Under Vt. Stat. Ann. tit 32, § 3108(a), the Vermont Commissioner of Taxes shall set interest rates no later than December 15th of each year with rates that become effective on January 1st of the following year and apply to interest that accrues in that calendar year. On October 11, 2019, the Vermont Commissioner of Taxes issued a memorandum on interest rates for 2020. The memorandum announced that the annual rate for overpayment of taxes (the “Declared Rate”) for 2020 will be 5.5%.
The Declared Rate is found by rounding the average prime loan rate (as determined by the Board of Governors of the Federal Reserve System) to the nearest quarter of a percent. The average prime loan rate for the 12-month period beginning October 1, 2018 and ending September 30, 2019 was 5.40%, which rounded to the nearest quarter of a percent results in a Declared Rate of 5.5% for calendar year 2020.
The Declared Rate is used to determine whether a loan is considered a “high rate / high point loan” subject to Vermont’s anti-predatory lending law. A first-lien, residential loan in Vermont is high rate if the interest rate for the loan exceeds the adjusted Declared Rate by more than three percent (3%). For more information, reference DocMagic’s High Cost Memo on the Vermont High Rate / High Point Law.
DocMagic has adjusted our Vermont High Cost Test as well as our Vermont High Rate, High Point Disclosure form (Form ID: VTHRHP.DSC) to reflect the declared rate adjustment for the January 1, 2020 effective date.
If you have any questions regarding this article, please contact DocMagic’s Compliance Department.
