Interest On Deficiencies, Refunds, And Estimated Returns

Sections 28-22-104, 63-3045, 63-3630, Idaho Code 01. Interest Rate. The rate of interest on deficiencies or refunds of tax is determined annually as provided in Section 63-3045, Idaho Code, and IDAPA 35.02.01, Section 310. All interest on sales or use tax deficiencies is simple interest. (7-1-26) 02. Interest Accrual During a Period Subject to Audit. (7-1-26) a. Signal Period. Interest on deficiencies begins to accrue from the due date of the return to which the deficiency relates. Interest on refunds begins to accrue from the due date of the return or date of payment, whichever is later. (7-1-26) b. Multiple Periods. When a deficiency is asserted or a refund is claimed for a period of time which includes several reporting periods, interest may be averaged over the interest rate period if no substantial distortion results from the averaging technique. When averaging interest, sales or purchases of extraordinary amounts outside IDAHO ADMINISTRATIVE CODE IDAPA 35.01.02 State Tax Commission Idaho Sales & Use Tax Administrative Rules Section 123 Page 72 the usual course of business which would substantially distort the result should be excluded from the averaging calculation and interest calculated separately on such transactions. Average interest, accruing during an interest rate period, may be calculated according to the following formula: N = Number of reporting periods in interest rate period. R = Interest rate per reporting period, e.g., one percent (1%) for monthly filers, three percent (3%) for quarterly filers, at a 12% annual interest rate, etc. (7-1-26) 03. Alternate Formulas. Alternatively, interest may be calculated according to such other formula as the taxpayer and the Tax Commission’s sales tax audit staff may agree to apply. (7-1-26) 04. Estimated Returns. Interest on estimated returns accrues at an annual rate as provided in Section 63-3045, Idaho Code, and IDAPA 35.02.01, Section 310. (7-1-26) 05. Unpermitted Taxpayers. For the calculation of interest on a deficiency, unpermitted taxpayers are treated as monthly filers. (7-1-26) 06. Judgments. Nothing in this rule is intended to affect interest rates on judgments pursuant to Section 28-22-104(2), Idaho Code. (7-1-26)