Delaware State Tax Enforcement Decision Checklist
State tax enforcement is a formal process that the Delaware Division of Revenue uses to collect unpaid taxes, penalties, and interest from taxpayers. Enforcement actions typically begin when a tax debt remains unpaid after the initial notices and collection attempts have been made. Understanding what enforcement entails, the stages involved, and your obligations during this process helps you respond appropriately and avoid further complications.
Ignoring enforcement notices can result in wage garnishment, asset seizure, or other legal actions that significantly complicate the situation's resolution. This checklist outlines what enforcement entails in Delaware, the steps involved at each stage, and the actions you can take if you receive an enforcement action or notice. The Division of
Revenue operates under the Department of Finance and adheres to procedures established by the Delaware Code and state court precedents.
What This Issue Means
State tax enforcement occurs when Delaware's Division of Revenue takes active collection measures against a taxpayer who owes unpaid state taxes. This typically happens after standard billing notices have been sent and payment has not been received. Enforcement actions represent a shift from routine collection to more serious legal action involving potential judicial review.
The state is moving beyond written reminders and is preparing to use formal collection tools such as wage garnishment, asset liens, or, in specific circumstances, business license revocation. Under Delaware law, the Division of Revenue may revoke or deny
the renewal of a business license if a taxpayer has a delinquent balance exceeding
$2,500 that has remained unpaid for 180 days after the expiration of appeal periods.
Why the State Issued This or Requires This
Delaware issues enforcement actions when a tax debt becomes delinquent and remains unpaid despite previous notices. The state's Division of Revenue has internal administrative procedures that require escalation to enforcement when certain conditions are met. Common triggers for enforcement include missed payment deadlines, failure to respond to collection notices, or non-filing of federal tax returns and corresponding state returns.
According to state administrative practices, enforcement represents the Division's attempt to recover tax revenue through lawful means before pursuing more restrictive collection methods. The Division of Revenue must follow specific legal requirements before taking certain enforcement actions, including filing a Notice of Judgment in
Superior Court at least 10 days before issuing a wage garnishment.
What Happens If This Is Ignored
Continuing to ignore enforcement notices or failing to respond to enforcement actions typically results in escalation by the state. The Division of Revenue may proceed with
wage garnishment (limited to 15% of disposable income under Delaware law), bank
account levy, or liens on property. Additional penalties and interest continue to accrue on the unpaid debt through the assessment of interest calculations.
The longer the debt remains unresolved, the larger the total amount owed becomes, making resolution more difficult over time. Under Delaware Code Title 30 Section 553,
the Division of Revenue has 10 years from the date an assessment becomes final to collect tax debt.
Once enforcement has begun, delays in response generally result in more serious collection action rather than pauses in the process. The state may send notices via certified or registered mail to document compliance enforcement efforts.
What This Does NOT Mean
Receiving an enforcement notice does not automatically mean your wages will be garnished, your bank account will be frozen, or your business license will be revoked immediately. These are possible next steps, but they are not automatic or simultaneous.
An enforcement action does not mean the state has filed a criminal case against you through the Delaware Supreme Court or other state court systems.
Enforcement is a civil collection process, not a criminal proceeding. An enforcement notice does not prevent you from working with the Division of Revenue to resolve the debt. Even during enforcement, taxpayers typically can arrange payment plans, file a claim for credit or refund if appropriate, or address compliance issues through the Tax
Appeal Process if they disagree with the assessment.
Checklist: What to Do After Receiving an Enforcement
Notice
Step 1: Locate and Review the Enforcement Notice
Find the original notice or document from Delaware's Division of Revenue. Read the notice thoroughly, including all dates, amounts, and instructions. Note the specific tax type, tax year(s), and total amount owed, including any assessment of interest. Identify
any deadline listed on the notice for your response or action. Keep this document and all bank statements or payment records in a safe place.
Step 2: Verify the Tax Debt Is Correct
Gather your tax return, payment records, and any prior correspondence from the state.
Compare the amount listed on the enforcement notice to what you believe you owe.
Check whether you have already made payments that may not have been posted yet.
Verify whether the tax year listed on the notice is accurate and corresponds to your federal tax returns. Document any discrepancies between your records and the notice of proposed assessment or final assessment.
Step 3: Determine Your Current Tax Filing Status
Review whether you filed a tax return for the year(s) listed on the enforcement notice. If you did not file, gather documents needed to file now, including income records consistent with Internal Revenue Service requirements, deductions, and credits. If you filed, confirm whether you reported all required income and information consistent with the Internal Revenue Code. Note whether there are any years beyond those listed where you may owe taxes.
Step 4: Check for Payment Arrangements or Prior Agreements
Review any prior correspondence with the Division of Revenue about payment plans or installment agreements. Verify whether you had an approved payment arrangement that may have been broken. Verify whether the notice specifies the reason for enforcement, such as a new debt, missed payment, or non-compliance with a previous agreement.
Determine whether you can resume payments under your prior agreement or if a new arrangement is necessary.
Step 5: Contact the Division of Revenue
Contact the appropriate Division of Revenue office for your situation. For collections and account management issues, call (302) 577-8785. For installment payment arrangements, call (302) 577-8586. For general personal income tax assistance, call
(302) 577-8200. If you are located in New Castle County or other areas, these phone numbers apply statewide.
Please briefly explain your situation, including any issues with inability to pay, filing, or requests for payment plans. Request information about available options to resolve the enforcement action. Ask whether the enforcement action can be paused while you work on a resolution. Take detailed notes during your conversation, including the name of the person you spoke with and any specific instructions provided.
Step 6: Determine What You Can Pay Immediately
Assess your current cash flow and financial situation realistically. Decide whether you can make a lump-sum payment toward the debt. Calculate what portion of the debt you could pay, if any, based on your current bank statements and financial resources.
Gather funds or arrange payment if you decide to make a partial payment.
Step 7: Request a Payment Plan, if Needed
If you cannot pay the full debt at once, ask the Division about installment agreement options. Provide information about your monthly income and expenses based on your accounting records. Propose a monthly payment amount you can realistically afford.
Ask whether the Division will accept a formal payment plan to halt enforcement action.
Obtain written confirmation of any agreement.
Step 8: Address Any Unfiled Returns
If the enforcement notice relates to a tax year for which you did not file, file that return immediately. Use prior-year tax documents, W-2s, 1099s, and other income records to complete the return. If you need help preparing the return, contact a tax professional or the Division's taxpayer assistance line. Submit the completed return according to the instructions provided by the Division of Revenue.
Step 9: Consider Appeal Rights if You Disagree
If you believe the assessment is incorrect, you may have appeal rights through the
Delaware Tax Appeal Board. The Tax Appeal Process allows taxpayers to dispute assessments before an independent body formally. You must file your appeal within the timeframe specified in the notice, typically within a specific number of days after receiving the proposed assessment.
The Tax Appeal Board provides an administrative review of disputed tax matters before they proceed to judicial review in the Delaware Court system. If you plan to appeal, continue communicating with the Division of Revenue about your intent and maintain documentation of all correspondence. Note that filing an appeal does not automatically stop collection action unless specifically agreed upon.
Step 10: Request Penalty Relief if Appropriate
If you have reasonable cause for late filing or late payment, you may request penalty abatement. To request penalty relief, submit a written request to the Delaware Division of Revenue. Include your name, contact information, taxpayer identification number, explanation of circumstances beyond your control, and supporting documentation.
For penalty relief requests, you may write to the Tax Conferee at the Division of
Revenue or email TaxConferee@delaware.gov. Clearly explain why the penalty should
be waived and provide evidence supporting your claim. Note that penalty relief is not guaranteed and is granted based on the specific facts of each case, following compliance review procedures.
Step 11: Document All Actions and Correspondence
Keep copies of every document you send to the Division of Revenue. Save copies of every notice or letter received from the state. Write down the date, time, and name of any person you speak with at the Division. Note the substance of each conversation in writing, including any references to specific Delaware Code sections discussed. Keep payment receipts and proof of delivery for all correspondence sent, particularly if sent via certified or registered mail.
- 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 12: Follow Up on Your Response
If you requested a payment plan or penalty relief, follow up within one to two weeks if you have not received a response. Confirm in writing that the Division received your response or request. Ask for written confirmation of any agreement or resolution. Check whether the enforcement action has been paused or withdrawn and whether any Notice of Judgment filed with the Superior Court has been released.
What Happens After This Is Completed
After you contact the Division of Revenue and provide information about your situation, the state typically responds with guidance on available options. If you file a missing return, the Division will process it and adjust your account accordingly. If the Division approves a payment plan, you will receive written confirmation of the terms, including the monthly payment amount and due date.
The enforcement action may be paused during the setup period, though this is not guaranteed in all cases. If you make a payment or partial payment, the Division applies the funds to your account and sends you a receipt or confirmation. The enforcement action may continue if the remaining debt remains unpaid, or it may be halted if the payment resolves the issue or a payment plan is in place.
Common Mistakes to Avoid
Failing to meet the deadline for response can result in immediate escalation to wage garnishment or asset levy. Enforcement notices typically include response deadlines that must be taken seriously and responded to promptly. Failing to provide complete information when contacting the Division can delay resolution; always provide accurate information about your income, expenses, and ability to pay, based on verified accounting records.
Assuming the debt will disappear if ignored is a critical error. Ignoring an enforcement notice does not cancel the debt or stop the collection process; it typically accelerates it.
Failing to follow up on requests for information can halt negotiations. If the Division asks for proof of income, copies of tax returns, bank statements, or other documents, provide them within the requested timeframe.
Not keeping copies of everything is another common mistake. Without documentation of your communications and agreements, disputes arise later. Always keep copies of notices, requests, and payment records for your records. Making a single payment without confirming it applies correctly can create confusion; confirm that any payment you make is credited to the correct tax year and account.
Frequently Asked Questions
Does receiving an enforcement notice mean the state is suing me?
Not necessarily. An enforcement notice is part of the state's collection process. It does not mean a lawsuit has been filed, though the state may file a Notice of Judgment with the Superior Court as part of the enforcement process.
Can the state take my paycheck without warning?
No. Under Delaware law, the Division of Revenue must file a Notice of Judgment in
Delaware Superior Court at least 10 days before wage garnishment begins. You will receive notice before garnishment action is taken.
If I set up a payment plan, will the enforcement action stop?
When a payment plan is approved, and you are making payments according to the agreement, enforcement action typically pauses. However, if you miss a payment under the plan, enforcement may resume. Confirm the terms of your contract in writing.
Can I get the penalties and interest waived?
You may request penalty abatement by submitting a written request to the Tax Conferee at the Division of Revenue. Whether relief is granted depends on whether you can demonstrate reasonable cause for your failure to file or pay on time. Interest generally cannot be waived.
What if I believe the amount owed is wrong?
Contact the Division of Revenue and explain the discrepancy. Provide copies of your return, payment records, or other supporting documentation. If informal resolution is not
successful, you may file an appeal with the Delaware Tax Appeal Board following the
Tax Appeal Process outlined in the Delaware Code.
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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