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%		7/1/1999	-	6/30/2000	11.75%
10/1/1974	-	7/31/1980	8.00%		7/1/2000	-	6/30/2001	13.50%
8/1/1980	-	6/30/1983	10.00%		7/1/2001	-	6/30/2002	11.00%
7/1/1983	-	6/30/1984	14.50%		7/1/2002	-	6/30/2003	8.75%
7/1/1984	-	6/30/1985	16.00%		7/1/2003	-	6/30/2004	8.25%
7/1/1985	-	6/30/1986	14.50%		7/1/2004	-	6/30/2005	8.00%
7/1/1986	-	6/30/1987	14.50%		7/1/2005	-	6/30/2006	10.00%
7/1/1987	-	6/30/1988	12.25%		7/1/2006	-	6/30/2007	12.00%
7/1/1988	-	6/30/1989	13.00%		7/1/2007	-	6/30/2008	12.25%
7/1/1989	-	6/30/1990	15.50%		7/1/2008	-	6/30/2009	9.00%
7/1/1990	-	6/30/1991	14.00%		7/1/2009	-	6/30/2016	7.25%
7/1/1991	-	6/30/1992	12.50%		7/1/2016	-	6/30/2017	7.50%
7/1/1992	-	6/30/1993	10.50%		7/1/2017	-	6/30/2018	8.00%
7/1/1993	-	6/30/1994	10.00%		7/1/2018	-	6/30/2019	8.75%
7/1/1994	-	6/30/1995	11.25%		7/1/2019	-	6/30/2020	9.50%
7/1/1995	-	6/30/1996	13.00%		7/1/2020	-	6/30/2021	7.25%
7/1/1996	-	6/30/1997	12.25%		7/1/2021	-	6/30/2022	7.25%
7/1/1997	-	6/30/1998	12.50%		7/1/2022	-	6/30/2023	8.00%
7/1/1998	-	6/30/1999	12.50%