We received a letter from the Dept of the Treasury/ IRS - "Statement showing interest income from the Internal Revenue Service" for calendar year 2020. Says to report.

Yes, you are correct.  That is interest income entered as a 1099-INT form. 

Enter a 1099-Int under

Federal

Wages & Income

Interest and Dividends

Interest on 1099INT - Click the Start or Update button

For interest from the IRS put the amount in box 1.

Thank you!