What Virginia tax interest rates applied during the third quarter of 2016?

Subject

Third Quarter Interest Rates 2016

Plain-English summary

Virginia announced the following rates for the third quarter of 2016:

• 6% annual interest on Virginia tax underpayments and assessments;
• 6% annual interest on Virginia tax overpayments and refunds; and
• 1% reduced interest for qualifying assessments in dispute, beginning nine months after assessment while a Department administrative appeal remained pending.

The corresponding federal underpayment and noncorporate overpayment rates were 4%. Va. Code § 58.1-15 set Virginia's rates two percentage points higher.

For taxpayers with a taxable year ending June 30, 2016, the 6% rate applied to estimated-income-tax underpayment additions through the October 15, 2016 return due date. Localities could apply delinquency and refund interest under Va. Code § 58.1-3916 subject to that statute's separate limits.

Citations and references

• IRC § 6621.
• Va. Code §§ 58.1-15, 58.1-1822, and 58.1-3916.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 16-121

Original ruling text

TAX BULLETIN 16-4
Virginia Department of Taxation
June 17, 2016

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. IRC § 6621 dictates that the federal underpayment and overpayment rates are three percentage points higher than the federal short-term rate. Federal rates for the third quarter of 2016 will be 4% for tax underpayments (assessments) and 4% for tax overpayments (refunds) by taxpayers other than corporations.

Virginia Code § 58.1-15 provides that the underpayment rate for Virginia taxes will be 2% higher than the corresponding federal rate and the overpayment rate for Virginia taxes will be 2% higher than the corresponding federal rate. Accordingly, the Virginia rates for the third quarter of 2016 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, 2016 : 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, 2016.

Reduced Rate for Certain Assessments in Dispute:

Assessments in Dispute : During the 2011 session, the General Assembly passed Senate Bill 1152 (Chapter 295, 2011 Acts of Assembly), which created a reduced rate for certain assessments in dispute. If a taxpayer files an administrative appeal with the Department of Taxation on or after July 1, 2011, interest begins accruing at the standard underpayment rate until nine months from the date of assessment. From nine months after the date of assessment until a determination is issued, interest accrues at the federal short-term rate established pursuant to IRC § 6621(b).

The federal short-term rate established pursuant to IRC § 6621(b) for the third quarter of 2016, rounded to the nearest whole percent, is 1%. Accordingly, the reduced rate for the third quarter of 2016 for qualifying assessments in dispute is 1%. This rate applies only to contested assessments for which an administrative appeal was filed on or after July 1, 2011 and the Department has not made a determination within nine months from the date of assessment. See Va. Code § 58.1-1822 for more information.

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 2016, 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 (Refund)

Underpayment (Assessment)

Reduced

Rate

Beginning

Through

1-Jul-04

30-Sept-04

6%

6%

-

1-Oct-04

31-Mar-05

7%

7%

-

1-Apr-05

30-Sept-05

8%

8%

-

1-Oct-05

30-Jun-06

9%

9%

-

1-July-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-Sept-08

7%

7%

-

1-Oct-08

31-Dec-08

8%

8%

-

1-Jan-09

31-Mar-09

7%

7%

-

1-Apr-09

31-Dec-10

6%

6%

-

1-Jan-11

31-Mar-11

5%

5%

-

1-Apr-11

30-Sept-11

6%

6%

-

1-Oct-11

31-Mar-16

5%

5%

0%

1-Apr-16

30-Sept-16

6%

6%

1%

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 Laws, Rules and Decisions section of the Department of Taxation's website, located at www.tax.virginia.gov.

Factors for Computing Daily Interest

6%

(Simple interest pursuant to Va. Code § 58.1-15)

365 day year

1
0.00016
53
0.00871
105
0.01726
157
0.02581
210
0.03452
262
0.04307
314
0.05162

2
0.00033
54
0.00888
106
0.01742
158
0.02597
211
0.03468
263
0.04323
315
0.05178

3
0.00049
55
0.00904
107
0.01759
159
0.02614
212
0.03485
264
0.04340
316
0.05195

4
0.00066
56
0.00921
108
0.01775
160
0.02630
213
0.03501
265
0.04356
317
0.05211

5
0.00082
57
0.00937
109
0.01792
161
0.02647
214
0.03518
266
0.04373
318
0.05227

6
0.00099
58
0.00953

162
0.02663
215
0.03534
267
0.04389
319
0.05244

7
0.00115
59
0.00970
110
0.01808
163
0.02679
216
0.03551
268
0.04405

8
0.00132

111
0.01825
164
0.02696
217
0.03567
269
0.04422
320
0.05260

9
0.00148
60
0.00986
112
0.01841
165
0.02712
218
0.03584

321
0.05277

61
0.01003
113
0.01858
166
0.02729
219
0.03600
270
0.04438
322
0.05293

10
0.00164
62
0.01019
114
0.01874
167
0.02745

271
0.04455
323
0.05310

11
0.00181
63
0.01036
115
0.01890
168
0.02762
220
0.03616
272
0.04471
324
0.05326

12
0.00197
64
0.01052
116
0.01907
169
0.02778
221
0.03633
273
0.04488
325
0.05342

13
0.00214
65
0.01068
117
0.01923

222
0.03649
274
0.04504
326
0.05359

14
0.00230
66
0.01085
118
0.01940
170
0.02795
223
0.03666
275
0.04521
327
0.05375

15
0.00247
67
0.01101
119
0.01956
171
0.02811
224
0.03682
276
0.04537
328
0.05392

16
0.00263
68
0.01118

172
0.02827
225
0.03699
277
0.04553
329
0.05408

17
0.00279
69
0.01134
120
0.01973
173
0.02844
226
0.03715
278
0.04570

18
0.00296

121
0.01989
174
0.02860
227
0.03732
279
0.04586
330
0.05425

19
0.00312
70
0.01151
122
0.02005
175
0.02877
228
0.03748

331
0.05441

71
0.01167
123
0.02022
176
0.02893
229
0.03764
280
0.04603
332
0.05458

20
0.00329
72
0.01184
124
0.02038
177
0.02910

281
0.04619
333
0.05474

21
0.00345
73
0.01200
125
0.02055
178
0.02926
230
0.03781
282
0.04636
334
0.05490

22
0.00362
74
0.01216
126
0.02071
179
0.02942
231
0.03797
283
0.04652
335
0.05507

23
0.00378
75
0.01233
127
0.02088

232
0.03814
284
0.04668
336
0.05523

24
0.00395
76
0.01249
128
0.02104
180
0.02959
233
0.03830
285
0.04685
337
0.05540

25
0.00411
77
0.01266
129
0.02121
181
0.02975
234
0.03847
286
0.04701
338
0.05556

26
0.00427
78
0.01282

182
0.02992
235
0.03863
287
0.04718
339
0.05573

27
0.00444
79
0.01299
130
0.02137
183
0.03008
236
0.03879
288
0.04734

28
0.00460

131
0.02153
184
0.03025
237
0.03896
289
0.04751
340
0.05589

29
0.00477
80
0.01315
132
0.02170
185
0.03041
238
0.03912

0.00000
341
0.05605

81
0.01332
133
0.02186
186
0.03058
239
0.03929
290

342
0.05622

30
0.00493
82
0.01348
134
0.02203
187
0.03074

291
0.04784
343
0.05638

31
0.00510
83
0.01364
135
0.02219
188
0.03090
240
0.03945
292
0.04800
344
0.05655

32
0.00526
84
0.01381
136
0.02236
189
0.03107
241
0.03962
293
0.04816
345
0.05671

33
0.00542
85
0.01397
137
0.02252

242
0.03978
294
0.04833
346
0.05688

34
0.00559
86
0.01414
138
0.02268
190
0.03123
243
0.03995
295
0.04849
347
0.05704

35
0.00575
87
0.01430
139
0.02285
191
0.03140
244
0.04011
296
0.04866
348
0.05721

36
0.00592
88
0.01447

192
0.03156
245
0.04027
297
0.04882
349
0.05737

37
0.00608
89
0.01463
140
0.02301
193
0.03173
246
0.04044
298
0.04899

38
0.00625

141
0.02318
194
0.03189
247
0.04060
299
0.04915
350
0.05753

39
0.00641
90
0.01479
142
0.02334
195
0.03205
248
0.04077

351
0.05770

0.00000
91
0.01496
143
0.02351
196
0.03222
249
0.04093
300
0.04932
352
0.05786

40
0.00658
92
0.01512
144
0.02367
197
0.03238

301
0.04948
353
0.05803

41
0.00674
93
0.01529
145
0.02384
198
0.03255
250
0.04110
302
0.04964
354
0.05819

42
0.00690
94
0.01545
146
0.02400
199
0.03271
251
0.04126
303
0.04981
355
0.05836

43
0.00707
95
0.01562
147
0.02416

252
0.04142
304
0.04997
356
0.05852

44
0.00723
96
0.01578
148
0.02433
200
0.03288
253
0.04159
305
0.05014
357
0.05868

45
0.00740
97
0.01595
149
0.02449
201
0.03304
254
0.04175
306
0.05030
358
0.05885

46
0.00756
98
0.01611

202
0.03321
255
0.04192
307
0.05047
359
0.05901

47
0.00773
99
0.01627
150
0.02466
203
0.03337
256
0.04208
308
0.05063

48
0.00789

151
0.02482
204
0.03353
257
0.04225
309
0.05079
360
0.05918

49
0.00805
100
0.01644
152
0.02499
205
0.03370
258
0.04241

361
0.05934

101
0.01660
153
0.02515
206
0.03386
259
0.04258
310
0.05096
362
0.05951

50
0.00822
102
0.01677
154
0.02532
207
0.03403

311
0.05112
363
0.05967

51
0.00838
103
0.01693
155
0.02548
208
0.03419
260
0.04274
312
0.05129
364
0.05984

52
0.00855
104
0.01710
156
0.02564
209
0.03436
261
0.04290
313
0.05145
365
0.06000