SC SC Information Letter #20-12 2020-06-10

What South Carolina tax interest rate applied from July 1 through September 30, 2020, and what did eligible refunds earn?

Short answer: The listed rate for South Carolina tax underpayments and overpayments from July 1 through September 30, 2020 was 3%. Interest was compounded daily, except simple interest applied to underpayments of declaration of estimated tax. For fiscal year 2020-2021, budget provisos reduced eligible refund interest by three percentage points, so the listed 3% rate produced 0% eligible refund interest during this quarter.

Apply this to your situation

This page answers the general question as of 2020. Ezel answers yours, under current South Carolina tax law, with citations.

Disclaimer: This is an official South Carolina Department of Revenue Information Letter with NO precedential value. The 3% listed rate applied only from July 1 through September 30, 2020, and the three-percentage-point refund reduction applied during fiscal year 2020-2021. Later quarterly rates and budget provisos can change both underpayment and refund interest. This summary is informational only and is not legal or tax advice.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

South Carolina's listed tax interest rate was 3% from July 1 through September 30, 2020. The rate applied to tax underpayments and overpayments under § 12-54-25.

Interest was generally compounded daily. The stated exception was an underpayment of declaration of estimated tax, which used simple interest.

For fiscal year July 1, 2020 through June 30, 2021, Budget Provisos 41.2 and 117.85 required the Department to reduce interest paid on eligible refunds by a total of three percentage points. Applied to the quarter's listed 3% rate, the eligible refund rate was 0%.

Immediately before this quarter, the table listed a 5% rate from July 1, 2019 through June 30, 2020.

What this means for you

Taxpayers with an unpaid balance in the quarter

The historical listed rate was 3%, generally compounded daily.

Taxpayers expecting refund interest

The Department did not pay the full listed rate on eligible refunds during the fiscal year. The three-point reduction reduced this quarter's 3% rate to zero.

Estimated-tax filers

The letter distinguished underpayments of declaration of estimated tax, which used simple interest.

Common questions

Q: What was the listed rate for July-September 2020?
A: 3%.

Q: What was the eligible refund rate during that quarter?
A: 0% after the three-percentage-point budget reduction.

Q: Was interest compounded?
A: Generally daily; estimated-tax declaration underpayments used simple interest.

Citations and references

S.C. Code Ann. § 12-54-25
2020 S.C. Act No. 135, Provisos 41.2 and 117.85
S.C. Code Ann. § 12-4-320
SC Revenue Procedure #09-3

Source

Landing page: https://dor.sc.gov/advisory-opinion-search
Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL20-12.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 #20-12

SUBJECT:

Interest Rate

DATE:

June 10, 2020

REFERENCE:

S.C. Code Ann. Section 12-54-25 (2014)
2020 S.C. Act No. 135, Provisos 41.2 and 117.85

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

09/01/85 – 12/31/85
01/01/86 – 06/30/86
07/01/86 – 09/30/87
10/01/87 – 12/31/87
01/01/88 – 03/31/88
04/01/88 – 09/30/88
10/01/88 – 03/31/89
04/01/89 – 09/30/89
10/01/89 – 03/31/91
04/01/91 – 12/31/91
01/01/92 – 03/31/92
04/01/92 – 09/30/92
10/01/92 – 06/30/94
07/01/94 – 09/30/94
10/01/94 – 03/31/95
04/01/95 – 06/30/95

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

07/01/95 – 03/31/96
04/01/96 – 06/30/96
07/01/96 – 03/31/98
04/01/98 – 12/31/98
01/01/99 – 03/31/99
04/01/99 – 03/31/00
04/01/00 – 03/31/01
04/01/01 – 06/30/01
07/01/01 – 12/31/01
01/01/02 – 12/31/02
01/01/03 – 09/30/03
10/01/03 – 03/31/04
04/01/04 – 06/30/04
07/01/04 – 09/30/04
10/01/04 – 03/31/05
04/01/05 – 09/30/05

Rate*
9%
8%
9%
8%
7%
8%
9%
8%
7%
6%
5%
4%
5%
4%
5%
6%

Period

Rate*

10/01/05 – 06/30/06
07/01/06 – 12/31/07
01/01/08 – 03/31/08
04/01/08 – 06/30/08
07/01/08 – 09/30/08
10/01/08 – 12/31/08
01/01/09 – 03/31/09
04/01/09 – 12/31/10
01/01/11 – 03/31/11
04/01/11 – 09/30/11
10/01/11 – 03/31/16
04/01/16 – 03/31/18
04/01/18 – 12/31/18
01/01/19 – 06/30/19
07/01/19 – 06/30/20
07/01/20 – 09/30/20

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

*Note reduction of interest rate on refunds. For fiscal year 2020-2021 (July 1, 2020 through June
30, 2021), Budget Provisos 41.2 and 117.85 directs the Department to reduce the rate of interest
paid on eligible refunds by a total of three percentage points from the above listed rates. 2020 S.C.
Act No. 135, Provisos 41.2 and 117.85

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