KRS 131.183: Tax interest rate.

(1) (a) Except for the addition to tax required when an underpayment of estimated

tax occurs under KRS 141.044 and 141.305, all taxes payable to the

Commonwealth not paid at the time prescribed by statute shall accrue interest

at the tax interest rate.

(b) 1. a. Except as provided by subparagraph 2. of this paragraph, the tax

interest rate shall be equal to the adjusted prime rate charged by

banks rounded to the nearest full percent as adjusted by subsection

(2) of this section.

b. The commissioner of revenue shall adjust the tax interest rate not

later than November 15 of each year if the adjusted prime rate

charged by banks during September of that year, rounded to the

nearest full percent, is at least one (1) percentage point more or

less than the tax interest ra te which is then in effect. The adjusted

tax interest rate shall become effective on January 1 of the

immediately succeeding year.

2. For additional tax billed in accordance with KRS 136.180(2), the tax

interest rate shall be equal to the federal short -term rate applicable to

each quarter of the period that begins on the date the protest was filed by

the taxpayer under KRS 131.110 and ends on the due date of the tax as

stated on the final tax bill. The federal short -term rate for each quarter

shall be the f ederal short -term rate determined by the Secretary of the

Treasury under Section 6621(b) of the Internal Revenue Code of 1986

or equivalent section in case of amendment. The two percent (2%)

adjustment provided by subsection (2)(a) of this section shall no t apply

to the interest rate determined under this subparagraph.

(2) (a) All taxes payable to the Commonwealth that have not been paid at the time

prescribed by statute shall accrue interest at the tax interest rate as determined

in accordance with subsection (1) of this section plus two percent (2%).

(b) 1. Interest shall be allowed and paid upon any overpayment as defined in

KRS 134.580 at the rate provided in subsection (1) of this section minus

two percent (2%).

2. Except for the provisions of KRS 138.351, 141.044(2), and 141.235(3)

and subsection (3) of this section, interest authorized under this

subsection shall begin to accrue sixty (60) days after the latest of:

a. The due date of the return;

b. The date the return was filed;

c. The date the tax was paid;

d. The last day prescribed by law for filing the return; or

e. The date an amended return claiming a refund is filed.

(c) In no case shall interest be paid in an amount less than five dollars ($5).

(d) A refund shall not be made of any estimated tax paid unless:

1. a. An application is made by the taxpayer or officer authorized to

make the request on a form prescribed by the department; and

b. It is determined that the estimated tax was paid to the department

in error; or

2. A return is filed as required by KRS Chapter 141.

(3) If any overpayment of the tax imposed under KRS Chapter 141 results from a

carryback of a net capital loss, the overpayment shall be deemed to have been made

on the date the claim for refun d was filed. Interest authorized under subsection (2)

of this section shall begin to accrue ninety (90) days from the date the claim for

refund was filed.

(4) Interest shall not be allowed or paid on any sales tax refund as provided by KRS

139.536.

(5) For purposes of this section, any addition to tax provided in KRS 141.044 and

141.305 shall be considered a penalty.