What Virginia tax interest rates applied during the fourth quarter of 2011?

Plain-English summary

Virginia announced these rates for the fourth quarter of 2011:

• 5% on Virginia tax underpayments and assessments; and
• 5% on Virginia tax overpayments and refunds.

The corresponding federal underpayment and noncorporate overpayment rates were 3%. Virginia's ordinary rates were two percentage points higher under Va. Code § 58.1-15.

Estimated-tax additions depended on the taxpayer's year-end. June 30, 2011 year-end taxpayers continued using the prior third-quarter 6% rate through the October 17 return due date. September 30, 2011 year-end taxpayers used the new fourth-quarter 5% rate through January 16, 2012.

Local delinquency and refund interest remained subject to the separate rules and limits in Va. Code § 58.1-3916. The bulletin also supplied a historical rate table covering April 2000 through December 2011.

What this means for you

• These rates apply only to the fourth quarter of 2011.
• Match interest to the period when it accrued.
• Estimated-tax additions can follow a different quarter's rate through the return due date.
• Local tax interest follows separate statutory limits.

Citations and references

• IRC § 6621.
• Va. Code §§ 58.1-15 and 58.1-3916.
• Virginia Tax Bulletin 11-10.

Subject

Fourth Quarter Interest Rates 2011

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 11-157

Original ruling text

TAX BULLETIN 11 - 10
Virginia Department of Taxation

September 9, 2011

VIRGINIA’S FOURTH QUARTER 2011 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 fourth quarter of 2011 will be 3% for tax underpayments (assessments) and 3% 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 2011 will be 5% for tax underpayments (assessments) and 5% for tax overpayments (refunds).
Rate for Addition to Tax for Underpayments of Estimated Tax

Taxpayers whose taxable year ends on June 30, 2011 : 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 third quarter 6% underpayment rate will apply through the due date of the return, October 17, 2011.

Taxpayers whose taxable year ends on September 30, 2011 : 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 5% underpayment rate will apply through the due date of the return, January 16, 2012.
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 2011, the federal underpayment rate is 3%.

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
31-Dec-10
6%
6%

1-Jan-11
31-Mar-11
5%
5%

1-Apr-11
30-Sept-11
6%
6%

1-Oct-11
31-Dec-11
5%
5%

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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