DES MOINES – The Iowa Department of Revenue announces that the annual interest rate in 2012 will be 5.0 percent. The monthly interest rate will be 0.4 percent. The 2012 annual and monthly rates are the same interest rates that were imposed by the Department for calendar year 2011.
By statute, the Department’s interest rate is based on the average prime rate charged by banks on short-term business loans between October 2010 and September 2011. The Iowa Code requires two percentage points to be added to this average, and then the final value is rounded to the nearest whole percentage. The prime rate was 3.25% every day in this time period, resulting in no change for the Departments interest rate for 2012.
The Department charges interest on taxes that are overdue; income, sales and withholding taxes are included. In addition, the Department pays interest to taxpayers who file their individual income tax returns on time but do not receive their refunds by June 1. Late refunds of other taxes are paid with interest as well.
The 2011 Department annual and monthly rates are effective beginning January 1, 2012, for taxes which are overdue and for late refunds payable at that time. The new interest rates continue to apply for overdue taxes and late refunds through December 31, 2012.
