Virginia Department of Taxation
December 17, 2004
INTEREST RATES
FIRST QUARTER 2005
Federal Rates Unchanged: State and certain local interest rates are subject to change every quarter based on changes in federal rates established pursuant to IRC § 6621. The federal rates for the first quarter of 2005 will be 5% for tax underpayments (assessments), 5% for tax overpayments (refunds) by taxpayers other than corporations, and 7% for “large corporate underpayments” as defined in IRC § 6621(c). Va. Code § 58.1-15 provides that the 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 for noncorporate taxpayers. Accordingly, the Virginia rates for the first quarter of 2005 will be 7% for tax underpayments (assessments), 7% for tax overpayments (refunds), and 9% for “large corporate underpayments.”
Taxpayers whose taxable year ends on December 31, 2004: 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 7% underpayment rate will apply through the due date of the return, April 15, 2005 (for corporations) and May 2, 2005 (for individuals and fiduciaries).
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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 2005, the federal underpayment rate is 5%.
Refunds: Effective July 1, 1999, localities which 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.
Accrual | Period | Non –Corporation Overpayment | Corporation Overpayment | Underpayment | Large Corporate |
Beginning | Through | (Refund) | (Refund) | (Assessment) | Underpayment |
1-Jul-96 | 31-Mar-98 | 8% | 8% | 11% | 13% |
1-Apr-98 | 31-Dec-98 | 7% | 7% | 10% | 12% |
1-Jan-99 | 31-Mar-99 | 7% | 6% | 9% | 11% |
1-Apr-99 | 31-Dec-99 | 8% | 7% | 10% | 12% |
1-Jan-00 | 31-Mar-00 | 10% | 10% | 10% | 12% |
1-Apr-00 | 31-Mar-01 | 11% | 11% | 11% | 13% |
1-Apr-01 | 30-Jun-01 | 10% | 10% | 10% | 12% |
1-Jul-01 | 31-Dec-01 | 9% | 9% | 9% | 11% |
1-Jan-02 | 31-Dec-02 | 8% | 8% | 8% | 10% |
1-Jan-03 | 30-Sep-03 | 7% | 7% | 7% | 9% |
1-Oct-03 | 31-Mar-04 | 6% | 6% | 6% | 8% |
1-Apr-04 | 30-Jun-04 | 7% | 7% | 7% | 9% |
1-Jul-04 | 30-Sep-04 | 6% | 6% | 6% | 8% |
1-Oct-04 | 31-Mar-05 | 7% | 7% | 7% | 9% |
Additional Information: Contact Customer Services, Virginia Department of Taxation, P. O. Box 1115, Richmond, Virginia 23218-1115, or call the following numbers for additional 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 |
In addition, this Tax Bulletin along with other reference documents are available online in the Tax Policy Library section of the Department of Taxation’s web site, located at www.tax.virginia.gov.
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