Tennessee § 67-1-801 - Rate of penalty and interest.

§ 67-1-801. Rate of penalty and interest.

When any person liable to pay any tax that is collected or administered by the commissioner of revenue fails to pay the tax, or any portion of the tax, on or before the date when such tax shall be required to be paid, interest shall be added to the amount of tax due, in addition to any penalty provided by law, at a rate to be determined by the commissioner in the manner provided in this subsection (a). The rate of interest determined by the commissioner shall be the formula rate of interest last published in the Tennessee Administrative Register, pursuant to title 47, chapter 14. The commissioner shall determine the rate of interest by causing notice of such rate to be filed with the secretary of state on July 1 each year, for publication in the Tennessee Administrative Register. The rate of interest determined by the commissioner shall become effective on July 1 of each year, and shall apply to all assessments of interest on and after July 1 of each year, until July 1 of the following year when the rate of interest shall be redetermined by the commissioner. The determination of the commissioner of the rate of interest on delinquent and deficient tax payments and the filing of notice thereof, as provided for in this chapter shall not constitute a rule under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5. All delinquent or deficient payments of taxes, either administered or collected by the commissioner, shall accrue interest from the date delinquent or deficient until paid. For periods prior to the date of final assessment, interest shall accrue at the prevailing rate in effect on the date of the final assessment, regardless of the taxable period involved. For periods subsequent to the date of final assessment, interest shall accrue at the prevailing rate in effect on the date of the accrual of such interest. Any interest imposed on delinquent or deficient tax payments shall be considered part of such delinquent or deficient taxes and shall be payable to and collectible by the commissioner in the same manner as the tax is paid and collected. In any case where the commissioner, in the commissioner's discretion, agrees to permit a taxpayer to pay a tax liability to the department in installments over an extended period, the interest payable on the liability shall be computed at the time the taxpayer executes an agreement to do so. The interest shall be computed at a rate not to exceed the highest rate allowable by law in Tennessee on short-term business loans and upon the basis of the total tax, penalty and interest owed by the taxpayer at the time the agreement is made. If the taxpayer makes all of the monthly installment payments on a timely basis, no additional interest shall be computed on the liability covered by the agreement. If an installment payment is delinquent, additional interest shall be computed on the delinquency at the stated rate, and penalty shall be computed only if allowed by any other law. Any change in the interest rate shall be effective only after a notice of the change has been filed with the secretary of state. This notice shall not constitute a rule under the Uniform Administrative Procedures Act. Tax returns filed prior to the due date shall be deemed to be filed on the due date, rather than on the date actually filed. Notwithstanding the provisions of this section or any law to the contrary, no interest shall be imposed on delinquent or deficient payments of litigation taxes to be collected by the clerk of the appellate courts. When it is determined by administrative review that a person is entitled to a refund or credit of any tax collected or administered by the commissioner, and such person is not a debtor as defined in § 67-1-1808, interest shall be added to the amount of refund or credit due, beginning forty-five (45) days from the date the commissioner receives proper proof to verify that the refund or credit is due and payable. In the case of a taxpayer who is a debtor as defined in § 67-1-1808, when it is determined by administrative review that such taxpayer is entitled to a refund or credit of any tax collected or administered by the commissioner, interest shall be added to the amount of refund or credit due, beginning ninety (90) days from the date the commissioner receives proper proof to verify that the refund or credit is due and payable. When it is determined by court order that a person is entitled to a refund or credit of any tax collected or administered by the commissioner, interest shall be added to the amount of refund or credit due, beginning: Forty-five (45) days from the date of filing a claim for refund, pursuant to § 67-1-1802(a); Forty-five (45) days from the date of waiver by the commissioner, pursuant to § 67-1-1802(c)(3); On the date of payment, in the case of any tax collected after suit was filed under § 67-1-1801; or Ninety (90) days from the date of filing a claim for refund in the case of a taxpayer who is a debtor as defined in § 67-1-1808. The rate of interest to be paid pursuant to this subsection (b) shall be determined as provided in subsection (a). Except for taxes collected after suit is filed under § 67-1-1801, no interest shall be added to any refund made, or credit given, by the commissioner for which no claim for refund or application for credit is made by the taxpayer, pursuant to § 67-1-1802(a), or for which the requirement that the taxpayer file a claim for refund is waived by the commissioner, pursuant to § 67-1-1802(c)(3). Notwithstanding the provisions of this section, interest added to highway user fuel tax due or interest added to refunds of such taxes shall be computed in accordance with § 67-3-710 [repealed]. Acts 1907, ch. 602, §§ 48, 73; Shan., §§ 865a2, 865a3; Acts 1923, ch. 77, § 1; mod. Code 1932, §§ 1547, 1548; Acts 1971, ch. 380, § 1; 1974, ch. 693, § 1; 1976, ch. 429, § 1; 1978, ch. 802, § 1; 1980, ch. 885, § 1; modified; Acts 1982, ch. 883, §§ 1-3; 1983, ch. 62, §§ 1, 2; 1983, ch. 238, §§ 3, 4; 1983, ch. 430, § 2; T.C.A. (orig. ed.), §§ 67-112, 67-1105(b), 67-1106; Acts 1984, ch. 580, § 1; 1985, ch. 203, §§ 1, 2; 1986, ch. 749, § 3; 1986, ch. 851, § 1; 1987, ch. 2, §§ 1, 2; 1988, ch. 526, § 5; 1988, ch. 795, §§ 17, 18; 1989, ch. 291, § 4; 1989, ch. 550, § 4; 1993, ch. 142, § 15; 2002, ch. 559, § 3; 2005, ch. 499, § 28; 2010, ch. 1113, §§ 2, 3; 2014, ch. 854, § 3. Code Commission Notes. Acts 1988, ch. 526, § 45 provided that the amendment by that act shall apply to all assessments of penalty made on or after January 1, 1989. Compiler's Notes. Section 67-3-710 , referred to in this section, was repealed by Acts 1997, ch. 316, § 1, effective January 1, 1998. For new provisions concerning highway user fuel tax, see §§ 67-3-1201 — 67-3-1210 . Acts 2010, ch. 1113, § 8 provided that any claimant may promulgate rules to effectuate the provisions of the act relating to internal procedures for reporting debts and conducting administrative hearings. The department of revenue may promulgate such other rules to carry out the remaining provisions of the act. Acts 2010, ch. 1113, § 9 provided that the act, which amended subsection (b), shall apply to any claim for refund filed with the department of revenue on or after July 1, 2009, that has not been finally determined. Amendments. The 2014 amendment, effective January 1, 2015, substituted “final assessment” for “tax assessment” twice in the second sentence and once in the last sentence of (a)(2). Effective Dates. Acts 2014, ch. 854, § 11. January 1, 2015. Cross-References. Delinquent property taxes, title 67, ch. 5, part 20. Effect of appeal or reappraisal on payment of interest and penalties on delinquent taxes, § 67-5-1512 . Penalty and costs, § 67-1-1008 . Textbooks. Pritchard on Wills and Administration of Estates (4th ed., Phillips and Robinson), §§ 944, 963. Tennessee Jurisprudence, 23 Tenn. Juris., Taxation, § 49. Law Reviews. A Revolution in Tennessee Tax Procedure (S. Gale Graham), 22 Tenn. B.J. 13 (1986). Taxing Tennessee: New Business Taxes for 1999 (J. Leigh Griffith), 35 Tenn. B.J. 12 (1999). Cited: Cummings v. Shipp, 156 Tenn. 595, 3 S.W.2d 1062, 1928 Tenn. LEXIS 241 (1928); Esch v. Wilcox, 181 Tenn. 165, 178 S.W.2d 770, 1944 Tenn. LEXIS 355 (1944); Clark v. Lincoln County, 54 Tenn. App. 13, 387 S.W.2d 360, 1964 Tenn. App. LEXIS 140 (Tenn. Ct. App. June 26, 1964); Genesco, Inc. v. Woods, 578 S.W.2d 639, 1979 Tenn. LEXIS 419 (Tenn. 1979); James v. Huddleston, 795 S.W.2d 661, 1990 Tenn. LEXIS 308 (Tenn. 1990).