Interest

# (a)

Interest on an underpayment of tax, including an underpayment of an installment payment of estimated tax, is calculated for the time beginning with and including the day after the tax is due, and to and including the day the unpaid amount due is paid.

# (b)

Interest with respect to an underpayment or overpayment of an installment payment of estimated tax under AS 43.55.020(g) or (h) is subject to the following requirements:

# (1)

except as otherwise provided in (2)(A) of this subsection, and for purposes only of determining the applicable rate of interest to be applied during a month based on the size of an underpayment or overpayment of tax under 26 U.S.C. 6621 (Internal Revenue Code), as amended,

(A) the size of that underpayment or overpayment of tax is considered to be equal to the total net outstanding amount of underpayments or overpayments including outstanding accrued interest, as of the end of

(i) the last day of the previous month; or

(ii) if the last day of the previous month is a Saturday, Sunday, or legal holiday as described in 15 AAC 05.310(h), the next succeeding day that is not a Saturday, Sunday, or legal holiday;

(B) the higher interest rate provided under 26 U.S.C. 6621 (Internal Revenue
Code), as amended, for a large corporate underpayment applies to the entire amount of an underpayment of tax if the amount would constitute a large corporate payment under that section; and

(C) the lower interest rate provided under 26 U.S.C. 6621 (Internal Revenue
Code), as amended, to the extent that an overpayment exceeds $10,000, applies only to the portion of the amount of overpaid tax that exceeds $10,000;

# (2)

if a producer makes a payment on a day other than the last day of a month,

(A) the payment will be applied to any then outstanding net underpayment to the extent of that underpayment; interest ceases to accrue, as provided under (a) of this section, on the amount of the underpayment to which the payment is applied; the applicable rate of interest provided under 26 U.S.C. 6621 (Internal Revenue Code), as amended, during the rest of the month on any remaining balance of the net underpayment is determined by the size of that remaining balance, if any;

(B) the payment is not considered an overpayment or an increase in a producer's net outstanding amount of overpayments, if any, until the last day of the month;

# (3)

the earliest day that interest may begin to accrue on either an underpayment or overpayment with respect to the production of oil or gas during a calendar year is March 1 of that calendar year.
(Eff. 5/3/2007, Register 182)
Statutory Authority:
Authority:
AS 43.05.080 AS 43.55.020 AS 43.55.110
AS 43.05.225 AS 43.55.060