What Virginia tax interest rates applied during the first quarter of 2019 to assessments, refunds, disputed assessments, estimated tax, and local taxes?

Plain-English summary

Virginia Tax Bulletin 18-6 announced the interest rates for January 1 through March 31, 2019.

• State assessment underpayments: 8%
• State refund overpayments (noncorporate): 8%
• Reduced rate on qualifying disputed assessments: 3%

These are historical quarterly rates, not current standing rates.

How Virginia calculated 8%

Under IRC § 6621, the first-quarter federal underpayment and noncorporate overpayment rates were 6%. Va. Code § 58.1-15 adds two percentage points, producing Virginia's 8% rates for both assessments and refunds.

Estimated tax and appeals

• Taxable year ended September 30, 2018: the fourth-quarter 7% underpayment rate applied through the January 15, 2019 return due date on Forms 500C, 760C, and 760F.
• Taxable year ended December 31, 2018: the first-quarter 8% underpayment rate applied through the return due date -- April 15, 2019 for corporations and May 1, 2019 for individuals and fiduciaries.
• Disputed assessments: for administrative appeals filed on or after July 1, 2011, the federal short-term rate applies beginning nine months after assessment until a determination issues. That rounded rate was 3% for Q1 2019.

Local taxes

Localities that assess interest under Va. Code § 58.1-3916 could charge up to 10% for the first year of delinquency, and later up to the greater of 10% or the applicable federal underpayment rate (6% for Q1 2019). A locality charging delinquency interest also had to pay the same rate on qualifying refunds.

What this means for you

• Match interest to the precise quarter in which it accrues -- rates reset every quarter.
• Appeal-rate relief begins only after the nine-month mark, not at filing.
• Estimated-tax computations can carry a prior-quarter rate through the return due date.
• Local interest depends on the locality's lawful policy under § 58.1-3916.

Common questions

Q: What was Virginia's ordinary Q1 2019 interest rate?

A: 8% for both assessments and noncorporate refunds.

Q: What was the reduced rate for an assessment in dispute?

A: 3% during the first quarter of 2019, beginning nine months after the assessment date.

Citations and references

• IRC § 6621 -- federal underpayment, overpayment, and short-term rates
• Va. Code § 58.1-15 -- Virginia state underpayment and overpayment rates (federal rate plus two points)
• Va. Code § 58.1-3916 -- local delinquent-tax interest and matching refund interest

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 18-6

Original ruling text

Tax Bulletin 18-6

Virginia Department of Taxation

December 14, 2018

VIRGINIA’S INTEREST RATES WILL CHANGE

FOR THE FIRST QUARTER OF 2019

Federal Rates Increased: State and certain local interest rates are subject to change every quarter due to changes in federal rates established pursuant to Internal Revenue Code (“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 2019 will be 6% for tax underpayments (assessments) and 6% for tax overpayments (refunds) by noncorporate taxpayers.

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 federal overpayment rate for noncorporate taxpayers. Accordingly, the Virginia rates for the first quarter of 2019 will be 8% for tax underpayments (assessments) and 8% for tax overpayments (refunds).

Rate for Addition to Tax for Underpayments of Estimated Tax

Taxpayers whose taxable year ends on September 30, 2018: 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 7% underpayment rate will apply through the due date of the return, January 15, 2019.

Taxpayers whose taxable year ends on December 31, 2018: 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 8% underpayment rate will apply through the due date of the return, April 15, 2019 (for corporations), and May 1, 2019 (for individuals and fiduciaries).

Reduced Rate for Certain Assessments in Dispute

For administrative appeals filed with the Department of Taxation on or after July 1, 2011, a reduced interest rate equal to the federal short term rate established pursuant to IRC § 6621(b) applies, beginning nine months after the date of assessment until a determination is issued. The federal short-term rate established pursuant to IRC § 6621(b) for the first quarter of 2019, rounded to the nearest whole percent, is 3%. Accordingly, the reduced rate for the first quarter of 2019 for qualifying assessments in dispute is 3%.

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 2019, the federal underpayment rate is 6%.

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 (Refund)

Underpayment (Assessment)

Reduced Rate

Beginning

Through

1-Apr-05

30-Sept-05

8%

8%

-

1-Oct-05

30-Jun-06

9%

9%

-

1-July-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-Sept-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-16

5%

5%

0%

1-Apr-16

31-Mar-18

6%

6%

1%

1-Apr-18

30-Sept-18

7%

7%

2%

1-Jan-19

31-Mar-19

8%

8%

3%

Additional Information: This Tax Bulletin, along with other reference documents, is available online in the Laws, Rules and Decisions section of the Department’s website, located at www.tax.virginia.gov . If you have questions about interest rates, please visit Virginia Tax’s website or contact the Department at 804.367.8031 (for individuals), 804-786-2450 (for Soft Drink Excise Tax and Aircraft Sales and Use Tax), or 804-367-8037 (for all other business taxes).

Factors for Computing Daily Interest
8%

(Simple interest pursuant to Va. Code § 58.1-15)

365 day year

1
0.00022
53
0.01162
105
0.02301
157
0.03441
210
0.04603
262
0.05742
314
0.06882

2
0.00044
54
0.01184
106
0.02323
158
0.03463
211
0.04625
263
0.05764
315
0.06904

3
0.00066
55
0.01205
107
0.02345
159
0.03485
212
0.04647
264
0.05786
316
0.06926

4
0.00088
56
0.01227
108
0.02367
160
0.03507
213
0.04668
265
0.05808
317
0.06948

5
0.00110
57
0.01249
109
0.02389
161
0.03529
214
0.04690
266
0.05830
318
0.06970

6
0.00132
58
0.01271

162
0.03551
215
0.04712
267
0.05852
319
0.06992

7
0.00153
59
0.01293
110
0.02411
163
0.03573
216
0.04734
268
0.05874

8
0.00175

111
0.02433
164
0.03595
217
0.04756
269
0.05896
320
0.07014

9
0.00197
60
0.01315
112
0.02455
165
0.03616
218
0.04778

321
0.07036

61
0.01337
113
0.02477
166
0.03638
219
0.04800
270
0.05918
322
0.07058

10
0.00219
62
0.01359
114
0.02499
167
0.03660

271
0.05940
323
0.07079

11
0.00241
63
0.01381
115
0.02521
168
0.03682
220
0.04822
272
0.05962
324
0.07101

12
0.00263
64
0.01403
116
0.02542
169
0.03704
221
0.04844
273
0.05984
325
0.07123

13
0.00285
65
0.01425
117
0.02564

222
0.04866
274
0.06005
326
0.07145

14
0.00307
66
0.01447
118
0.02586
170
0.03726
223
0.04888
275
0.06027
327
0.07167

15
0.00329
67
0.01468
119
0.02608
171
0.03748
224
0.04910
276
0.06049
328
0.07189

16
0.00351
68
0.01490

172
0.03770
225
0.04932
277
0.06071
329
0.07211

17
0.00373
69
0.01512
120
0.02630
173
0.03792
226
0.04953
278
0.06093

18
0.00395

121
0.02652
174
0.03814
227
0.04975
279
0.06115
330
0.07233

19
0.00416
70
0.01534
122
0.02674
175
0.03836
228
0.04997

331
0.07255

71
0.01556
123
0.02696
176
0.03858
229
0.05019
280
0.06137
332
0.07277

20
0.00438
72
0.01578
124
0.02718
177
0.03879

281
0.06159
333
0.07299

21
0.00460
73
0.01600
125
0.02740
178
0.03901
230
0.05041
282
0.06181
334
0.07321

22
0.00482
74
0.01622
126
0.02762
179
0.03923
231
0.05063
283
0.06203
335
0.07342

23
0.00504
75
0.01644
127
0.02784

232
0.05085
284
0.06225
336
0.07364

24
0.00526
76
0.01666
128
0.02805
180
0.03945
233
0.05107
285
0.06247
337
0.07386

25
0.00548
77
0.01688
129
0.02827
181
0.03967
234
0.05129
286
0.06268
338
0.07408

26
0.00570
78
0.01710

182
0.03989
235
0.05151
287
0.06290
339
0.07430

27
0.00592
79
0.01732
130
0.02849
183
0.04011
236
0.05173
288
0.06312

28
0.00614

131
0.02871
184
0.04033
237
0.05195
289
0.06334
340
0.07452

29
0.00636
80
0.01753
132
0.02893
185
0.04055
238
0.05216

341
0.07474

81
0.01775
133
0.02915
186
0.04077
239
0.05238
290
0.06356
342
0.07496

30
0.00658
82
0.01797
134
0.02937
187
0.04099

291
0.06378
343
0.07518

31
0.00679
83
0.01819
135
0.02959
188
0.04121
240
0.05260
292
0.06400
344
0.07540

32
0.00701
84
0.01841
136
0.02981
189
0.04142
241
0.05282
293
0.06422
345
0.07562

33
0.00723
85
0.01863
137
0.03003

242
0.05304
294
0.06444
346
0.07584

34
0.00745
86
0.01885
138
0.03025
190
0.04164
243
0.05326
295
0.06466
347
0.07605

35
0.00767
87
0.01907
139
0.03047
191
0.04186
244
0.05348
296
0.06488
348
0.07627

36
0.00789
88
0.01929

192
0.04208
245
0.05370
297
0.06510
349
0.07649

37
0.00811
89
0.01951
140
0.03068
193
0.04230
246
0.05392
298
0.06532

38
0.00833

141
0.03090
194
0.04252
247
0.05414
299
0.06553
350
0.07671

39
0.00855
90
0.01973
142
0.03112
195
0.04274
248
0.05436

351
0.07693

91
0.01995
143
0.03134
196
0.04296
249
0.05458
300
0.06575
352
0.07715

40
0.00877
92
0.02016
144
0.03156
197
0.04318

301
0.06597
353
0.07737

41
0.00899
93
0.02038
145
0.03178
198
0.04340
250
0.05479
302
0.06619
354
0.07759

42
0.00921
94
0.02060
146
0.03200
199
0.04362
251
0.05501
303
0.06641
355
0.07781

43
0.00942
95
0.02082
147
0.03222

252
0.05523
304
0.06663
356
0.07803

44
0.00964
96
0.02104
148
0.03244
200
0.04384
253
0.05545
305
0.06685
357
0.07825

45
0.00986
97
0.02126
149
0.03266
201
0.04405
254
0.05567
306
0.06707
358
0.07847

46
0.01008
98
0.02148

202
0.04427
255
0.05589
307
0.06729
359
0.07868

47
0.01030
99
0.02170
150
0.03288
203
0.04449
256
0.05611
308
0.06751

48
0.01052

151
0.03310
204
0.04471
257
0.05633
309
0.06773
360
0.07890

49
0.01074
100
0.02192
152
0.03332
205
0.04493
258
0.05655

361
0.07912

101
0.02214
153
0.03353
206
0.04515
259
0.05677
310
0.06795
362
0.07934

50
0.01096
102
0.02236
154
0.03375
207
0.04537

311
0.06816
363
0.07956

51
0.01118
103
0.02258
155
0.03397
208
0.04559
260
0.05699
312
0.06838
364
0.07978

52
0.01140
104
0.02279
156
0.03419
209
0.04581
261
0.05721
313
0.06860
365
0.08000