What is South Carolina's tax interest rate for the period ending June 30, 2010 (per SC IL #10-2)?

Plain-English summary

South Carolina's interest rate on both tax underpayments and overpayments is 4% for the period April 1, 2009 through June 30, 2010. The rate is set under S.C. Code § 12-54-25 and changes periodically as the underlying federal rate moves.

Two mechanical points matter. First, the interest is compounded daily, except that simple interest applies to underpayments of declaration of estimated tax. Second, for fiscal year 2009-2010, budget provisos direct the Department to reduce the interest it pays on eligible refunds by a total of two percentage points from the listed rate. Because the listed rate is 4%, the reduction brings the interest paid on eligible refunds to 2% while that rate is in effect.

The letter also reproduces the Department's full historical interest-rate table going back to 1985, which is useful when computing interest across older periods.

What this means for you

If you owe South Carolina tax

Interest accrues at 4% for the April 1, 2009 through June 30, 2010 period, compounded daily (simple interest for underpaid estimated tax). Interest is separate from any penalties.

If South Carolina owes you a refund

For fiscal year 2009-2010, the interest the state pays on eligible refunds is reduced by two percentage points under budget provisos, which brings refund interest to 2% while the 4% rate is in effect. This reduction is a temporary measure tied to that fiscal year.

Common questions

Q: What is the South Carolina interest rate for this period?
A: 4% on both underpayments and overpayments for April 1, 2009 through June 30, 2010, compounded daily.

Q: Does the 4% rate apply to the interest the state pays me on a refund?
A: No. For fiscal year 2009-2010 the refund-interest rate is reduced by two percentage points to 2%.

Q: How is the interest computed?
A: It is compounded daily, except that simple interest applies to underpayments of declaration of estimated tax.

Subject

Interest Rate

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL10-2.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214
Website Address: http://www.sctax.org

SC INFORMATION LETTER #10-2

SUBJECT:

Interest Rate

DATE:

March 12, 2010

REFERENCE:

S.C. Code Ann. Section 12-54-25 (Supp. 2008)
Act 23, Part IB, Section 72, Proviso 72.17 (2009)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2000)
SC Revenue Procedure #05-2

SCOPE:

An Information Letter is a written statement issued to the public to announce
general information useful in complying with the laws administered by the
Department. An Information Letter has no precedential value.

The interest rate to be applied to underpayments and overpayments is listed below.* The rate is
compounded daily except simple interest applies to the underpayment of declaration of estimated
tax.
Period

Rate*

Period

Rate*

9/1/85 – 12/31/85
1/1/86 – 6/30/86
7/1/86 – 9/30/87
10/1/87 – 12/31/87
1/1/88 – 3/31/88
4/1/88 – 9/30/88
10/1/88 – 3/31/89
4/1/89 – 9/30/89
10/1/89 – 3/31/91
4/1/91 – 12/31/91
1/1/92 – 3/31/92
4/1/92 – 9/30/92
10/1/92 – 6/30/94
7/1/94 – 9/30/94
10/1/94 – 3/31/95
4/1/95 – 6/30/95
7/1/95 – 3/31/96
4/1/96 – 6/30/96
7/1/96 – 3/31/98
4/1/98 – 12/31/98
1/1/99 – 3/31/99

11%
10%
9%
10%
11%
10%
11%
12%
11%
10%
9%
8%
7%
8%
9%
10%
9%
8%
9%
8%
7%

4/1/99 – 3/31/00
4/1/00 – 3/31/01
4/1/01 – 6/30/01
7/1/01 – 12/31/01
1/1/02 – 12/31/02
1/1/03 – 9/30/03
10/1/03 – 3/31/04
4/1/04 – 6/30/04
7/1/04 – 9/30/04
10/1/04 – 3/31/05
4/1/05 – 9/30/05
10/1/05 – 6/30/06
7/1/06 – 12/31/07
1/1/08 – 3/31/08
4/1/08 – 6/30/08
7/1/08 – 9/30/08
10/1/08 – 12/31/08
1/1/09 – 3/31/09
4/1/09 – 6/30/10

8%
9%
8%
7%
6%
5%
4%
5%
4%
5%
6%
7%
8%
7%
6%
5%
6%
5%
4%

• Note reduction of interest rate on refunds. 2009 Act 23, Part IB, Section 72, Proviso 72.17
  directs the Department to reduce the rate of interest paid on eligible refunds by two
  percentage points from the above listed rates for refunds paid from July 1, 2009 through
  June 30, 2010.