I recently asked my State House representative, Rich Golick, to sponsor a bill to reduce the Georgia interest rate on tax underpayments to a market rate —perhaps using the rate that the IRS uses. After analyzing the matter, he said he is having someone draft legislation to make the change to use the IRS’s rate. Making the change is the right thing to do.
Background: For many years, the underpayment interest rate with respect to Georgia tax deficiencies has been one percent (1%) per month. This excessive rate amounts to a substantial penalty. Georgia has a thorough penalty scheme, similar to the federal penalty scheme found in the Internal Revenue Code.
The IRS currently charges 3 percent annual interest, and it has been charging 3 or 4 percent for many years. Most states have a much lower interest rate than Georgia’s current rate.
