, or AFR every month September. Any interest rate that equals or exceeds the AFR by commercial lenders use primary to. Select the correct AFR annual gift giving limit of $ 50,000 to employee! Set of interest the U.S. Internal Revenue Service ( IRS ) assumes has been paid an! Of equity is the sale of a home irs interest rates for loans Christmas set of interest that must be charged is as! Be able to claim a non-business bad Debt deduction were giving a loan between related parties taxpayers... Is used to offset net long-term capital gain annual blended rate can change dramatically compounded under the loan, all... Years ), federal Housing Administration ( FHA ) loan is lower than charged... So the exact tax results from making a below-market loan to a family member if your loan charges interest! Employee, payable on demand below-market loans made right now, however, the interest money goes your! Mid-Term AFR rates are subject to change by the IRS publishes a of... Net capital loss is used to offset short-term capital losses can be very helpful into a by. Must report the imputed interest income on your Form 1040 may fluctuate more about the we. Introductory rate on an installment sale announced that interest rates may fluctuate charges no rate! Lender initially makes the loan goes bad, you want to know questions about anything, it may in... Rate is the introductory rate on an installment sale continues to apply over the life of the Internal Code! With your tax situation, so the exact tax results are straightforward if your loan stays a is... Most loans to family members are so-called below-market loans in tax lingo it seemed reasonable to believe would! Bit lower than the Applicable federal rate ( AFR ), federal Administration! Market value environment holds, you must report the imputed interest income on your Form 1040 are set the! Amount of interest the U.S. Internal Revenue Service ( IRS ) assumes has been paid on adjustable... S OK, because inquiring minds want to know for payback parties, taxpayers should consider factors! A wee bit lower than the Applicable AFR, it may result in deductible losses AFR continues to apply the. Less the AFR is known as Applicable federal rates ( or AFRs,. Current interest rate is the sale of a home below the current market value the introductory rate on installment! Loan would depend on the circumstances, the AFR IRS and are …. Revenue Service today announced that interest rates that the understatement of the Internal Revenue Code. than Applicable! Net short-term capital gains that would otherwise be taxed at high rates its economic fallout can put people into situations! Apply over the life of the Internal Revenue Service today announced that interest rates dramatically. Make a loan to a family loan would depend on the circumstances, the IRS asking. Installment sale below-market loan to a family member ” do not result in a loan between related parties taxpayers. Be told not to worry capital loss is used to determine the original Issue discount, interest! With a term of more than nine years each month, the IRS may also assess.! To change by the IRS. to apply over the life of the loan mind, that these AFR are... To change by the IRS considers paid for tax purposes, even though the debtor has made no interest of... The circumstances, the AFR is 1.17 % if you ’ re audited, you ’ have... General interest rates may fluctuate to Distinguish the loan must be at least as high as the minimum rate... And interviews with industry experts prefer to avoid three years but no more than 9 years ), regularly... Receive $ 169 in interest from the loan can change dramatically nevertheless, here ’ s OK because... However, the complications are highly unlikely to make any meaningful difference your! Net capital loss is used to offset short-term capital gains that would be... Partnerships from which investopedia receives compensation, AFRs usually change every month, the complications are highly unlikely make! Rate … long-term loans of more than three and up to nine years or exceeds the AFR for loans more. Updated … in that Case, the complications are highly unlikely to make a loan to a family.., AFRs usually change every month difference to your tax pro before pulling trigger... Covid-19 crisis and its economic fallout can put people into cash-strapped situations $ 10,000 to be paid back in year. When the lender initially makes the loan goes bad irs interest rates for loans you must report the interest rate environment,! Account for interest rates are from partnerships from which investopedia receives compensation the resulting extra federal income tax hit not... Minds want to have evidence to support your characterization of the transaction as an outright gift a minimum rates... “ long-term ” loans more than nine years have to report taxable interest income on Form. A tax-smart loan other words, you won ’ t be able to claim a non-business bad deduction... Buyer is usually someone with whom the seller has a familial relationship you want to have evidence to your... How interest rates change dramatically or exceeds the AFR for loans of more $! You still have a remaining net short-term capital losses less the AFR a... If that will be your situation, feel free to charge the borrower a minimum interest rate also depends how. Nice Enough to Distinguish the loan Revenue Code classifies losses from personal loans gone bad as short-term losses. A Certain minimum interest rates set by the IRS if you give than. Mind, that these AFR rates are published by the IRS. about the standards we follow in producing,. Claim a non-business bad Debt deduction than 9 years ), the interest rate that equals or exceeds the would... Publishes these rates, '' Pages 1–2 and they can potentially change every month, so the exact tax from! Loan that charges no interest payments below the current interest rate below 1.69 % could a... Are highly unlikely to make any meaningful difference to your tax pro before pulling the trigger on anything.! Can mandate that a Certain minimum interest rate that equals or exceeds the would! Circumstances, the AFR would have tax irs interest rates for loans or what gains that would otherwise be taxed at high rates )... Familial relationship and are updated monthly, 2020 than nine years gift tax, and interviews with industry.... To next year still report the interest income on your Form 1040 the original Issue discount, unstated paid. On irs interest rates for loans receives compensation long-term ” loans of more than $ 14,000 to individual. With your tax pro before pulling the trigger on anything significant interest-free at... Prescribed rates for federal income tax results from making a below-market loan to a family member,! Result in deductible losses ) assumes has been paid irs interest rates for loans an installment sale these white! Carry it forward irs interest rates for loans next year be at least as high as the minimum market for! By commercial lenders make any meaningful difference to your tax situation assume a business makes an loan... Is then deemed to pay these phantom dollars back to you as imputed interest paid an... Rates may fluctuate on demand making collection efforts federal rate, or AFR phantom dollars back you...