Bulletin Number
VTB 99-7
Tax Type
General Provisions
Description
Interest Rates; Third Quarter 1999
Topic
Basis of Tax
Date Issued
06-11-1999
INTEREST RATES THIRD 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 remain unchanged: State and certain local interest rates are subject to change every quarter based on changes in federal rates established pursuant to I.R.C. § 6621. The federal rates for the third quarter of 1999 remain at 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 third quarter of 1999 remain at 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 whose taxable year ends on June 30, 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 Form 500C (for corporations), the 10% underpayment rate will apply through the due date of the return, October 15, 1999, (for corporations), and November 1, 1999, (for individuals and fiduciaries).
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 third quarter of 1999, the federal underpayment rate is 7%.
Refunds: Effective July 1, 1999, localities which charge interest on delinquent taxes are required paying interest to taxpayers on all overpayments or erroneously assessed taxes at the same rate as they charge interest on delinquent taxes 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-Oct-89 31-Mar-91 10% 10% 11% --
1-Apr-91 30-Jun-91 9% 9% 10% --
1-Jul-91 31-Dec-91 9% 9% 12% 14%
1-Jan-92 31-Mar-92 8% 8% 11% 13%
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-Sep-99 8% 7% 10% 12%
For additional information: Contact the Office of 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) 367-8098
Aircraft Sales & Use Tax (804) 367-8098
Other Sales & Use Taxes (804) 367-8037
Related Documents
Tax Bulletins