Interest rate used for state taxes to remain unchanged
Friday, October 04, 2013 4:05 PM
The interest rate used by the state to assess penalties on overdue tax payments and to reimburse taxpayers on late refunds will remain unchanged for a fifth consecutive year in 2014, the Iowa Department of Revenue announced. The annual interest rate in 2014 will continue to be 5.0 percent; the monthly interest rate will again be 0.4 percent. The rates are applied to overdue income, sales and withholding taxes. Additionally, the department pays interest to taxpayers who file their individual income tax returns on time but who do not receive their refunds by June 1. Late refunds for other taxes are paid with interest as well. By statute, the 2014 interest rate is based on the average prime rate charged by banks on short-term business loans between October 2012 and September 2013, which was 3.25 percent. Two percentage points are added to the average, with the final value rounded to the nearest whole percent.