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

Subject

Second-quarter 2010 Virginia tax interest rates

Plain-English summary

Virginia kept both assessment and refund interest at 6% for the second quarter of 2010. The federal underpayment and noncorporate overpayment rates remained 4%, and the Virginia statute added two percentage points to each corresponding federal rate.

The bulletin applied the 6% underpayment rate to specified estimated-income-tax additions calculated on Forms 500C, 760C, and 760F through the stated July 15, 2010 return due date.

For local delinquent taxes, a locality using the cited statute could impose no more than 10% in the first year. In later years it could impose the greater of 10% or the applicable federal underpayment rate; that federal rate was 4% for the quarter. A locality charging delinquency interest also had to pay refund interest at the same rate.

The historical table showed Virginia's 6% assessment and refund rate had run from April 1, 2009, through June 30, 2010.

What this means for you

• This bulletin applies only to the second quarter of 2010.
• Virginia's quarterly rate tracked the federal rate plus two percentage points.
• Assessment and refund rates were both 6% for the period.
• Local tax interest followed separate caps and matching-refund rules.

Common questions

What dates did the 6% rate cover?

April 1 through June 30, 2010.

What federal rate drove the calculation?

4% for underpayments and noncorporate overpayments.

Did the bulletin set current rates?

No. It is historical quarterly 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. 10-19

Original ruling text

TAX BULLETIN 10-3
Virginia Department of Taxation

March 5, 2010

VIRGINIA’S SECOND 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 second 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 second 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 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, 2010.
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 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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