Section 4.7. Termination of interest

(a) Cash refund. If the Commonwealth pays a cash refund to the taxpayer, interest terminates on a date not exceeding 30 days prior to the date of the Commonwealth’s refund check under section 806.1(c)(1) of the FC (72 P. S. § 806.1(c)(1)).

(b) Credit. In cases in which a taxpayer is entitled to a credit, the following applies:

(1) If the Commonwealth recognizes a claimed overpayment and so notifies the taxpayer, or credits the taxpayer’s account against other taxes or other claims which are due or may become due the Commonwealth, interest terminates on the mailing date of the Commonwealth’s notice of recognition of the credit, or on the date the credit is applied by the Department to an account, whichever is earlier under section 806.1(c)(2) of the FC (72 P. S. § 806.1(c)(2)).

(2) If the amount reported as due on a corporation’s annual report is less than the amount of taxes paid, the Department will credit the taxpayer’s account. The credit may be applied in payment of another tax liability, assigned to another taxpayer, or refunded if other obligations due the Commonwealth by the taxpayer have been paid. If the Department provides notification of the available credit within 60 days of filing the annual report by the taxpayer, no interest will be allowed on the credit.

Example. A corporation makes the required tentative tax payments in the amount of $150,000 on account of its 1985 corporate net income tax (CNI) liability. The corporation files its 1985 annual corporate tax report timely on April 15, 1986, reporting its CNI tax liability at $100,000. The Department posts the report to the taxpayer’s account and enters a credit for $50,000, providing notice thereof on April 29, 1986 by mailing an account review statement to the taxpayer. By settlement mailed November 15, 1986 the Department settles the taxpayer’s CNI liability at $100,000.

No interest is payable on the $50,000 credit because notification of the availability of the credit was provided to the taxpayer on April 29, 1986, within 60 days of the filing of the annual report on April 15, 1986.

Notation

Cross References

This section cited in 61 Pa. Code § 4.6 (relating to overpayment); 61 Pa. Code § 4.9 (relating to application dates); and 61 Pa. Code § 35.2 (relating to interest, additions, penalties, crimes and offenses).