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

Plain-English summary

Virginia announced these annual rates for the fourth quarter of 2013:

• 5% on Virginia tax underpayments and assessments;
• 5% on Virginia tax overpayments and refunds; and
• 0% reduced interest for qualifying disputed assessments after the statutory nine-month period while a Department appeal remained pending.

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.

For taxpayers with years ending September 30, 2013, the 5% rate applied to estimated-income-tax underpayment additions through the January 15, 2014 return due date. Local delinquency and refund interest remained subject to the separate rules and limits in Va. Code § 58.1-3916.

What this means for you

• These rates apply only to the fourth quarter of 2013.
• Match the interest rate to the actual accrual period, not merely the return year.
• The 0% rate applied only to qualifying administrative appeals after nine months without a determination.
• Local tax interest followed a separate statute.

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).
• Virginia Tax Bulletin 13-12.

Subject

2013 Fourth Quarter Interest Rates

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 13-171

Original ruling text

TAX BULLETIN 13-12
Virginia Department of Taxation

September 17, 2013

VIRGINIA’S INTEREST RATES WILL REMAIN THE SAME
FOR THE FOURTH QUARTER OF 2013

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 fourth 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 fourth 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 September 30, 2013 : 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 15, 2014.
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 fourth quarter of 2013.

The federal short-term rate established pursuant to IRC § 6621(b) for the fourth quarter of 2013, rounded to the nearest whole percent, is 0%. Accordingly, the reduced rate for the fourth 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 fourth 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

Beginning
Through
(Refund)
(Assessment)
Rate

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-Dec-10
6%
6%
-

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

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

1-Oct-11
30-Jun-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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