Interest Rate on Delinquent Taxes

Reference Number: MTAS-748
Tennessee Code Annotated
Reviewed Date: October 30, 2018
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The payment of taxes to local municipalities or to the state of Tennessee generally has a due date associated with it. If a taxpayer fails to pay the tax, or a portion thereof, on or before the date the taxes are required to be paid, interest is added to the amount of tax due. The commissioner of revenue determines the interest rate for delinquent taxes collected or administered by the state of Tennessee. Sales tax and local business tax are examples of taxes falling into this category.

Formula Rate of Interest
T.C.A. § 67-1-801 provides for the rate of interest to be charged on delinquent tax payments. This rate is called the “formula rate of interest” and is determined and set annually by the Tennessee commissioner of revenue.

Action Required by Municipal Finance Staff
Finance directors, city recorders and other finance office personnel responsible for collecting or remitting delinquent taxes collected or administered by the state of Tennessee should review the interest rate currently used for delinquent accounts and verify that it complies with the chart below.

Historical Interest Rates
The following table from the Tennessee Department of Revenue is a historical presentation of the “formula rate of interest” as determined by the commissioner of revenue. This information is provided as supplemental data to give finance officials a perspective of interest rates for prior years.

INTEREST RATE HISTORY
DELINQUENT TAXES OF ALL TYPES
T.C.A. § 67-1-801(a)(1-3)
PERIOD COVERED RATE PERIOD COVERED RATE
Through - 9/30/1974 6.00% 7/1/1996 - 6/30/1997 12.25%
10/1/1974 - 7/31/1980 8.00% 7/1/1997 - 6/30/1998 12.50%
8/1/1980 - 6/30/1983 10.00% 7/1/1998 - 6/30/1999 12.50%
7/1/1983 - 6/30/1984 14.50% 7/1/1999 - 6/30/2000 11.75%
7/1/1984 - 6/30/1985 16.00% 7/1/2000 - 6/30/2001 13.50%
7/1/1985 - 6/30/1986 14.50% 7/1/2001 - 6/30/2002 11.00%
7/1/1986 - 6/30/1987 14.50% 7/1/2002 - 6/30/2003 8.75%
7/1/1987 - 6/30/1988 12.25% 7/1/2003 - 6/30/2004 8.25%
7/1/1988 - 6/30/1989 13.00% 7/1/2004 - 6/30/2005 8.00%
7/1/1989 - 6/30/1990 15.50% 7/1/2005 - 6/30/2006 10.00%
7/1/1990 - 6/30/1991 14.00% 7/1/2006 - 6/30/2007 12.00%
7/1/1991 - 6/30/1992 12.50% 7/1/2007 - 6/30/2008 12.25%
7/1/1992 - 6/30/1993 10.50% 7/1/2008 - 6/30/2009 9.00%
7/1/1993 - 6/30/1994 10.00% 7/1/2009 - 6/30/2016 7.25%
7/1/1994 - 6/30/1995 11.25% 7/1/2016 - 6/30/2017 7.50%
7/1/1995 - 6/30/1996 13.00%  
 

 

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