You do not need to report the refund, except the part that is interest. It is fully taxable and needs to be entered as a form 1099-INT entry in TurboTax as follows:
1. Go to the "Federal" section of TurboTax
2. Click on "Income and Expenses"
3. Find "Interest and Dividends"
4. Click on "Interest on a 1099-INT"
5. Click on the "Start" button or "Update" button next to it
6. Click on the option "I'll type it in myself"
7. Enter the name of the company that paid you and enter the interest amount received
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