Delaware Unfiled Gross Receipts Tax Returns
Checklist
An unfiled gross receipts tax return in Delaware occurs when a business required to report and remit gross receipts tax to the state fails to submit a return for one or more filing periods. The Delaware Division of Revenue uses gross receipts tax returns to track the tax paid by businesses on their gross revenues and ensure that proper payment is made to the state. Gross receipts tax filing is a core compliance responsibility for most companies operating in Delaware that sell goods or provide services.
If returns remain unfiled, the state typically begins enforcement action, which may include penalty notices, payment demands, and eventually liens or collection activity.
Understanding what Delaware unfiled gross receipts tax returns mean and how
Delaware processes them can help taxpayers take appropriate action quickly and avoid escalating consequences.
What This Issue Means
An unfiled gross receipts tax return means that the state has identified one or more reporting periods during which a business failed to submit the required gross receipts
tax return form to the Delaware Division of Revenue. This represents a compliance gap
the state has no official record of the business's gross revenues or taxes paid during that time. Unfiled returns differ from filed returns with unpaid balances. An unfiled return means that no return was submitted, regardless of whether tax was owed.
It is essential to note that Delaware does not impose a traditional sales tax on customers. Instead, Delaware imposes a Gross Receipts Tax on businesses based on their total gross revenues from selling goods or providing services within the state.
Why the State Issued This or Requires This
Delaware requires all businesses meeting certain thresholds to file gross receipts tax returns on a regular schedule (either monthly or quarterly, depending on sales volume and the state's lookback period determination). The filing requirement exists to create an official record of business revenues and ensure systematic payment of the gross receipts tax to the state. When returns are not filed, the state initiates contact to prompt compliance.
Common triggers for identifying unfiled returns include pattern breaks in filing history, prior correspondence from the taxpayer, or periodic account reviews by the Division of
Revenue. All new businesses in Delaware are automatically set up as quarterly filers.
After the first calendar year, the Division of Revenue reviews the business's gross receipts during the lookback period to determine whether the company should file monthly or quarterly going forward.
What Happens If This Is Ignored
If unfiled returns are not addressed, the Delaware Division of Revenue typically escalates enforcement action. The state may assess estimated tax based on available records or prior filing history. Penalties and interest accrue on unpaid amounts.
The state may issue additional notices demanding payment or filing. Eventually, unfiled accounts may be placed in collection status, which can result in liens, wage
garnishment, or bank levies. The longer the account remains unfiled, the larger the total liability becomes due to accumulating penalties and interest.
Delaware law provides specific timeframes for enforcement: the state has three years from the date a return is filed (or should have been filed) to assess additional tax. Once evaluated, the state has ten years to collect the tax, penalties, and interest owed.
What This Does NOT Mean
An unfiled return notice does not mean the state has closed the business account or revoked any licenses (though that may happen later if the issue is not resolved). It does not automatically mean criminal prosecution is underway. It does not mean the business cannot file future returns. An unfiled return also does not mean the state has accepted that zero tax was owed.
Instead, it means that no official record of the business's revenues exists with the state, which is why filing is required, regardless of the amount owed. An unfiled gross receipts tax return is not the same as an unfiled sales tax return in other states because
Delaware does not have a sales tax system.
Checklist: What to Do After Identifying or Receiving
Notice of Unfiled Gross Receipts Tax Returns
Step 1: Gather Your Records
Collect all documents related to the unfiled period or periods. This includes point-of-sale records, sales invoices, customer receipts, bank statements, accounting software reports, or ledgers. Identify the exact filing periods that the state designates as unfiled.
Note the dates covered by each unfiled return. Your records should show your total gross revenues (gross receipts) for each period, not just taxable sales.
Step 2: Review Your Filing Status with Delaware
Verify whether your business is currently registered with the Delaware Division of
Revenue for gross receipts tax purposes. Check your business license number and registration details.
If you are unsure of your status, please contact the Division of Revenue directly to confirm that your account is active and to determine which filing periods are open or past due. Confirm whether you are classified as a monthly or quarterly filer.
Step 3: Determine Your Gross Receipts During the Unfiled Periods
Based on your records, calculate the total gross revenues (gross receipts) for each unfiled period. Gross receipts encompass all revenue from goods sold or services provided within the state of Delaware. Do not estimate; use actual business records whenever possible.
Identify the business activity category that applies to your operations, as different activities have varying gross receipts tax rates, ranging from 0.0945% to 1.9914%.
Keep notes on how you calculated the figures.
Step 4: Calculate the Gross Receipts Tax Due
Apply the correct gross receipts tax rate for your business activity to your total gross receipts. Subtract the applicable monthly exclusion ($100,000 for monthly filers) or quarterly exclusion ($300,000 for quarterly filers) from your gross receipts before calculating the tax. For example, if you are a monthly filer with $150,000 in gross receipts, you would calculate the tax on only $50,000 after the exclusion. Remember
that only one exclusion applies per enterprise (all branches or entities with common ownership share one exclusion).
Step 5: Obtain the Correct Return Forms
Visit the Delaware Division of Revenue website to access gross receipts tax return forms for the specific tax periods that are unfiled. Forms are available through the
Division's online portal. Ensure you access the correct form version for the relevant year or period.
Note whether you need to file monthly or quarterly returns based on your account classification. Delaware mandates online filing for gross receipts taxes, effective
January 1, 2021.
Step 6: Complete the Unfiled Return Forms Accurately
Fill out each return form with the gross receipts and tax information from your records.
Enter the reporting period dates. Include all required line items, such as total gross receipts, applicable exclusions, taxable gross receipts, and tax due. Double-check all calculations and figures. Sign and date the forms as required. If your business entity has changed, note this when filing.
Step 7: Calculate Any Penalties and Interest Due
Delaware assesses specific penalties and interest on unfiled and unpaid returns. The failure-to-file penalty is 5% of the unpaid tax per month or fraction thereof, up to a maximum of 50%. The failure-to-pay penalty is 1% of the unpaid tax per month or fraction thereof, up to a maximum of 25%.
Interest accrues at 0.5% per month from the original due date of the return until paid.
Calculate these amounts carefully based on the number of months the returns have
been late. If the penalty and interest amount is unclear to you, contact the Division of
Revenue before submitting your returns.
Step 8: Prepare Payment for All Unfiled Returns
Calculate the total tax due, penalties, and interest for all unfiled periods combined.
Determine the payment method (electronic transfer or online payment through the
Delaware Taxpayer Portal). Include documentation showing which periods the payment covers.
If the amount is substantial, consider contacting the Division of Revenue in advance to inquire about available payment plans. Payment plans may be available for businesses that cannot pay the full amount immediately.
Step 9: Submit Completed Returns to the State
File the completed return forms electronically through the Delaware Division of
Revenue's online portal at tax.delaware.gov. Keep confirmation receipts of all forms you submit for your records. Follow the state's online filing instructions carefully. Note the submission date.
To complete portal registration, you will need your Federal Employer Identification
Number (FEIN) or Social Security Number, as well as your Delaware Business License
Number.
Step 10: Send Payment Along with the Returns
Submit payment for the full amount due (tax, penalties, and interest) through the online portal using a credit or debit card or bank transfer. If paying separately from filing, indicate the corresponding periods clearly. Note the payment confirmation number or reference ID.
Ensure your payment is correctly credited to the correct tax periods to avoid additional collection action.
Step 11: Keep Documentation of Your Submission
Retain proof of electronic submission (such as confirmation receipts or reference numbers). Keep copies of all return forms you filed. Keep records of payment confirmation or bank statements showing that the payment was processed.
Maintain this documentation for at least seven years in case the state requests verification or you need proof of filing for future reference. This documentation protects you if the state later claims returns were not received.
Step 12: Monitor Your Account for State Communication
Watch for acknowledgment from the Delaware Division of Revenue that your returns were received and processed. The state may send a notice confirming the filings or requesting additional information. If you receive follow-up notices, respond promptly and thoroughly.
Check the division's website or your online account periodically for any updates to your account status. Processing times vary, but the state generally acknowledges receipt within a few weeks of submission.
- Failing to meet the correct filing deadline for follow-up returns can result in
- Filing incomplete return forms may cause them to be rejected or returned,
- Failing to include payment with the returns may delay processing and result in
- Paying the wrong amount or to the wrong account can create confusion.
- Failing to respond to subsequent notices from the state is a critical mistake. If the
- Not keeping copies of submitted returns eliminates your proof of filing. Copies
- Continuing to miss future filing deadlines compounds the problem. Filing unfiled
- Using the wrong tax rate for your business activity can result in underpayment.
- 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 13: File All Future Returns on Schedule
After addressing unfiled returns, ensure all future returns are filed on time according to your assigned filing frequency. Monthly filers must file by the 20th day of each month for the preceding month. Quarterly filers must file by the last day of the first month following the close of the quarter.
Set reminders for filing deadlines. Confirm your filing schedule with the Division of
Revenue if you are uncertain. This prevents future unfiled return issues and maintains your business's good standing.
What Happens After This Is Completed
After you submit unfiled returns and payment to the Delaware Division of Revenue, the state typically processes the filing and updates your account record. The division may issue a confirmation or processing notice. Any payments received are applied to the tax, penalties, and interest owed.
If the amount paid covers all outstanding liabilities, the account moves to a current status. If payments are incomplete, the state may issue additional notices or pursue collection action for any remaining balance.
Common Mistakes to Avoid additional penalties. If the state gives you a deadline to file unfiled returns, meet that deadline to avoid escalating the situation. requiring resubmission and delaying resolution. Complete all sections of the return form accurately. additional interest and penalties. Submit payment at the same time you file the returns.
Double-check the payment amount and follow the Division of Revenue's payment instructions carefully before submitting your payment.
Division of Revenue sends follow-up letters, respond to them promptly, even if you believe you have already filed. serve as evidence if the state later claims returns were not received. returns does not excuse future late filings. Set up a system to file on time going forward.
Verify the correct gross receipts tax rate for your specific business type before calculating the tax due.
Frequently Asked Questions
What is the penalty for unfiled gross receipts tax returns in Delaware?
Delaware imposes a failure-to-file penalty of 5% of the unpaid tax per month (up to 50% maximum) and a failure-to-pay penalty of 1% of the unpaid tax per month (up to 25% maximum). Interest accrues at a rate of 0.5% per month on the unpaid tax, penalties, and interest. These percentages are set by Delaware Code Title 30, Sections 533 and
534.
Can I file unfiled returns without paying the full amount immediately?
In many cases, the Division of Revenue allows payment arrangements or installment plans for tax liability. Contact the division to inquire about whether a payment plan is available for your specific situation.
How far back can the state go to collect unfiled returns?
Delaware has a three-year statute of limitations for assessing taxes after a return is filed or should have been filed. Once evaluated, the state has ten years to collect the tax.
Contact the Division of Revenue for information specific to your account.
If I file the unfiled returns now, will the state automatically close my account?
Filing unfiled returns brings your account into compliance for those periods, but it does not automatically close your account. Your account remains active if you have an ongoing gross receipts tax obligation. If you no longer conduct taxable business in
Delaware, contact the Division of Revenue to request account closure or inactive status.
Will filing unfiled returns eliminate the penalties and interest?
No. Filing the returns addresses the failure-to-file issue, but penalties and interest that have accrued remain due. Some states allow penalty abatement requests in limited circumstances, but these are handled separately from the filing process. Contact the
Division of Revenue to ask about penalty relief options, if any are available.
What if I am unable to locate records for the unfiled periods?
If business records are unavailable, the Division of Revenue may allow you to reconstruct figures using bank statements, credit card records, or other documentation.
Contact the division to discuss the acceptable alternatives. The state may also make an estimated assessment if you cannot provide actual figures.
Can I file unfiled returns electronically, or must I mail them?
Delaware mandates online filing for gross receipts taxes. You must file electronically through the Delaware Division of Revenue portal at tax.delaware.gov. Paper filing is no longer accepted except in limited circumstances.
If I file unfiled returns, will that prevent collection action?
Filing unfiled returns and paying the full amount due will stop or prevent collection action. If you file but do not pay, collection action may continue for the unpaid balance. If you pay partially, collection action may continue for the remaining balance.
How long does it take for the Division of Revenue to process the unfiled returns I submit?
The state does not publicly specify a processing timeframe for unfiled return submissions. Processing times may vary depending on the number of periods being filed and the complexity of the account. Contact the Division of Revenue for an estimate or to inquire about your status.
If I received a notice of unfiled returns, does that mean I am under audit?
An unfiled return notice is a compliance notice, not automatically an audit notice. An audit is a separate investigation into the accuracy and completeness of returns that have already been filed. Filing unfiled returns addresses the specific issue of missing returns. If the state initiates an audit afterward, that would be a separate process.
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