§ 684. Interest on underpayment.-- (a) General.--If any amount of
income tax is not paid on or before the last date prescribed in this
article for payment, interest on such amount at the underpayment rate
set by the commissioner pursuant to section six hundred ninety-seven of
this part, or if no rate is set, at the rate of seven and one-half
percent per annum shall be paid for the period from such last date to
the date paid, whether or not any extension of time for payment was
granted. Interest under this subsection shall not be paid if the amount
thereof is less than one dollar. If the time for filing of a return of
tax withheld by an employer is extended, the employer shall pay interest
for the period for which the extension is granted and may not charge
such interest to the employee.

(b) Exception as to estimated tax.--This section shall not apply to
any failure to pay estimated tax.

(c) Exception for mathematical or clerical error.--No interest shall
be imposed on any underpayment of tax due solely to mathematical or
clerical error if the taxpayer files a return within the time prescribed
in this article (including any extension of time) and pays the amount of
underpayment within three months after the due date of such return, as
it may be extended.

(d) Suspension of interest on deficiencies.--If a waiver of
restrictions on assessment of a deficiency has been filed by the
taxpayer, and if notice and demand by the tax commission for payment of
such deficiency is not made within thirty days after the filing of such
waiver, interest shall not be imposed on such deficiency for the period
beginning immediately after such thirtieth day and ending with the date
of notice and demand.

(e) Tax reduced by carryback.--If the amount of tax for any taxable
year is reduced by reason of a carryback of a net operating loss, such
reduction in tax shall not affect the computation of interest under this
section for the period ending with the filing date for the taxable year
in which the net operating loss arises. Such filing date shall be
determined without regard to extensions of time to file.

(f) Interest treated as tax.--Interest under this section shall be
paid upon notice and demand and shall be assessed, collected and paid in
the same manner as income tax. Any reference in this article to the tax
imposed by this article shall be deemed also to refer to interest
imposed by this section on such tax.

(g) Interest on penalties or additions to tax.--Interest shall be
imposed under subsection (a) of this section in respect of any
assessable penalty or addition to tax only if such assessable penalty or
addition to tax is not paid within twenty-one calendar days from the
date of the notice and demand therefor under subsection (b) of section
six hundred ninety-two of this article (ten business days if the amount
for which such notice and demand is made equals or exceeds one hundred
thousand dollars), and in such case interest shall be imposed only for
the period from such date of the notice and demand to the date of
payment.

(h) Payment within specified period after notice and demand.--If
notice and demand is made for payment of any amount under subsection (b)
of section six hundred ninety-two of this article, and if such amount is
paid within twenty-one calendar days (ten business days if the amount
for which such notice and demand is made equals or exceeds one hundred
thousand dollars) after the date of such notice and demand, interest
under this section on the amount so paid shall not be imposed for the
period after the date of such notice and demand.

(i) Limitation on assessment and collection.--Interest prescribed
under this section may be assessed and collected at any time during the
period within which the tax or other amount to which such interest
relates may be assessed and collected, respectively.

(j) Interest on erroneous refund.--Any portion of tax or other amount
which has been erroneously refunded, and which is recoverable by the
commissioner, shall bear interest at the underpayment rate set by the
commissioner pursuant to section six hundred ninety-seven of this part,
or if no rate is set, at the rate of seven and one-half percent per
annum from the date of the payment of the refund, but only if it appears
that any part of the refund was induced by fraud or a misrepresentation
of a material fact.

(k) Satisfaction by credits.--If any portion of a tax is satisfied by
credit of an overpayment, then no interest shall be imposed under this
section on the portion of the tax so satisfied for any period during
which, if the credit had not been made, interest would have been
allowable with respect to such overpayment.