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

Subject

Historical Virginia tax interest rates for April-June 2009

Plain-English summary

Virginia set both tax-underpayment and tax-overpayment interest at 6% for April 1 through June 30, 2009. Federal underpayment and noncorporate overpayment rates were 4%, and the cited Virginia statute added two percentage points.

For taxpayers with a March 31, 2009 year-end, the 6% underpayment rate applied through the July 15, 2009 return due date when computing additions for underpaid Virginia estimated income tax on the listed corporate, individual, fiduciary, farmer, and fisherman forms.

The bulletin separately explained local-tax limits. Localities using Va. Code § 58.1-3916 could charge no more than 10% during the first delinquency year and, in later years, no more than the greater of 10% or the applicable federal underpayment rate. A locality charging delinquent-tax interest also had to pay the same rate on overpayments or erroneous assessments.

What this means for you

• These 6% rates applied only to the second quarter of 2009.
• Historical interest calculations should use the rate for each accrual period, not today's rate.
• Estimated-tax additions can reference the quarter's rate through a return due date.
• Local delinquency and refund interest followed separate statutory rules.

Common questions

What were Virginia's state rates for the quarter?

6% for assessments and 6% for refunds.

What period did the bulletin cover?

April 1 through June 30, 2009.

Was the local-tax rate automatically 6%?

No. The bulletin described separate local caps and matching-refund requirements under Va. Code § 58.1-3916.

Citations and references

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

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 09-28

Original ruling text

TAX BULLETIN 09-3
Virginia Department of Taxation

March 16, 2009

VIRGINIA’S SECOND QUARTER 2009 INTEREST
RATES WILL CHANGE

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 second 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 second 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 March 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 second quarter 6% underpayment rate will apply through the due date of the return, July 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 second quarter of 2009, the federal underpayment rate is 6%.

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-09
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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