What Virginia tax interest rates applied during the first quarter of 2013?

Plain-English summary

Virginia's tax assessment and refund interest rates remained 5% for the first quarter of 2013. The federal underpayment and ordinary noncorporate overpayment rates were 3%, and Virginia Code § 58.1-15 added two percentage points to the corresponding federal rates.

The 5% rate also applied when computing additions to tax for underpaid Virginia estimated income tax for calendar-year 2012 filers through the return due dates stated in the bulletin: April 15, 2013 for corporations and May 1, 2013 for individuals and fiduciaries.

For qualifying assessments under administrative appeal, the reduced rate after nine months without a Department determination was 0% during the quarter. That rule applied only when the appeal was filed on or after July 1, 2011 and the other conditions in Va. Code § 58.1-1822 were met.

Localities using Va. Code § 58.1-3916 could charge no more than 10% for the first delinquency year and, in later years, no more than the greater of 10% or the applicable federal underpayment rate. The federal underpayment rate for the quarter was 3%. A locality charging delinquency interest also had to pay the same rate on overpayments or erroneous assessments.

Common questions

Q: What was Virginia's first-quarter 2013 assessment rate?
A: 5%.

Q: What was Virginia's first-quarter 2013 refund rate?
A: 5%.

Q: What was the reduced rate for qualifying disputed assessments?
A: 0% after the statutory nine-month point and before the Department issued its determination.

Q: Are these rates current?
A: No. They applied to the first quarter of 2013.

Citations and references

• IRC § 6621.
• Va. Code §§ 58.1-15, 58.1-1822, and 58.1-3916.
• 2011 Va. Acts ch. 295 (Senate Bill 1152).

Subject

First Quarter Interest Rates 2013

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 12-195

Original ruling text

TAX BULLETIN 12-8
Virginia Department of Taxation

December 4, 2012

VIRGINIA’S FIRST QUARTER 2013 INTEREST
RATES WILL REMAIN THE SAME

Federal Rates 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. IRC § 6621 dictates that the federal underpayment and overpayment rates are three percentage points higher than the federal short-term rate. Federal rates for the first quarter of 2013 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 the underpayment rate for Virginia taxes will be 2% higher than the corresponding federal rate and the overpayment rate for Virginia taxes will be 2% higher than the corresponding federal rate. Accordingly, the Virginia rates for the first quarter of 2013 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 December 31, 2012 : 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 5% underpayment rate will apply through the due date of the return, April 15, 2013 (for corporations) and May 1, 2013 (for individuals and fiduciaries).
Reduced Rate for Certain Assessments in Dispute

Assessments in Dispute : During the 2011 session, the General Assembly passed Senate Bill 1152 (Chapter 295, 2011 Acts of Assembly), which created a reduced rate for certain assessments in dispute. If a taxpayer files an administrative appeal with the Department of Taxation on or after July 1, 2011, interest begins accruing at the standard underpayment rate until nine months from the date of assessment. From nine months after the date of assessment until a determination is issued, interest accrues at the federal short-term rate established pursuant to IRC § 6621(b). Because the reduced rate is effective for administrative appeals filed on or after July 1, 2011, this legislation could potentially impact interest rates during the first quarter of 2013.

The federal short-term rate established pursuant to IRC § 6621(b) for the first quarter of 2013, rounded to the nearest whole percent, is 0%. Accordingly, the reduced rate for the first quarter of 2013 for qualifying assessments in dispute is 0%. This rate applies only to contested assessments for which an administrative appeal was filed on or after July 1, 2011 and the Department has not made a determination within nine months from the date of assessment. See Va. Code § 58.1-1822 for more information.
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 2013, 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
Reduce
Rate

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-Mar-13
5%
5%
0%

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 Laws, Rules and Decisions section of the Department of Taxation’s website, located at www.tax.virginia.gov.
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