What Virginia tax interest rates applied in the fourth quarter of 2018 to assessments, refunds, disputed assessments, estimated tax, and local taxes?

Plain-English summary

Virginia Tax Bulletin 18-5 announced the interest rates for October 1 through December 31, 2018.

• State assessment underpayments: 7%
• State refund overpayments: 7%
• Reduced rate on qualifying disputed assessments: 2%

These are historical quarterly rates, not current standing rates.

How Virginia calculated the rates

IRC § 6621 set fourth-quarter federal underpayment and noncorporate overpayment rates at 5%. Va. Code § 58.1-15 added two percentage points, producing Virginia's 7% ordinary rates. The 2% appeal rate was the rounded federal short-term rate.

Estimated tax and local taxes

For taxable years ending September 30, 2018, the 7% estimated-tax underpayment rate applied through the January 15, 2019 return due date on Forms 500C, 760C, and 760F.

Localities could charge interest within Va. Code § 58.1-3916's limits and had to pay refund interest at the same rate they charged on delinquent taxes.

Common questions

What was Virginia's ordinary Q4 2018 rate? 7% for both assessments and refunds.

What was the qualifying disputed-assessment rate? 2%, beginning nine months after assessment for qualifying administrative appeals.

Can these percentages be used for a current balance? No. They apply only to the historical fourth quarter of 2018.

Citations and references

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

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-5-0

Original ruling text

TAX BULLETIN 18-5

Virginia Department of Taxation

September 21, 2018

VIRGINIA’S INTEREST RATES WILL REMAIN THE SAME

FOR THE FOURTH QUARTER OF 2018

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 Internal Revenue Code (“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 fourth quarter of 2018 will be 5% for tax underpayments (assessments) and 5% for tax overpayments (refunds) by noncorporate taxpayers.

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 federal overpayment rate for noncorporate taxpayers. Accordingly, the Virginia rates for the fourth quarter of 2018 will be 7% for tax underpayments (assessments) and 7% for tax overpayments (refunds).

Rate for Addition to Tax for Underpayments of Estimated Tax

Taxpayers whose taxable year ends on September 30, 2018: 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 fourth quarter 7% underpayment rate will apply through the due date of the return, January 15, 2019.

Reduced Rate for Certain Assessments in Dispute

For administrative appeals filed with the Department of Taxation on or after July 1, 2011, a reduced interest rate equal to the federal short term rate established pursuant to IRC § 6621(b) applies, beginning nine months after the date of assessment until a determination is issued. The federal short-term rate established pursuant to IRC § 6621(b) for the fourth quarter of 2018, rounded to the nearest whole percent, is 2%. Accordingly, the reduced rate for the fourth quarter of 2018 for qualifying assessments in dispute is 2%.

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 fourth quarter of 2018, the federal underpayment rate is 5%.

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

31-Mar-18

6%

6%

1%

1-Apr-18

31-Dec-18

7%

7%

2%

Additional Information: This Tax Bulletin, along with other reference documents, is available online in the Laws, Rules and Decisions section of the Department’s website, located at www.tax.virginia.gov . If you have questions about interest rates, please visit Virginia Tax’s website or contact the Department at 804.367.8031 (for individuals), 804.786.2450 (for Soft Drink Excise Tax and Aircraft Sales and Use Tax), or

804.367.8037 (for all other business taxes).

Factors for Computing Daily Interest
7%

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

1
0.00019
53
0.01016
105
0.02014
157
0.03011
210
0.04027
262
0.05025
314
0.06022

2
0.00038
54
0.01036
106
0.02033
158
0.03030
211
0.04047
263
0.05044
315
0.06041

3
0.00058
55
0.01055
107
0.02052
159
0.03049
212
0.04066
264
0.05063
316
0.06060

4
0.00077
56
0.01074
108
0.02071
160
0.03068
213
0.04085
265
0.05082
317
0.06079

5
0.00096
57
0.01093
109
0.02090
161
0.03088
214
0.04104
266
0.05101
318
0.06099

6
0.00115
58
0.01112

162
0.03107
215
0.04123
267
0.05121
319
0.06118

7
0.00134
59
0.01132
110
0.02110
163
0.03126
216
0.04142
268
0.05140

8
0.00153

111
0.02129
164
0.03145
217
0.04162
269
0.05159
320
0.06137

9
0.00173
60
0.01151
112
0.02148
165
0.03164
218
0.04181

321
0.06156

61
0.01170
113
0.02167
166
0.03184
219
0.04200
270
0.05178
322
0.06175

10
0.00192
62
0.01189
114
0.02186
167
0.03203

271
0.05197
323
0.06195

11
0.00211
63
0.01208
115
0.02205
168
0.03222
220
0.04219
272
0.05216
324
0.06214

12
0.00230
64
0.01227
116
0.02225
169
0.03241
221
0.04238
273
0.05236
325
0.06233

13
0.00249
65
0.01247
117
0.02244

222
0.04258
274
0.05255
326
0.06252

14
0.00268
66
0.01266
118
0.02263
170
0.03260
223
0.04277
275
0.05274
327
0.06271

15
0.00288
67
0.01285
119
0.02282
171
0.03279
224
0.04296
276
0.05293
328
0.06290

16
0.00307
68
0.01304

172
0.03299
225
0.04315
277
0.05312
329
0.06310

17
0.00326
69
0.01323
120
0.02301
173
0.03318
226
0.04334
278
0.05332

18
0.00345

121
0.02321
174
0.03337
227
0.04353
279
0.05351
330
0.06329

19
0.00364
70
0.01342
122
0.02340
175
0.03356
228
0.04373

331
0.06348

71
0.01362
123
0.02359
176
0.03375
229
0.04392
280
0.05370
332
0.06367

20
0.00384
72
0.01381
124
0.02378
177
0.03395

281
0.05389
333
0.06386

21
0.00403
73
0.01400
125
0.02397
178
0.03414
230
0.04411
282
0.05408
334
0.06405

22
0.00422
74
0.01419
126
0.02416
179
0.03433
231
0.04430
283
0.05427
335
0.06425

23
0.00441
75
0.01438
127
0.02436

232
0.04449
284
0.05447
336
0.06444

24
0.00460
76
0.01458
128
0.02455
180
0.03452
233
0.04468
285
0.05466
337
0.06463

25
0.00479
77
0.01477
129
0.02474
181
0.03471
234
0.04488
286
0.05485
338
0.06482

26
0.00499
78
0.01496

182
0.03490
235
0.04507
287
0.05504
339
0.06501

27
0.00518
79
0.01515
130
0.02493
183
0.03510
236
0.04526
288
0.05523

28
0.00537

131
0.02512
184
0.03529
237
0.04545
289
0.05542
340
0.06521

29
0.00556
80
0.01534
132
0.02532
185
0.03548
238
0.04564

0.00000
341
0.06540

81
0.01553
133
0.02551
186
0.03567
239
0.04584
290

342
0.06559

30
0.00575
82
0.01573
134
0.02570
187
0.03586

291
0.05581
343
0.06578

31
0.00595
83
0.01592
135
0.02589
188
0.03605
240
0.04603
292
0.05600
344
0.06597

32
0.00614
84
0.01611
136
0.02608
189
0.03625
241
0.04622
293
0.05619
345
0.06616

33
0.00633
85
0.01630
137
0.02627

242
0.04641
294
0.05638
346
0.06636

34
0.00652
86
0.01649
138
0.02647
190
0.03644
243
0.04660
295
0.05658
347
0.06655

35
0.00671
87
0.01668
139
0.02666
191
0.03663
244
0.04679
296
0.05677
348
0.06674

36
0.00690
88
0.01688

192
0.03682
245
0.04699
297
0.05696
349
0.06693

37
0.00710
89
0.01707
140
0.02685
193
0.03701
246
0.04718
298
0.05715

38
0.00729

141
0.02704
194
0.03721
247
0.04737
299
0.05734
350
0.06712

39
0.00748
90
0.01726
142
0.02723
195
0.03740
248
0.04756

351
0.06732

0.00000
91
0.01745
143
0.02742
196
0.03759
249
0.04775
300
0.05753
352
0.06751

40
0.00767
92
0.01764
144
0.02762
197
0.03778

301
0.05773
353
0.06770

41
0.00786
93
0.01784
145
0.02781
198
0.03797
250
0.04795
302
0.05792
354
0.06789

42
0.00805
94
0.01803
146
0.02800
199
0.03816
251
0.04814
303
0.05811
355
0.06808

43
0.00825
95
0.01822
147
0.02819

252
0.04833
304
0.05830
356
0.06827

44
0.00844
96
0.01841
148
0.02838
200
0.03836
253
0.04852
305
0.05849
357
0.06847

45
0.00863
97
0.01860
149
0.02858
201
0.03855
254
0.04871
306
0.05868
358
0.06866

46
0.00882
98
0.01879

202
0.03874
255
0.04890
307
0.05888
359
0.06885

47
0.00901
99
0.01899
150
0.02877
203
0.03893
256
0.04910
308
0.05907

48
0.00921

151
0.02896
204
0.03912
257
0.04929
309
0.05926
360
0.06904

49
0.00940
100
0.01918
152
0.02915
205
0.03932
258
0.04948

361
0.06923

101
0.01937
153
0.02934
206
0.03951
259
0.04967
310
0.05945
362
0.06942

50
0.00959
102
0.01956
154
0.02953
207
0.03970

311
0.05964
363
0.06962

51
0.00978
103
0.01975
155
0.02973
208
0.03989
260
0.04986
312
0.05984
364
0.06981

52
0.00997
104
0.01995
156
0.02992
209
0.04008
261
0.05005
313
0.06003
365
0.07000