Understanding Interest Charges

Interest charges are handled solely by the Cash Receipts module.  Ironically, there is never a charge transaction created on the system for interest, which means there is no Tax Type Code for an interest charge in either the Tax Billing module or the Cash Receipts module.  You can only see the interest payment transactions (during Cash Receipts' Open Item Inquiry or Tax Billing's Tax Master Maintenance).

In the Cash Receipts module, the Tax Receipt Entry program automatically detects overdue tax charge amounts and calculates the interest charges based on the Interest Date and the rate stored in the INTCAL table.  Tax Receipt Entry displays the calculated interest transaction, which you can select to automatically apply the interest payment.  The interest payment shows up as a detail transaction with the 05 Interest Payment Tax Type Code.

Notes:

• For more information, refer to Tax Receipt Entry - Interest Calculation Detail Area.

• For informational purposes only, the Prepare Lien File program in Tax Billing calculates the estimated Lien Interest Amount, which is stored in the PPLIEN and RELIEN files, which are used for creating lien letters.  You can maintain the Lien Interest Amount during Real Estate Lien Maintenance and Personal Property Lien Maintenance.

Interest Calculation:

Interest Amount =

Previous Balance X Rate (from INTCAL table) /

# of Interest Days in Year (from INTCAL table to get interest per day) X

# of Days in Period (determined by the counting days between From Dates in the INTCAL table to get interest per period)