What is South Carolina's tax interest rate for underpayments and overpayments for the period ending June 30, 2017 (per SC IL #17-5)?

Plain-English summary

South Carolina's interest rate on both tax underpayments and overpayments is 4% for the period April 1, 2016 through June 30, 2017. The rate is set under S.C. Code § 12-54-25 and changes periodically as the underlying federal rate moves.

Two mechanical points matter. First, the interest is compounded daily, except that simple interest applies to underpayments of declaration of estimated tax. Second, for fiscal year 2016-2017 (July 1, 2016 through June 30, 2017), budget Provisos 93.7 and 117.86 direct the Department to reduce the interest it pays on eligible refunds by a total of three percentage points from the listed rate. Because the listed rate for that period is 4%, the reduction brings the interest paid on eligible refunds to 1% for that fiscal year.

The letter also reproduces the Department's full historical interest-rate table going back to 1985, which is useful when computing interest across older periods.

What this means for you

If you owe South Carolina tax

Interest accrues at 4% for the April 1, 2016 - June 30, 2017 period, compounded daily (simple interest for underpaid estimated tax). Interest is separate from any penalties.

If South Carolina owes you a refund

For fiscal year 2016-2017, the interest the state pays on eligible refunds is reduced by three percentage points under budget provisos, which brings refund interest to 1% for that year. This reduction is a temporary measure tied to that fiscal year.

Common questions

Q: What is the South Carolina interest rate for this period?
A: 4% on both underpayments and overpayments for April 1, 2016 through June 30, 2017, compounded daily.

Q: Does the 4% rate apply to the interest the state pays me on a refund?
A: Not fully. For fiscal year 2016-2017 the refund-interest rate is reduced by three percentage points to 1% under budget Provisos 93.7 and 117.86.

Q: How is the interest computed?
A: It is compounded daily, except that simple interest applies to underpayments of declaration of estimated tax.

Subject

Interest Rate

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL17-5.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 12265, Columbia, South Carolina 29211

SC INFORMATION LETTER #17-5
SUBJECT:

Interest Rate

DATE:

March 7, 2017

REFERENCE:

S.C. Code Ann. Section 12-54-25 (2014)
2016 S.C. Act No. 284, Provisos 93.7 and 117.86

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
SC Revenue Procedure #09-3

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* of taxes 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
4/1/99 – 3/31/00

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

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
7/1/06 – 12/31/07
1/1/08 – 3/31/08
4/1/08 – 6/30/08
7/1/08 – 9/30/08
10/1/08 – 12/31/08
1/1/09 – 3/31/09
4/1/09 – 12/31/10
1/1/11 – 3/31/11
4/1/11 – 9/30/11
10/1/11 – 3/31/16
4/1/16 – 6/30/17

9%
8%
7%
6%
5%
4%
5%
4%
5%
6%
7%
8%
7%
6%
5%
6%
5%
4%
3%
4%
3%
4%

• Note reduction of interest rate on refunds. For fiscal year 2016-2017 (July 1, 2016 through June
  30, 2017), Budget Provisos 93.7 and 117.86 direct the Department to reduce the rate of interest paid
  on eligible refunds by a total of three percentage points from the above listed rates. 2016 S.C. Act
  No. 284, Sections 93 and 117.