What Virginia tax assessment and refund interest rates applied during the first quarter of 2010?

Subject

First-quarter 2010 Virginia tax interest rates

Plain-English summary

Virginia kept assessment and refund interest at 6% for the first quarter of 2010. Federal underpayment and noncorporate overpayment rates remained 4%, and the Virginia statute added two percentage points.

For taxpayers with calendar-year 2009 tax years, the 6% rate applied to specified estimated-income-tax additions through the stated return due dates: April 15, 2010 for corporations and May 1, 2010 for individuals and fiduciaries.

The bulletin also described local rules. A locality could impose up to 10% for the first year of delinquency and, in later years, the greater of 10% or the applicable federal underpayment rate. A locality charging delinquency interest had to pay interest on overpayments and erroneous assessments at the same rate.

What this means for you

• This bulletin applies only to January-March 2010.
• State assessment and refund rates were both 6%.
• The rate derived from a 4% federal rate plus two points.
• Local interest followed separate statutory limits.

Common questions

What dates did the rate cover?

January 1 through March 31, 2010.

What was the Virginia rate?

6% for both assessments and refunds.

Is this current guidance?

No. It is historical quarterly-rate guidance.

Citations and references

• IRC § 6621.
• Va. Code §§ 58.1-15 and 58.1-3916.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 09-181

Original ruling text

TAX BULLETIN
Virginia Department of Taxation

December 9, 2009

VIRGINIA’S FIRST QUARTER 2010 INTEREST
RATES WILL REMAIN THE SAME

Federal Rates Remain Unchanged: 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 first quarter of 2010 will remain 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 first quarter of 2010 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 December 31, 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 first quarter 6% underpayment rate will apply through the due date of the return, April 15, 2010 (for corporations) and May 1, 2010 (for individuals and fiduciaries).
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 first quarter of 2010, 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.
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