§ 3108. Establishment of interest rate

(a) Not later than December 15 of each year, the Commissioner shall establish an annual rate of interest applicable to unpaid tax liabilities and tax overpayments that shall be equal to the average prime rate charged by banks during the immediately preceding 12 months commencing on October 1 of the prior year, rounded upwards to the nearest quarter percent. The rate established hereunder shall be effective on January 1 of the immediately following year. As used in this section, the term “prime rate charged by banks” shall mean the average predominate prime rate quoted by commercial banks to large businesses as determined by the Board of Governors of the Federal Reserve Board.

(b) Whenever the Commissioner is authorized or directed to pay interest on an overpayment of any taxes, nevertheless no interest shall be paid on such overpayment:

(1) where the Commissioner finds that such overpayment was made with the intention or expectation of receiving a payment of interest thereon and for no other reason;

(2) for any period of time prior to 45 days after the date the return other than a corporate income tax return was due, including any extensions of time or 45 days after the return was filed, whichever is the later date, and with respect to corporate income tax returns, for any period of time prior to 90 days after the date the return was due or 90 days after the return was filed, whichever is the later date;

(3) in the case of overpayments that result from carrybacks, for a period of time prior to 45 days after the end of the tax year in which the event giving rise to the carryback occurred; or

(4) to the extent the overpayment is paid at the direction of the taxpayer to a municipality for credit against the taxpayer’s homestead property tax liabilities.

(c)(1) For the purposes of subsection (b) of this section, a return shall not be treated as filed until it is filed in processible form, which means that the return is filed on a permitted form and the return contains the taxpayer’s name, address, identifying number, the required signature, and sufficient information, whether on the return or on required attachments, to permit the mathematical verification of the tax liability shown on the return.

(2) The provisions of subsection (b) of this section shall apply notwithstanding any other provision of law to the contrary. (Added 1981, No. 191, (Adj. Sess.), § 1; amended 1983, No. 59, § 2, eff. April 22, 1983; 1999, No. 49, § 75, eff. June 2, 1999; 2005, No. 185 (Adj. Sess.), § 4, eff. Jan. 1, 2007; 2011, No. 143 (Adj. Sess.), § 15, eff. May 15, 2012; 2019, No. 51, § 2, eff. June 10, 2019; 2019, No. 175 (Adj. Sess.), § 28, eff. Oct. 8, 2020; 2021, No. 105 (Adj. Sess.), § 496, eff. July 1, 2022.)