What South Carolina tax interest rate applied from October 1, 2005 through June 30, 2006?

Plain-English summary

South Carolina's listed tax interest rate was 7% for October 1, 2005 through June 30, 2006. The rate applied to underpayments and overpayments under § 12-54-25.

The letter says interest is compounded daily, except that simple interest applies to an underpayment of declaration of estimated tax.

There was a temporary refund adjustment. For eligible refunds paid from July 1, 2005 through June 30, 2006, 2005 Act No. 115, Proviso 56DD.40 directed the Department to reduce the listed interest rate by two percentage points. During the period when the listed rate was 7%, the resulting eligible-refund rate was 5%.

The attached table also gives historical underpayment and overpayment rates back to September 1985.

What this means for you

For interest accruing during October 1, 2005 through June 30, 2006, use the listed 7% rate, subject to the letter's computation rules. If the state paid an eligible refund during the temporary July 2005-June 2006 window, reduce the listed rate by two points.

Common questions

Q: What rate applied during the letter's latest period?
A: 7% from October 1, 2005 through June 30, 2006.

Q: How was interest computed?
A: Daily compounding, except simple interest for underpayments of declaration of estimated tax.

Q: What rate applied to an eligible refund while the listed rate was 7%?
A: 5%, because the budget proviso reduced eligible-refund interest by two percentage points.

Subject

Interest Rate

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL06-6.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214
Website Address: http://www.sctax.org

SC INFORMATION LETTER #06-6

SUBJECT:

Interest Rate

DATE:

March 22, 2006

REFERENCE:

S.C. Code Ann. Section 12-54-25 (2000)
Act No. 115, Section 56DD, Proviso 56DD.40 (2005)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2000)
SC Revenue Procedure #05-2

SCOPE:

An Information Letter is a written statement issued to the public to announce
general information useful in complying with the laws administered by the
Department. An Information Letter has no precedential value.

The interest rate to be applied to underpayments and overpayments is listed below.* The rate is
compounded daily except simple interest applies to the underpayment of declaration of estimated
tax.
Period

Rate*

Period

Rate*

9/1/85 – 12/31/85
1/1/86 – 6/30/86
7/1/86 – 9/30/87
10/1/87 – 12/31/87
1/1/88 – 3/31/88
4/1/88 – 9/30/88
10/1/88 – 3/31/89
4/1/89 – 9/30/89
10/1/89 – 3/31/91
4/1/91 – 12/31/91
1/1/92 – 3/31/92
4/1/92 – 9/30/92
10/1/92 – 6/30/94
7/1/94 – 9/30/94
10/1/94 – 3/31/95
4/1/95 – 6/30/95
7/1/95 – 3/31/96
4/1/96 – 6/30/96
7/1/96 – 3/31/98
4/1/98 – 12/31/98
1/1/99 – 3/31/99

11%
10%
9%
10%
11%
10%
11%
12%
11%
10%
9%
8%
7%
8%
9%
10%
9%
8%
9%
8%
7%

4/1/99 – 3/31/00
4/1/00 – 3/31/01
4/1/01 – 6/30/01
7/1/01 – 12/31/01
1/1/02 – 12/31/02
1/1/03 – 9/30/03
10/1/03 – 3/31/04
4/1/04 – 6/30/04
7/1/04 – 9/30/04
10/1/04 – 3/31/05
4/1/05 – 9/30/05
10/1/05 – 6/30/06

8%
9%
8%
7%
6%
5%
4%
5%
4%
5%
6%
7%

• Note reduction of interest rate on refunds. Act No. 115, Part IB, Section 56DD, Proviso
  56DD.40 directs the Department to reduce the rate of interest paid on eligible refunds by
  two percentage points from the above listed rates for refunds paid from July 1, 2005
  through June 30, 2006.