Personal Property Tax

County Bulletin

TO: ALL COUNTY AUDITORS - Bulletin No. 253

FROM: Edgar L. Lindley, Tax Commissioner

DATE: December 30, 1982

RE: Interest Charges on Personal and Intangible Property Taxes

Commencing with the 1983 tax year, monthly interest is charged on underpayments, and allowed on overpayments, of personal and intangible property taxes. The interest on county-paid taxes is imposed by R.C. 5719.041 (part of Am. Sub. H.B. 379) and replaces the 1/2% per-month additional charge under R.C. 5711-27. No interest is applicable for the 1982 and prior tax years, which remain subject to the additional charge provision. "Tax year" means the year in which a tax return is due, not the year in which it is filed.

In the case of underpayments, interest is charged against any tax (and penalty) which remains unpaid after the second-half payment due date, i.e., September 20 of the tax year or the date as extended pursuant to R.C. 5719.031.

The interest accrues on the unpaid balance at the end of each month subsequent to the month in which the second-half payment due date falls. Thus, if the due date is not extended, the first interest accrual for the 1983 tax year will be on the unpaid balance at the close of October 31, 1983. If a new taxpayer's return is filed after delivery of the current duplicate to the treasurer, the full amount of tax is due within ten days of filing and interest charges would first accrue at the end of the month which follows the month in which the ten day period expires.

In the case of overpayments, interest is allowed from the first day of the month following the date of overpayment until the last day of the full month preceding the date of refund. Accordingly, for both underpayments and overpayments, the interest charged or allowed is based upon the number of full calendar months falling between the applicable due date and payment date or overpayment date and refund date. The percentage of interest for any month is the same for both underpayments and overpayments and is equal to 1/2 of the annual rate imposed by R.C. 5703.47 for the year in which the month falls. For 1983, that annual rate is 10%, so the charge for any month in 1983 is .83% (.0083).

It should be noted that, unlike the additional charge, interest is charged against unpaid taxes (and penalties) ultimately found due, whether they result from assessing a late-filed return, increasing the valuation of property listed in a timely filed return, or adding omitted property to that listed in a return. It is designed to compensate the county for delayed collection of moneys that would have been received by the second half due date if the taxpayer had properly filed his return and paid his taxes in full by such date. Accordingly, neither the filing of a petition for abatement of penalty under R.C. 5711-27, an application for review and redetermination under R.C. 5711.31, nor an appeal under R.C. 5717.02 suspends the accrual of interest charges on any unpaid amounts. However, the taxpayer can make payment to stop the running of interest charges and receive interest on any refund ultimately found due.

Because interest is not compounded, the percentage of interest charged at any given point in time will be the same for all unpaid taxes (and penalties) for a given tax year.

The following chart reflects the rounding of monthly interest accruals based upon the 10% annual rate applicable for 1983. Please note that for underpayments, the maximum number of months in 1983 for which interest can be imposed is 3. If the second-half due date has not been extended pursuant to R.C. 5719.031, interest is charged on unpaid balances at the close of October (0.83%), November (1.67%),December (2.50%). For overpayments, the maximum number of months in 1983 for which interest can be allowed depends upon the month in which the overpayment was made. Thereafter, if the tax remains unpaid, interest accrues at the 1984 rate for months in 1984, etc.

 

No. of Months Late Rate No. of Months Late Rate
.83% 7 5.83%
2 1.67% 8 6.67%
3 2.50%  9 7.50%
4 3.33%   10 8.33%
5 4.17% 11 9.17%
6 5.00% 12 10.00%

 

Interest accruals for months in 1984 will be at 1/12th the annual rate for 1984 as determined and published on October 15, 1983.