61 Pa. Code § 4.5

Current through Register Vol. 54, No. 45, November 9, 2024

Section 4.5 - Computation of interest on unpaid taxes

(a)Daily computation. Interest is computed daily, beginning on the first day of delinquency through and including the day of payment. If paid by mail, the United States Postal Service postmark date is the date of payment. For purposes of computing the daily interest factor-the annual rate is divided by the number of days in a year-the Department will use a 365-day year. Interest is not compounded.

(b)Extensions. Tax due dates are established without regard to an extension of time for filing reports or returns. Although an extension may relieve a taxpayer from late filing or late payment additions or penalties, the taxpayer is not relieved from the payment of interest upon the amount due from the original due date until payment.

(c)Amendments. Amendments to tax returns or reports, when allowed or required by statutes and regulations are considered to amend the tax liability as of the original due date of the tax for the purpose of computing interest due on account of nonpayment or underpayment of tax. The interest rate will be the rate applicable upon the original due date, even when the rate has changed between the date and the date of the amendment.

(d)Federal report of change. An underpayment of corporate net income tax which results from a settlement or resettlement of tax based upon a final change or correction of Federal taxable income by the Commissioner of Internal Revenue or other agency or court of the United States, under section 407(b) of the TRC (72 P. S. § 7407(b)) and section 806 of the FC (72 P.S. § 806), is deemed first due and payable, for the purpose of establishing the rate and computing interest, 30 days after the corporation receives notice of the final change or correction. The interest is computed until the additional tax is paid.

(1) If the original due date of the tax report is on or before December 31, 1981, the tax settled or resettled is subject to interest at the rate of 6.0% per annum until paid-unless reported and paid within the 30-day period, in which case no interest is due.

(2) If the original due date of the tax report is on or after January 1, 1982, the additional tax is subject to the rate of interest and the annual adjustments as described in § 4.4 (relating to rate of interest applicable to unpaid taxes).

(3) The Federal report of change 30-day period does not apply to the personal income tax. Increases in personal income tax liability assessed or reassessed as a consequence of a Federal redetermination of Federal taxable income will bear interest from the original due date of the return at the rate then in effect, subject to annual adjustment, without regard to the date of the Federal redetermination.

(e)Unpaid tax resulting from application, assignment or refund of credit. If an application, assignment or refund of credit requested by the taxpayer, under Article XXX of the TRC (72 P. S. §§ 10001-10004), results in an underpayment of the tax due upon settlement or resettlement, interest will be calculated on the amount of the credit applied, assigned or refunded from the date the credit was applied, assigned or refunded to the date of payment.

Example. On April 15, 1985, a corporation makes the required tentative tax payment in the amount of $100,000 on account of its 1985 capital stock tax liability. On March 6, 1986, the corporation files its 1985 annual corporate tax report, reporting its capital stock tax liability at $50,000 and requesting the transfer of the $50,000 credit to another account. On March 17, 1986, the report is posted to its account and the $50,000 credit acknowledged by the Department, with notice to the taxpayer. On April 20, 1986, the Department prepares the journal entry transferring the credit as requested by the taxpayer. On August 5, 1986, the Department settles the corporation's 1985 capital stock tax liability at $80,000, an increase of $30,000 over the reported tax liability.

On October 2, 1986, the taxpayer pays the tax increased as a result of settlement. This payment is subject to the imposition of interest from April 20, 1986, the date of transfer, to October 2, 1986, the date of payment.

61 Pa. Code § 4.5

This section cited in 61 Pa. Code § 35.2 (relating to interest, additions, penalties, crimes and offenses).