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.
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