Delaware Gross Receipts Tax Nonpayment Risk
Checklist
Delaware requires businesses to pay gross receipts tax to the state based on their total revenues. Unlike most states, Delaware does not have a sales tax. Instead, the state imposes a gross receipts tax on businesses that sell goods or provide services within the state of Delaware.
When gross receipts tax goes unpaid, whether due to missed filings, late payments, or nonpayment after an assessment, the Delaware Division of Revenue begins a collection and compliance process, this issue matters because unpaid gross receipts tax can trigger penalties, interest, liens, and enforcement actions that grow more serious over time.
Understanding what nonpayment means and what typically happens next helps taxpayers take action before the situation escalates. Nonpayment of gross receipts tax represents a break in the state's filing or payment cycle, signaling to the Division of
Revenue that immediate collection efforts may be necessary.
What This Issue Means
Delaware gross receipts tax nonpayment occurs when a business fails to remit the required gross receipts tax by the due date on a return or fails to pay tax owed after a completed audit or assessment. This is distinct from not filing a return at all.
Nonpayment specifically means a return was filed (or should have been filed), but the
tax amount was not sent to the state.
In administrative terms, this moves a taxpayer from the regular filing cycle into the state's collection and enforcement process. The state treats this as an unpaid tax debt that requires action. Delaware's gross receipts tax is imposed on the seller of goods or provider of services based on total gross revenues.
Business and occupational gross receipts tax rates range from 0.0945% to 1.9914%, depending on the business activity. This tax is not collected from customers as a separate charge. Instead, it is calculated on the business's total revenues and paid directly by the company to the state.
Why the State Issued This or Requires This
The Delaware Division of Revenue monitors gross receipts tax payments through its filing system. When a return deadline passes without payment, or a payment is posted late, the state's automated system flags the account for collection activity. Common triggers include missed payment deadlines on filed returns, failure to pay tax calculated on gross revenues, or nonpayment following an audit or assessment.
According to Delaware's tax administration procedures, unpaid gross receipts tax is considered an active debt, and the state has the authority to pursue collection through notices, liens, and enforcement actions. The state does this to maintain tax compliance and collect revenue owed under Delaware tax law.
What Happens If This Is Ignored
If gross receipts tax nonpayment is ignored, the Delaware Division of Revenue typically sends escalating notices and may pursue collection actions. Initial notices request payment and provide a deadline. If payment is not received, the state may file a tax lien
(called a Notice of Judgment in Delaware) against the business or the taxpayer's property. Further inaction can result in wage garnishment, bank levies, or liens on business assets. Penalties and interest continue to accrue on the unpaid balance, making the total debt larger over time.
Gross receipts tax returns filed late are subject to a penalty of 5% per month, plus interest of 0.5% per month from the original due date until paid. In addition to these penalties and interest, an additional penalty of 1% per month (not to exceed 25%) is imposed for failure to pay the tax liability shown to be due on a timely filed return.
The Division of Revenue may revoke or deny renewal of a business license if a business has a delinquent balance in excess of $2,500 that has remained unpaid for
180 days after appeal periods. If a company continues operating without a license, it is subject to criminal prosecution or the issuance of an injunction by the Court of
Chancery.
What This Does NOT Mean
Nonpayment of gross receipts tax does not automatically mean that criminal charges will be filed against the taxpayer. It does not mean the business license has been revoked or suspended yet, though the state has the authority to do so if nonpayment continues and the balance exceeds $2,500 for 180 days. Nonpayment also does not mean all assets will be seized immediately.
It means the state is treating the account as delinquent and beginning collection efforts.
The state may pursue these actions, but they typically occur in stages. This is a financial collection process, not an immediate enforcement action.
Checklist: What to Do After Receiving This or Identifying
This Issue
Follow these steps if a gross receipts tax payment is overdue or has not been made
Step 1: Gather Documentation
Locate the original gross receipts tax return or notice from the Delaware Division of
Revenue. Find records of business revenues for the tax period in question. Collect bank statements showing when the payment was (or was not) sent. Identify the specific tax period or periods involved.
Step 2: Determine the Exact Amount Owed
Review the notice or return to confirm the gross receipts tax amount due. Note the original due date and any penalties or interest shown. Contact the Delaware Division of
Revenue at (302) 577-8780 if the amount is unclear. Request a current account statement if the debt includes multiple periods.
Step 3: Identify Any Related Notices
Check for collection notices, demand letters, or lien notices from the Division of
Revenue. Note any deadlines shown on these notices. Confirm the current status of the account.
Step 4: Review Reasons for Nonpayment
Determine why the payment was not made (cash flow issues, oversight, dispute, or other reasons). Document any circumstances relevant to the nonpayment. Note whether the business is currently operating or closed.
Step 5: Contact the Delaware Division of Revenue
Call the Division of Revenue Gross Receipts Department at (302) 577-8780 to confirm the account status. Ask about current balance, penalties, and interest. Inquire about available payment options or arrangements—request written confirmation of the amount owed.
Step 6: Prepare Payment or Request Alternative Options
Arrange payment in full if possible. If full payment is not possible immediately, please contact the Division of Revenue to discuss options. Ask about installment payment plans or other alternatives available. Obtain written confirmation of any agreement before making partial payments.
Step 7: Submit Payment with Proper Identification
Include the tax period and business identification number with the payment. Send payment to the address provided by the Division of Revenue. Request a written receipt or confirmation of payment. Keep copies of all payment documentation.
- Ignoring initial notices and treating early collection notices as non-urgent allows
- Sending payment without identification (such as the tax period, business name,
- Making partial payments without first contacting the Division of Revenue may
- Failing to keep records of payment makes it difficult to prove payment if disputes
- Assuming the debt is resolved without confirmation can leave collection
- Missing deadlines on follow-up notices can trigger liens or other collection
- Failing to respond to lien notices does not eliminate the lien; instead, contact the
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 8: Request Written Confirmation
After payment is submitted, follow up with the Division of Revenue in writing. Request written confirmation that the account has been credited. Verify that penalties or interest adjustments were applied if discussed. Keep all correspondence for your records.
What Happens After This Is Completed
Once payment is submitted to the Delaware Division of Revenue, the state typically processes the payment and credits it to the delinquent account. Division of Revenue
staff will update the account status in their system and may issue a written confirmation.
If a lien (Notice of Judgment) has been filed, the state may release the lien once the tax debt is satisfied, although this process may take additional time.
If only partial payment were made, the state continues collection efforts on the remaining balance. The taxpayer may receive follow-up notices if any balance remains due or if additional compliance steps are required.
Common Mistakes to Avoid the situation to escalate unnecessarily. or ID number) can delay credit to the correct account. result in the payment being applied to the oldest debt or incorrectly posted to the account. arise. proceedings active. actions.
Division of Revenue to discuss available options.
Frequently Asked Questions
How long does it take for the state to file a tax lien after nonpayment?
Delaware's tax administration guidance does not specify a set timeframe for lien filing.
The state may pursue liens as part of its collection process, but the exact timing is not publicly detailed. Contact the Division of Revenue for information specific to an account.
Can the state garnish wages for the unpaid gross receipts tax?
Yes, the Delaware Division of Revenue has the authority to pursue wage garnishment for unpaid tax debts, including gross receipts tax. However, the state typically uses this remedy after other collection efforts have been unsuccessful.
What are the interest and penalty rates on unpaid gross receipts tax?
Delaware charges interest at 0.5% per month on unpaid gross receipts tax. Gross receipts tax returns filed late are subject to a penalty of 5% per month. An additional penalty of 1% per month (not to exceed 25%) is imposed for failure to pay the tax liability shown on a timely filed return.
If I have a payment plan with the state, does that stop collection actions?
Generally, entering into a formal payment agreement with the Division of Revenue halts further collection action while the plan is active and payments are up to date. Confirm the terms of any agreement in writing.
Can I dispute the gross receipts tax amount owed if I disagree with it?
The process for disputing a gross receipts tax assessment is separate from the nonpayment collection process. Contact the Delaware Division of Revenue to inquire about dispute procedures applicable to your specific situation.
What happens if I cannot afford to pay the full amount?
The Delaware Division of Revenue may discuss payment plan options, partial payments, or other arrangements to accommodate your financial situation. Contact the
Division of Revenue directly to explain the situation and explore available options.
If a lien is filed, can it be released?
Liens are typically released once the tax debt is fully paid. The state may also release a lien if a formal payment agreement is in place, depending on circumstances. Contact the Division of Revenue for information on lien release procedures.
Does nonpayment affect my business license?
The Delaware Division of Revenue may revoke or deny renewal of a business license if a business has a delinquent balance in excess of $2,500 that has remained unpaid for
180 days after appeal periods. Continuing to operate a business without a license subjects the company to criminal prosecution or a court injunction.
What if the business is closed; does the debt disappear?
No. Closing a business does not eliminate the gross receipts tax debt. The state may pursue collection from the business owner personally or from the business's assets, depending on the business structure and circumstances. Contact the Division of
Revenue to discuss the situation.
Can penalties be reduced or removed if I pay the tax?
Delaware's tax administration does not clearly specify whether penalties can be abated or reduced. Contact the Division of Revenue to inquire about penalty adjustment options for a specific account.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement and are unsure how to respond, our team can help you understand your options and next steps.
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