What Virginia tax interest rates applied during the first quarter of 2009 to assessments, refunds, estimated-tax additions, and local taxes?

Subject

First-quarter 2009 Virginia tax interest rates

Plain-English summary

Virginia's ordinary state interest rates were 7% for both assessments and refunds during January 1 through March 31, 2009. The federal underpayment and noncorporate overpayment rates were 5%, and Virginia law added two percentage points.

For taxpayers with taxable years ending December 31, 2008, the 7% rate also applied when computing additions for underpaid Virginia estimated income tax through the return due date: April 15, 2009 for corporations and May 1, 2009 for individuals and fiduciaries.

The bulletin separately explained local-tax limits. A locality using Va. Code § 58.1-3916 could charge no more than 10% during the first delinquency year and, in later years, no more than the greater of 10% or the applicable federal underpayment rate. A locality charging delinquency interest also had to pay the same rate on overpayments or erroneous assessments.

What this means for you

• Match an interest calculation to the exact accrual quarter.
• The first-quarter 2009 Virginia assessment and refund rate was 7%.
• Calendar-year 2008 estimated-tax additions used 7% through the stated 2009 return due dates.
• Local rates depended on the locality's policy within the statutory limits.
• These percentages are historical, not current standing rates.

Common questions

What was Virginia's first-quarter 2009 assessment rate?

7%.

What was the state refund rate for the same quarter?

Also 7%.

Did every locality have to charge the same rate?

No. The bulletin described statutory maximums and matching refund-interest requirements for localities that charged delinquency interest.

Citations and references

• IRC § 6621.
• Va. Code §§ 58.1-15 and 58.1-3916.
• Forms 500C, 760C, and 760F, as referenced in the bulletin.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 08-195

Original ruling text

TAX BULLETIN 08-14
Virginia Department of Taxation

December 16, 2008

VIRGINIA’S FIRST QUARTER 2009 INTEREST
RATES WILL CHANGE

Federal Rates To Change: State and certain local interest rates are subject to change every quarter due to changes in federal rates established pursuant to IRC § 6621. Federal rates for the first quarter of 2009 will be 5% for tax underpayments (assessments) and 5% for tax overpayments (refunds) by taxpayers other than corporations. Va. Code § 58.1-15 provides that underpayment rates for Virginia taxes will be 2% higher than the corresponding federal rates and overpayment rates for Virginia taxes will be 2% higher than the federal rate.

Accordingly, the Virginia rates for the first quarter of 2009 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 December 31, 2008 : 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 first quarter 7% underpayment rate will apply through the due date of the return, April 15, 2009 (for corporations) and May 1, 2009 (for individuals and fiduciaries).
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 first quarter of 2009, 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
Underpayment

Beginning
Through
(Refund)
(Assessment)

1-Apr-00
31-Mar-01
11%
11%

1-Apr-01
30-Jun-01
10%
10%

1-Jul-01
31-Dec-01
9%
9%

1-Jan-02
31-Dec-02
8%
8%

1-Jan-03
30-Sep-03
7%
7%

1-Oct-03
31-Mar-04
6%
6%

1-Apr-04
30-Jun-04
7%
7%

1-Jul-04
30-Sep-04
6%
6%

1-Oct-04
31-Mar-05
7%
7%

1-Apr-05
30-Sep-05
8%
8%

1-Oct-05
30-Jun-06
9%
9%

1-Jul-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-Sep-08
7%
7%

1-Oct-08
31-Dec-08
8%
8%

1-Jan-09
31-Mar-09
7%
7%

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 Tax Policy Library section of the Department of Taxation’s website, located at www.tax.virginia.gov.
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