What is South Carolina's tax interest rate for the period ending September 30, 2010 (per SC IL #10-5)?

Plain-English summary

South Carolina's interest rate on both tax underpayments and overpayments is 4% for the period April 1, 2009 through September 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 2010-2011, budget provisos direct the Department to reduce the interest it pays on eligible refunds by a total of three percentage points from the listed rate. Because the listed rate is 4%, the reduction brings the interest paid on eligible refunds to 1% 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 September 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 2010-2011, the interest the state pays on eligible refunds is reduced by three percentage points under budget provisos, which brings refund interest to 1% 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 September 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 2010-2011 the refund-interest rate is reduced by three percentage points to 1%.

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/IL10-5.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 #10-5 (REVISED) 1
SUBJECT:

Interest Rate

DATE:

July 22, 2010

REFERENCE:

S.C. Code Ann. Section 12-54-25 (Supp. 2009)
House Bill 4657, Part IB, Provisos 72.17 and 89.142 (2010)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2000)
SC Revenue Procedure #09-3

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 – 9/30/10

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. Section 72, Proviso 72.17 and Section 89,
  Proviso 89.142 of 2010 House Bill 4657, Part IB direct the Department to reduce the rate of
  interest paid on eligible refunds by a total of three percentage points from the above listed
  rates for refunds paid from July 1, 2010 through June 30, 2011.
  1

This information letter is revised to reflect the additional one percentage point reduction of the interest
rate on refunds provided in Proviso 89.142 of 2010 House Bill 4657, Part IB, Section 89.