What interest rates did Virginia apply to state tax assessments and refunds in the third quarter of 2009?

Subject

Historical third-quarter 2009 Virginia tax interest rates

Plain-English summary

Virginia set both state tax assessment and refund interest at 6% for the third quarter of 2009. Virginia law added two percentage points to the corresponding federal rates identified in the bulletin.

For taxpayers with taxable years ending June 30, 2009, the 6% third-quarter underpayment rate applied through the October 15, 2009 return due date when computing additions for underpaid Virginia estimated income tax on Forms 500C, 760C, or 760F.

The bulletin also summarized separate local-tax rules: localities could charge delinquent-tax interest within statutory limits and, when charging such interest, had to pay interest on overpayments or erroneous assessments at the same rate.

What this means for you

• The 6% rates applied only to the historical third quarter of 2009.
• Virginia state rates were linked to quarterly federal rates under the cited statutes.
• Estimated-tax additions could span the quarterly rate through the applicable return due date.
• Local tax interest followed different statutory ceilings and matching-refund requirements.

Common questions

What was the Virginia assessment rate?

6% for the third quarter of 2009.

What was the Virginia refund rate?

Also 6% for that quarter.

Citations and references

• IRC § 6621.
• Va. Code §§ 58.1-15 and 58.1-3916.
• Forms 500C, 760C, and 760F, as identified in the bulletin.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Tax Bulletin: P.D. 09-91 / Tax Bulletin 09-6

Original ruling text

TAX BULLETIN 09 - 6
Virginia Department of Taxation

June 8, 2009

VIRGINIA’S THIRD 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 third 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 third 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 June 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 third quarter 6% underpayment rate will apply through the due date of the return, October 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 third 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-Sep-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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