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
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
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
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
No. of Months Late
Interest accruals for months in 1984 will be at 1/12th the
annual rate for 1984 as determined and published on October