Rulings of the Tax Commissioner

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. Federal rates for the third quarter of 2011 will be 4% for tax underpayments (assessments) and 4% 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 third quarter of 2011 will be 6% for tax underpayments (assessments) and 6% for tax overpayments (refunds).

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.

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 third quarter of 2011, the federal underpayment rate is 4%.

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.

	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	30-Jun-10	6%	6%
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 1- Jan-11 1-Apr-11	31-Dec-10 31- Mar-11 30- Sept-11	6% 5% 6%	6% 5% 6%

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.

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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