Administrative Code

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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 20. General Provisions Applicable to All Taxes Administered by the Department of Taxation
2/4/2023

23VAC10-20-60. Rate of interest.

A. In general.

1. Unless otherwise specifically provided, interest on omitted taxes, taxes paid after the date prescribed for payment, assessments and refunds shall be computed at a rate equal to the rate of interest established pursuant to § 6621 of the Internal Revenue Code of 1954, as amended.

2. Separate computations shall be made for each period during which the interest rate differs from the current rate by multiplying the deficiency or overpayment outstanding during each period by the rate of interest applicable to that period.

3. The Internal Revenue Code requires that interest accruing after December 31, 1982 be compounded daily. Although Virginia uses the nominal interest rate established pursuant to IRC § 6621, Virginia applies simple interest computations without compounding.

4. The rates of interest applicable to deficiencies and overpayments under this section and prior law are as follows:

Prior to July 1, 1976

6%

July 1, 1976 through January 31, 1978

7%

February 1, 1980 through January 31, 1980

6%

February 1, 1980 through January 31, 1982

12%

February 1, 1982 through December 31, 1982

20%

January 1, 1983 through June 30, 1983

16%

July 1, 1983 through December 31, 1984

11%

5. Interest is computed by excluding the due date and including the date of payment in the number of days. For example, interest on $100 tax due June 20, 1983 and paid July 10, 1983 would be computed as follows:

June 21 through June 30 = 10 days at 16%

10

x 0.16 = 0.004383

365

July 1 through July 10 = 10 days at 11%

10

x 0.11 = 0.003013

365

Total Interest Factor 0.007396 x $100 = $0.74 interest

Note that June 20, the due date, is not counted, and that July 10 and all intervening days are counted.

B. § 6621. The text of IRC § 6621 as amended through December 31, 1983 is set forth below:

IRC Section 6621. Determination of rate of interest.

a. In general. The annual rate established under this section shall be such adjusted rate as is established by the Secretary under subsection (b).

b. Adjustment of interest rate.

1. Establishment of adjusted rate. If the adjusted prime rate charged by banks (rounded to the nearest full percent)

(A) during the 6-month period ending on September 30 of any calendar year, or

(B) during the 6-month period ending on March 31 of any calendar year, differs from the interest rate in effect under this section on either such date, respectively, then the Secretary shall establish, within 15 days after the close of the applicable 6-month period, an adjusted rate of interest equal to such adjusted prime rate.

2. Effective date of adjustment. Any adjusted rate of interest established under paragraph (1) shall become effective:

(A) on January 1 of the succeeding year in the case of an adjustment attributable to paragraph (1)(A), and

(B) on July 1 of the same year in the case of an adjustment attributable to paragraph (1)(B).

c. Definition of prime rate. For purposes of subsection (b), the term "adjusted prime rate charged by banks" means the average predominant prime rate quoted by commercial banks to large businesses, as determined by the Board of Governors of the Federal Reserve System.

Statutory Authority

§§ 58.1-15 and 58.1-203 of the Code of Virginia.

Historical Notes

Derived from VR630-1-15, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia.

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