Sec. 7-3.7. Interest on certain installments based on preceding year's tax

Tax Law, § 213-b(e)

If the amount paid pursuant to section 213-b(a) of the Tax Law exceeds the tax shown on the report required to be filed by the taxpayer for the taxable year for which the amount was paid, interest will be allowed and paid on the amount by which the amount paid exceeds the tax. Interest will be paid at the overpayment rate or rates set by the Commissioner of Taxation and Finance pursuant to section 1096(e) of the Tax Law (see Part 2393 of this Title) or, if no rate is set, at the rate specified in section 213-b(e) of the Tax Law from the date of payment of the amount to the 15th day of the third month of the succeeding taxable year. However, no interest will be allowed or paid if the excess is less than one dollar or if the interest becomes payable solely because of the carry-back of a net operating loss from a subsequent taxable year.

Example:

X corporation, a calendar-year corporation, files its report for the calendar year 1980 on March 15, 1981 and shows a tax due of $4,000. The taxpayer pays $1,000, representing 25 percent of the preceding year's tax, as its first installment for the current taxable year's estimated tax. On March 15, 1982, X corporation files its report for the calendar year 1981 and shows a tax due of $600. Interest will be paid on the difference of $400 from March 15, 1981 to March 15, 1982.