The Fiscal Service, part of the Treasury Department, has issued a notice about the interest rate applicable under the Prompt Payment Act and the Contract Disputes Act. For the period from January 1, 2021, to June 30, 2021, the interest rate is set at 7/8 percent per annum. This rate is used to calculate interest penalties on late payments by federal agencies to businesses. The notice emphasizes that these penalties must be paid regardless of whether the business requests them.
Simple Explanation
The Fiscal Service from the Treasury Department has announced that from January 1 to June 30, 2021, if the government pays a bill late, they have to give a little extra money, called interest, which is set at about 0.875% per year, to the business they owe, even if the business doesn’t ask for it.