What Virginia tax interest rates applied during the fourth quarter of 2010?

Subject

2010 Fourth Quarter Interest Rate

Plain-English summary

Virginia announced these annual rates for the fourth quarter of 2010:

• 6% on Virginia tax underpayments and assessments; and
• 6% on Virginia tax overpayments and refunds.

The corresponding federal underpayment and noncorporate overpayment rates were 4%. Virginia's rates were two percentage points higher under Va. Code § 58.1-15.

For taxpayers with taxable years ending September 30, 2010, the 6% rate applied when computing additions for underpaid Virginia estimated income tax through the January 15, 2011 return due date.

Local delinquency and refund interest followed Va. Code § 58.1-3916 instead. For the fourth quarter, the federal underpayment rate used in the local rule was 4%, and localities that charged delinquency interest had to pay the same rate on overpayments or erroneous assessments.

What this means for you

• These rates apply only to interest accruing during the fourth quarter of 2010.
• Match the interest rate to the accrual period, not merely the tax-return year.
• Estimated-tax additions and local tax interest had their own timing and statutory rules.
• The historical rate table in the bulletin should not be used for later periods without checking the applicable quarter.

Citations and references

• I.R.C. § 6621.
• Va. Code §§ 58.1-15 and 58.1-3916.
• Virginia Tax Bulletin 10-10.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-211

Original ruling text

TAX BULLETIN 10 - 10
Virginia Department of Taxation

September 13, 2010

VIRGINIA’S FOURTH QUARTER 2010 INTEREST
RATES WILL REMAIN THE SAME

Federal Rates To Remain Unchanged: 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 fourth quarter of 2010 will be 4% for tax underpayments (assessments) and 4% for tax overpayments (refunds) by taxpayers other than corporations. Virginia 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 fourth quarter of 2010 will be 6% for tax underpayments (assessments) and 6% for tax overpayments (refunds).
Rate for Addition to Tax for Underpayments of Estimated Tax

Taxpayers whose taxable year ends on September 30, 2010 : 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 6% underpayment rate will apply through the due date of the return, January 15, 2011.
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 2010, the federal underpayment rate is 4%.

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%

1-Apr-09
30-Jun-10
6%
6%

1-Jul-08
30-Sep-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%

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.

[[{"fid":"527","view_mode":"default","fields":{"format":"default","field_file_image_alt_text[und][0][value]":"Daily Interest Table","field_file_image_title_text[und][0][value]":"Daily Interest Table"},"type":"media","attributes":{"height":1233,"width":1172,"class":"media-element file-default"}}]]