What Virginia tax interest rates applied during the fourth quarter of 2009?

Plain-English summary

Virginia's underpayment and overpayment rates both remained 6% for the fourth quarter of 2009. The corresponding federal rate was 4% for tax underpayments and for overpayments by taxpayers other than corporations. Virginia law set the state rates two percentage points above the corresponding federal rates.

The 6% underpayment rate also applied to the estimated-income-tax addition for taxpayers whose taxable year ended September 30, 2009, through the return due date stated in the bulletin.

Local delinquent-tax interest followed separate limits. A locality could charge up to 10% for the first delinquency year and, for later years, up to the greater of 10% or the applicable federal underpayment rate. Localities charging delinquency interest also had to pay interest on overpayments and erroneous assessments at the same rate.

What this means for you

• These rates apply only to the fourth quarter of 2009.
• Match the rate to the period when interest accrued, not merely the return or assessment year.
• Virginia state rates and local tax rates followed different statutory formulas.
• The bulletin's historical rate table helps identify rates for earlier accrual periods.

Common questions

What was Virginia's Q4 2009 assessment rate?

6%.

What was Virginia's Q4 2009 refund rate?

6%.

What corresponding federal rate did the bulletin report?

4% for underpayments and noncorporate overpayments.

Citations and references

• IRC § 6621.
• Va. Code §§ 58.1-15 and 58.1-3916.
• Virginia Tax Bulletin 09-9.

Subject

2009 Fourth Quarter Interest Rates

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 09-138

Original ruling text

TAX BULLETIN 09 - 9

Virginia Department of Taxation

September 17, 2009

VIRGINIA’S FOURTH QUARTER 2009 INTEREST

RATES WILL REMAIN THE SAME

Federal Rates To Change: State and certain local interest rates are subject to change every quarter due to changes in federal rates established pursuant to IRC § 6621. Federal rates for the fourth quarter of 2009 will be 4% for tax underpayments (assessments) and 4% for tax overpayments (refunds) by taxpayers other than corporations. Va. Code § 58.1-15 provides that underpayment rates for Virginia taxes will be 2% higher than the corresponding federal rates and overpayment rates for Virginia taxes will be 2% higher than the federal rate.

Accordingly, the Virginia rates for the fourth quarter of 2009 will be 6% for tax underpayments (assessments) and 6% for tax overpayments (refunds).

Rate for Addition to Tax for Underpayments of Estimated Tax

Taxpayers whose taxable year ends on September 30, 2009 : For the purpose of computing the addition to the tax for underpayment of Virginia estimated income taxes on Form 500C (for corporations), Form 760C (for individuals, estates and trusts), or Form 760F (for farmers and fishermen), the fourth quarter 6% underpayment rate will apply through the due date of the return, January 15, 2009.

Local Tax

Assessments: Localities that assess interest on delinquent taxes under Va. Code § 58.1-3916 may impose interest at a rate not to exceed 10% for the first year of delinquency, and at a rate not to exceed 10% or the federal underpayment rate in effect for the applicable quarter, whichever is greater, for the second and subsequent years of delinquency. For the fourth quarter of 2009, the federal underpayment rate is 4%.

Refunds: Localities that charge interest on delinquent taxes are required to pay interest to taxpayers on all overpayments or erroneously assessed taxes at the same rate as they charge interest on delinquent taxes under Va. Code § 58.1-3916. Recent Interest Rates

Accrual Period
Overpayment
Underpayment

Beginning
Through
(Refund)
(Assessment)

1-Apr-00
31-Mar-01
11%
11%

1-Apr-01
30-Jun-01
10%
10%

1-Jul-01
31-Dec-01
9%
9%

1-Jan-02
31-Dec-02
8%
8%

1-Jan-03
30-Sep-03
7%
7%

1-Oct-03
31-Mar-04
6%
6%

1-Apr-04
30-Jun-04
7%
7%

1-Jul-04
30-Sep-04
6%
6%

1-Oct-04
31-Mar-05
7%
7%

1-Apr-05
30-Sep-05
8%
8%

1-Oct-05
30-Jun-06
9%
9%

1-Jul-06
31-Dec-07
10%
10%

1-Jan-08
31-Mar-08
9%
9%

1-Apr-08
30-Jun-08
8%
8%

1-Jul-08
30-Sep-08
7%
7%

1-Oct-08
31-Dec-08
8%
8%

1-Jan-09
31-Mar-09
7%
7%

1-Apr-09
30-Jun-10
6%
6%

Additional Information: Contact Customer Services, Virginia Department of Taxation, P. O. Box 1115, Richmond, Virginia 23218-1115, or call the following numbers for more information about interest rates and penalties.

Individual & Fiduciary Income Tax (804) 367-8031

Corporation Income Tax (804) 367-8037

Withholding Tax (804) 367-8037

Soft Drink Excise Tax (804) 786-2450

Aircraft Sales & Use Tax (804) 786-2450

Other Sales & Use Taxes (804) 367-8037

This Tax Bulletin, along with other reference documents, is available online in the Tax Policy Library section of the Department of Taxation’s website, located at www.tax.virginia.gov.