Bulletin Number
VTB 99-3
Tax Type
General Provisions
Description
Interest Rates; Second Quarter 1999
Topic
Basis of Tax
Date Issued
04-04-1999
INTEREST RATES; SECOND QUARTER 1999
Interest Rate Provisions of the IRS Restructuring Act: Congress recently enacted the Internal Revenue Restructuring and Reform Act of 1998 (the "Restructuring Act') which included a provision that changed the manner in which the interest is computed on federal tax underpayments (assessments) and overpayments (refunds). Under the provisions of the Restructuring Act, the federal overpayment rate was increased for taxpayers (other than corporations) to equal the federal underpayment rate.
However, the Restructuring Act had no impact on the federal interest rates applicable to corporations. Because Virginia's interest rates are tied to the federal rates, the interest rates on corporate overpayments (refunds) will be different than those for overpayments (refunds) of taxpayers other than corporations beginning January 1, 1999.
Rates changed: State and certain local interest rates are subject to change every quarter based on changes in federal interest rates established pursuant to I.R.C. § 6621. The federal rates for the second quarter of 1999 will be 8% for tax underpayments (assessments), 8% for tax overpayments (refunds) by taxpayers other than corporations, 7% for corporate tax overpayments (refunds), and 10% for "large corporate underpayments' as defined in I.R.C. § 6621(c). Code of Virginia § 58.1-15 provides that the underpayment rate for Virginia taxes will be 2% higher than the corresponding federal rates. Accordingly, the Virginia rates for the second quarter of 1999 will be 10% for tax underpayments (assessments), 8% for tax overpayments (refunds) for taxpayers other than corporations, 7% for corporate tax overpayments (refunds), and 12% for "large corporate underpayments.'
Rate for Addition to Tax for Underpayments of Estimated Tax
Taxpayers with taxable years ending on March 31, 1999: Tax returns are due on July 15, 1999. For the purpose of computing the addition to the tax for underpayment of Virginia estimated income taxes on Form 760C (for individuals, estates and trusts), Form 760F (for farmers and fishermen) or on Form 500C, the second quarter 10% underpayment rate will apply through the due date of the return, July 15, 1999, (for corporations), and August 2, 1999, (for individuals and fiduciaries).
Individuals whose taxable years ends on December 31, 1998: Tax returns for the calendar year 1998 are due on May 3, 1999. For the purpose of computing the additional to the tax for underpayment of Virginia estimated income taxes on Form 760C (for individuals, estates and trusts) or Form 760F (for farmers and fishermen), the first quarter 9% underpayment rate will apply through the due date of the return, May 3, 1999.
Corporations with taxable years ending on December 31, 1998: Tax returns for the calendar year 1998 are due on April 15, 1999. For the purpose of computing the addition to the tax for underpayment of Virginia estimated income taxes on Form 500C, the first quarter 9% underpayment rate will apply through the due date of the return, April 15, 1999.
Local Tax
Assessments: Localities assessing interest on delinquent taxes pursuant to Code of Virginia § 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 second quarter of 1999, the federal underpayment rate is 7%.
Refunds: Localities which have provided for refunds of erroneously assessed taxes may provide by ordinance that such refunds are repaid with interest at a rate which does not exceed the rate imposed by the locality for delinquent taxes.
BPOL Refunds: Effective January 1, 1997, interest on any refund will be paid at the same rate as assessments under Code of Virginia § 58.1-3916.
Recent Interest Rates
Non-Corporation Corporation Large
Accrual Period Overpayment Overpayment Underpayment Corporate
Beginning Through (Refund) (Refund) (Assessment) Underpayment
1-Apr-92 30-Sep-92 7% 7% 10% 12%
1-Oct-92 30-Jun-94 6% 6% 9% 11%
1-Jul-94 30-Sep-94 7% 7% 10% 12%
1-Oct-94 31-Mar-95 8% 8% 11% 13%
1-Apr-95 30-Jun-95 9% 9% 12% 14%
1-Jul-95 31-Mar-96 8% 8% 11% 13%
1-Apr-96 30-Jun-96 7% 7% 10% 12%
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 30-Jun-99 8% 7% 10% 12%
For additional information: Contact the Customer Services Section, 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) 367-8098
Aircraft Sales & Use Tax (804) 367-8098
Other Sales & Use Taxes (804) 367-8037
Related Documents
Tax Bulletins