Pennsylvania Code › Title 61 - REVENUE › Part I - Department of Revenue › Subpart A - General Provisions › Chapter 4 - INTEREST › Section 4.4 - Rate of interest applicable to unpaid taxes

Current through Register Vol. 54, No. 28, July 13, 2024
(a)
Initial rate of
				  interest.
The initial interest rate applicable to unpaid taxes is the
				  rate in effect during the calendar year in which the tax is originally required
				  by statute to be reported and paid to the Department, without regard to the
				  dates of accrual, extensions for filing, subsequent amendments or alterations
				  of the report or return, or subsequent resettlements, reassessments or
				  redeterminations. Examples of the initial interest rate are as follows:
Example 1. Personal Income Tax.
The
					 initial interest rate on delinquent annual Personal Income Tax is determined by
					 the rate in effect on the date the tax is required by statute to be reported
					 and paid to the Department, even though the tax may relate to incidents which
					 occurred prior to that date.
Example 2. Withheld personal income tax.
In the case of personal income tax withheld by an employer, unpaid tax bears
					 interest at the rate in effect on the date the tax is required to be reported
					 and paid by the employer to the Commonwealth.
Example 3. Sales or use tax.
Interest on
					 sales or use tax-or other taxes paid to an officer, licensee or other
					 collector-is due at the rate in effect on the date the tax is originally
					 required by statute to be reported and transmitted by the officer, licensee or
					 collector to the Department, even though the tax was collected or incurred
					 prior thereto.
Example 4. Tentative tax.
A tax required
					 by statute to be reported and paid in installments prior to the original due
					 date of the annual report or return-for example, tentative tax-bears interest
					 at the rate in effect on the due date for the prepayment. The remaining portion
					 of the tax due shall bear interest at the rate in effect on the date the
					 taxpayer's annual report or return is required to be filed under the applicable
					 tax statute, determined without reference to an extension of time for filing
					 the report.
Example 5. Corporate net income tax.
Underpayments of installments of estimated tax do not bear interest during the
					 period of the underpayment. Tax finally determined to be due, which is not paid
					 by the date the annual report is due-determined without regard to an extension
					 of time for filing-bears interest from the date until paid.
Example 6. Inheritance tax.
With respect
					 to inheritance tax and estate tax, the interest rate is the rate in effect on
					 the date the tax becomes delinquent.
(b)
Annual interest rate
				  adjustment.
The interest rate in effect when a tax is required to be
				  paid remains in effect until the tax is paid or until the end of the calendar
				  year, whichever occurs first. On January 1 of each succeeding year, the new
				  interest rate for that year will commence to apply to unpaid tax.
This section cited in 61 Pa. Code §
												4.5 (relating to computation of
						interest on unpaid taxes); and 61 Pa. Code §
												35.2 (relating to interest,
						additions, penalties, crimes and
						offenses).