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For Immediate Release
June 10, 2008
Kentucky Makes Significant Changes to the Calculation of Interest on Tax
Assessments and Refunds
Recent legislation has change how interest is
calculated for both assessments and refunds.
For assessments of tax, interest accrues on outstanding
assessments at the rate of 8% from January 1, 2008 through April 30,
2008. Beginning May 1, 2008, all taxes payable to the state that have not
been paid within the statutory provisions, will accrue interest at the
rate as determined in accordance with KRS 131.183(1), plus 2%. Therefore,
from May 1, 2008, through December 31, 2008, interest on assessments will
accrue at the rate of 10%.
For refunds prior to May 1, 2008, interest will be
computed at the old interest rate (8% for 2008) through April 30, 2008.
Interest will then accrue at the new interest rate for refunds beginning
on May 1, 2008. The new rate will be 6% for the remainder of 2008.
For motor fuel tax refunds, the interest accrual date
will continue to be 60 days after the postmark date of the application for
refund. The old interest rate and the new interest rate will apply to
motor fuel refunds based on whether the “60 days after the postmark date”
is before or after May 1, 2008.
For refunds issued based on corporation income tax
declaration overpayments, the interest accrual date was changed to begin
90 days after the later of the due date of the return, the date the return
was filed, the date the tax was paid, the last day by law for filing the
return, or the date an amended return claiming a refund is filed.
Refund requests received prior to May 1, 2008, will
have the interest computed at the old interest rate (8% for 2008) through
April 30, 2008. Interest will then accrue at the new interest rate (6% for
the remainder of 2008) for refunds beginning on May 1, 2008.
If you would like additional
information on this topic or have any questions,
please contact the taxdesk@thesaltgroup.com
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