Delaware State Tax Payment Plan Guide

Introduction to Why Delaware Tax Payment Plans Matter

Many Delawareans find it hard to keep up with their state tax obligations. Falling behind on taxes is common because of unexpected job losses, sickness, or other financial problems. Fortunately, the Delaware Division of Revenue offers ways for taxpayers to catch up without having to deal with harsh penalties or legal problems.

One of the best ways to deal with Delaware tax debt is to set up a formal payment plan. These plans, called installment agreements, let people and businesses who qualify pay off what they owe over time in small monthly payments. Taxpayers who meet specific criteria can work directly with the Division of Revenue to protect their financial stability instead of having their wages garnished, having a tax lien placed on them, or having other enforcement actions taken against them.

This guide is for working families, middle-income people, and small business owners who don't know how Delaware's tax system works. You'll learn how to apply for payment plans, who can use them, and how to stay compliant. This guide will help you take charge of your situation confidently, whether you owe back taxes, missed a state tax refund, or didn't realize how much you owed in taxes.

What is the plan for paying Delaware taxes?

A Delaware plan for paying taxes is an agreement between a taxpayer and the Delaware Division of Revenue that lets the taxpayer pay back taxes over a set period instead of all at once. These plans are ideal for people or businesses that can't pay their whole tax bill immediately but can and will make regular monthly payments.

By signing an installment agreement, you can avoid aggressive collection actions like wage garnishment, bank account levies, or filing a tax lien. You work directly with the division to set up a payment plan that works with your current financial situation, so you don't have to keep paying more and more penalties and interest while you wait for enforcement action.

Plans usually fall into two categories: short-term (less than 180 days) and long-term (more than 180 days). Plans for the short term are usually easier and may not include detailed financial information. As part of their long-term plans, people may have to send information statements to prove their income, expenses, and assets.

Delaware taxpayers behind on income taxes, business taxes, or estimated payments can apply for these plans. Once approved, your plan outlines how much you must pay each month, when payments are due, and how long the agreement will remain in effect.

Importantly, while interest continues to accrue on the unpaid balance, the ability to spread payments over time can help protect your wages, business operations, and personal property. For many, this arrangement offers a practical and less stressful way to pay off Delaware back taxes without going into bankruptcy or default.

Benefits of Setting Up a Payment Plan

People and businesses that owe taxes in Delaware can benefit in a number of important ways by signing up for a tax payment plan. These benefits go beyond making things easier; they can also help keep your finances stable and stop enforcement actions from worsening.

1. Don't Collect: If you make a payment plan with the Delaware Division of Revenue, the agency usually stops taking aggressive collection actions like wage garnishment, bank levies, and property seizures as long as you stick to the plan.

2. Avoid Extra Penalties: Setting up a payment plan can help you avoid many penalty charges, even though interest on the unpaid balance keeps increasing. This can save you a lot of money over time.

3. Protect Your Assets and Credit: A reasonable payment plan can help you keep the IRS from putting a lien on your property. Tax liens put your property at risk and could hurt your credit score, making it harder to get a loan or refinance your mortgage.

4. Pay Over Time: Instead of paying off your debt all at once and emptying your bank account, installments let you pay it off in smaller, more manageable amounts each month.

5. Having control over your money and peace of mind: Having a plan can help you relax when you owe taxes. You can work on getting better and getting your money back on track without worrying about the Division of Revenue taking action against you immediately.

Types of Delaware Tax Payment Plans

The Delaware Division of Revenue has two main ways to pay your taxes: short-term and long-term. Your financial situation, how much you owe, and how much you can pay will affect your best plan.

Payment Plans for a Short Time (Up to 180 Days)

Short-term plans are for people who can pay their tax bill in six months. These are usually easier to get and don't need a lot of paperwork.

Important Features:

• Delaware short-term tax payment plans usually don't have any setup fees, which makes them a beneficial way to quickly pay off your tax bill without spending a lot of money.
  
  
• The application process is more straightforward and requires less paperwork and fewer forms than long-term installment agreements.
  
  
• When applying for a short-term plan, taxpayers usually don't have to send a collection information statement, which makes it easier for them to provide detailed financial information.
  
  
• These plans are open to individuals and businesses in Delaware, giving many people and businesses in the state many options.
  
  

Who Should Think About a Short-Term Plan

• A short-term plan is ideal for taxpayers expecting a tax refund, year-end bonus, or another form of income that will allow them to pay off their tax liability soon.
  
  
• Individuals with a relatively small balance who can realistically pay off their Delaware tax debt within six months are strong candidates for this plan.
  
  
• Business owners who experience seasonal revenue spikes or are anticipating short-term cash flow improvements may benefit from using a short-term payment arrangement to resolve their state tax liabilities without long-term financial commitments.

Short-term plans can help Delaware taxpayers resolve their debt quickly while avoiding unnecessary interest or enforcement actions.

Long-Term Payment Plans (Over 180 Days)

Long-term installment agreements are better suited for those with larger balances or limited financial resources. Depending on your financial disclosures, these plans can extend over 12, 24, or even up to 48 months.

Key Features of a Long-Term Payment Plan

• Taxpayers who request a long-term plan may be required to complete a collection information statement, such as the CISP for individuals or CISB for businesses. This form provides the Delaware Division of Revenue with a detailed view of your financial condition, including income, expenses, and assets.
  
  
• Unlike short-term options, long-term installment agreements may come with setup fees. These fees are more common in extended plans and can vary depending on the payment duration and financial hardship status.
  
  
• The Delaware Division of Revenue recommends setting up automatic withdrawals directly from your bank account to ensure consistency and avoid missed payments. This method provides added convenience and minimizes the risk of default.
  
  
• If your payment plan extends beyond a specific time frame—often more than 48 months—the division may file a tax lien to secure the state’s interest. A tax lien is a public record that could impact your credit or financial standing.
  
  

Who Should Consider a Long-Term Plan

• Taxpayers who owe substantial Delaware tax debt and cannot afford to pay it in a single lump sum may find that a long-term installment agreement offers a realistic way to regain control of their finances.
  
  
• Individuals or families living on a fixed income, such as retirees or those receiving disability or Social Security benefits, often benefit from the predictability and affordability of a longer repayment schedule.
  
  
• Business owners managing recurring expenses and financial obligations may prefer a long-term plan that aligns with their cash flow and operational needs.
  
  
• Taxpayers who cannot secure a personal loan or borrow money to pay their tax bill in full may find that a long-term payment plan is the most practical alternative for settling their state tax liabilities.

While long-term plans offer flexibility, they also increase the total amount of interest paid over time. It's essential to determine your budget carefully before selecting a repayment term.

Eligibility Requirements and Who Qualifies

To qualify for a tax payment plan in Delaware, you must meet specific eligibility criteria set by the Delaware Division of Revenue. These requirements help ensure that payment arrangements are made with taxpayers who genuinely need assistance and are likely to comply with the terms of the agreement.

Basic Eligibility Criteria:

• File All Required Returns: You must have submitted all applicable Delaware tax returns. If you have unfiled returns, you must file them before applying for a payment plan.
  
  
• Financial Hardship or Inability to Pay in Full: You must demonstrate that paying your full tax bill immediately would cause financial difficulty.
  
  
• Current on Estimated Payments: If you're self-employed or required to make estimated payments, you must be up-to-date on those obligations.
  
  
• Reasonable Faith Effort: Making partial payments or showing intent to resolve your balance improves your chances of approval.
  
  
• Willingness to Stay Compliant: You must commit to filing future tax returns and paying all new taxes on time.
  
  

Who May Not Qualify:

• Taxpayers with sufficient funds or assets but who refuse to use them to pay their tax liability may face challenges in obtaining a payment plan.
  
  
• Those who have fallen behind on prior payment agreements are eligible.
  
  
• Businesses that don't have current payroll taxes or other state tax obligations are also eligible.
  
  
• Taxpayers who lack the necessary documentation or fabricate their financial status face penalties.
  
  

Suppose you meet the basic criteria and are committed to resolving your tax debt. In that case, the Delaware Division of Revenue will work with you to create a manageable plan. For more complex cases, submitting a detailed collection information statement may be required to assess your ability to pay.

Step-by-Step Guide to Setting Up Your Delaware Payment Plan

Setting up a Delaware tax payment plan involves a clear and structured process. The following steps will guarantee a prompt review of your application and enhance its chances of approval.

Step 1: Gather Required Documentation

Before applying, collect all relevant financial and tax documents. This includes:

• Your most recent tax bill or notice
  
  
• Copies of all filed and unfiled Delaware tax returns
  
  
• Bank statements for the last three months
  
  
• Recent pay stubs or income documentation
  
  
• A list of monthly expenses and debts
  
  
• Documentation of any financial hardships
  
  
• Employer name and contact details (if applicable)
  
  

Having these records ready will streamline your application and demonstrate your financial condition accurately.

Step 2: Calculate a Realistic Monthly Payment

Please review your budget to determine a reasonable monthly payment amount. Be sure to:

• Account for essential expenses (housing, food, transportation).
  
  
• Leave room for unexpected costs.
  
  
• Ensure the payment amount allows you to resolve your tax debt reasonably.
  
  

Remember that while larger payments reduce interest charges over time, overcommitting could lead to default.

Step 3: Contact the Delaware Division of Revenue

Call the Division of Revenue’s installment payment line at (302) 577-8586 to discuss your options. Be prepared to provide:

• Your Social Security Number or Employer Identification Number
  
  
• The tax year(s) involved and the total balance owed
  
  
• Your proposed monthly payment
  
  
• A summary of your financial situation
  
  

The representative may provide specific forms and next steps based on your eligibility.

Step 4: Complete Required Forms

Depending on your circumstances, you may be asked to submit:

• Collection Information Statement—Personal (CISP) for individuals
  
  
• Collection Information Statement – Business (CISB) for businesses
  
  
• Automatic Payment Plan Agreement (ACH) for bank withdrawals
  
  

These forms are found on the Delaware Division of Revenue’s website under the Collections section.

Step 5: Submit Your Application

You may submit your completed application and documentation via

• Phone: By speaking with a representative
  
  
• Mail: Address provided by the division
  
  
• In Person: At a local office (appointments may be required)
  
  

Step 6: Await Approval and Begin Payments

Approval generally takes 2–4 weeks. During this period, you should send any partial payments you can afford as a sign of good faith.

Once approved, you'll receive a confirmation outlining

• Your approved monthly payment
  
  
• Due dates
  
  
• Payment methods
  
  
• Duration of your agreement
  
  
• Any applicable fees
  
  

What If You Miss a Payment?

Even with the best intentions, financial setbacks can lead to missed payments. If this happens, don’t panic—act quickly to prevent your agreement from defaulting.

Steps to Take Immediately:

• If you believe you missed a payment, please contact the Delaware Division of Revenue at (302) 577-8586 as soon as possible.
  
  
• Make a partial payment if you can. Even a small amount demonstrates your willingness to stay compliant.
  
  
• Please share your situation honestly, whether it involves job loss, unexpected bills, or a medical emergency.
  
  

When a Payment Plan Goes Into Default

Your Delaware tax payment plan may be considered in default if any of the following actions occur:

• You miss a scheduled monthly payment without contacting the Delaware Division of Revenue in advance to explain your situation or request an adjustment.
  
  
• You fail to file future tax returns by their due dates while your payment plan is active, which is required to maintain compliance.
  
  
• You incur new state tax debt and do not pay it promptly or notify the division, even while your current installment agreement is in effect.
  
  
• You provide false or incomplete information on your original application, such as underreporting income, hiding assets, or omitting relevant financial obligations.

Consequences of Default Include:

• Immediate termination of your payment plan
  
  
• Resumption of collection actions, such as wage garnishment or bank levies
  
  
• Filing of a tax lien against your property
  
  
• Reinstatement fees and additional penalties
  

Reinstating a Plan

Suppose your Delaware tax payment plan defaults. In that case, you may still have the opportunity to reinstate it, especially if you take action promptly and communicate clearly with the Delaware Division of Revenue. Reinstatement is not guaranteed, but it may be approved under certain conditions.

• You may need to pay the missed balance in full, including any overdue installment payments and newly accrued interest or penalties. This shows a good-faith effort to bring your Delaware tax debt back into compliance.
  
  
• The division may ask you to submit updated financial documentation, such as a revised collection information statement, recent pay stubs, or current bank account statements. This helps the division evaluate whether your financial condition still supports the terms of the original agreement or requires modification.
  
  
• You must demonstrate your ability to remain compliant moving forward by committing to on-time tax payments and ensuring all future Delaware tax returns are filed by their deadlines. Adjustments to the payment amount may be made to better reflect your updated income or expenses.
  
  

Reinstating your plan quickly can help avoid more severe enforcement actions such as wage garnishment or a tax lien, and it allows you to regain the protections that come with an active and approved installment agreement.

Proactively contacting the division of revenue can help you modify your agreement before default occurs.

Accepted Payment Methods and Best Practices

The Delaware Division of Revenue accepts several methods for making installment payments. Choosing a reliable and trackable method ensures you stay current and avoid late fees or misunderstandings.

Electronic Payment Options:

• Delaware Taxpayer Portal: Secure online payments at tax.delaware.gov
  
  
• Automatic Bank Withdrawal (ACH): Recommended for consistent monthly payments
  
  
• Phone Payments: Call the installment line to make payments by phone
  
  

Traditional Payment Methods:

• Personal Check or Money Order: Mail to the address provided in your payment agreement
  
  
• In-Person Payments: Accepted at designated revenue offices with a receipt provided
  
  

Tips to Ensure Successful Tax Payments:

• Always include your taxpayer ID and the tax year on your check or electronic form.
  
  
• Please ensure you reference the correct tax periods covered by your agreement.
  
  
• Keep copies of every receipt or confirmation number.
  
  
• Schedule payments several days in advance to account for processing time.
  
  
• Consider setting calendar reminders or enabling auto-pay to avoid missed payments.
  
  

Reliable payment habits are crucial to keeping your payment plan in good standing and avoiding enforcement actions such as levies or garnishments.

Rights and Collection Limits While on a Payment Plan

Delaware taxpayers participating in an approved payment plan receive specific legal safeguards as they settle their state tax obligations. Understanding your rights can help you stay informed and empowered throughout the process.

Your rights as a taxpayer include:

• The right to be treated with professionalism and respect by the Delaware Division of Revenue staff
  
  
• The right to representation by a licensed tax preparer, CPA, or attorney
  
  
• The right to appeal certain decisions related to payment plan terms or collection actions
  
  
• The right to receive clear documentation of your payment agreement
  
  

Once your payment plan is approved, the revenue division typically suspends enforcement actions as long as you remain compliant. This means

• No wage garnishment or employer contact
  
  
• No bank account levy
  
  
• No property seizure or asset liquidation
  
  
• No new tax lien filings during active compliance
  
  

However, if you default on the agreement, such as by missing a payment or failing to file a future Delaware tax return, the division may resume enforcement without additional notice. Inform the agency promptly if you face financial difficulties, enabling them to make necessary adjustments before any consequences arise.

Special Rules for Delaware Business Taxpayers

Delaware businesses that owe back taxes can also request installment agreements, but are subject to additional rules and documentation requirements. The Delaware Division of Revenue expects business taxpayers to remain current on all tax filings and deposits while under a payment plan.

Key Business Tax Requirements:

• All business-related Delaware tax returns must be filed
  
  
• Payroll taxes must be up to date, including withholding and employer contributions.
  
  
• Estimated payment requirements must be met going forward.
  
  
• A Collection Information Statement—Business (CISB) may be required to assess your financial condition.
  
  

Taxes Eligible for Business Payment Plans:

• Corporate income tax
  
  
• Withholding tax
  
  
• Gross receipts tax
  
  
• Franchise tax
  
  
• Business license tax
  
  

Additional Considerations for Business Owners:

• Personal guarantees may be required from business principals.
  
  
• The division may request financial statements or cash flow projections.
  
  
• Collateral or liens may be imposed if the business has a substantial outstanding balance.
  
  
• Sometimes, more frequent payment reviews or financial updates may be necessary.
  
  

Business taxpayers are encouraged to maintain strong records and consult a professional if the company has complex liabilities or is undergoing financial restructuring or bankruptcy.

How to Avoid Future Delaware Tax Problems

Once you’ve resolved your Delaware tax debt through a payment plan, you must take proactive steps to prevent new issues. Future noncompliance could lead to additional penalties, interest, or enforcement actions.

Best Practices for Staying Compliant:

• Adjust your withholding. If you’re employed, submit an updated Form W-4 to ensure enough taxes are withheld from your wages.
  
  
• Make quarterly estimated payments. If you are self-employed or earn income without withholding, please ensure that your estimated taxes are submitted to the Delaware Division of Revenue punctually each quarter.
  
  
• Track tax-deductible expenses. Organize receipts and business-related costs annually to reduce your Delaware tax liability at filing time.
  
  
• Open a tax savings account. Set aside funds regularly to have money available for future Delaware tax payments.
  
  
• Use a calendar or software tool. Remember due dates for tax returns and installment payments.
  
  

These simple steps can help you stay ahead of your obligations and avoid slipping back into debt. If your financial condition changes significantly, contact the Division of Revenue early to update your plan.

When to Seek Professional Tax Help

Many Delaware taxpayers can successfully apply for a payment plan on their own, but in some situations, they may need the help of an expert. A licensed tax professional can help you figure out your financial situation, negotiate fair terms, and ensure that all your forms are filed correctly with the Delaware Division of Revenue.

If you think you need professional help,

• You owe Delaware more than $25,000 in taxes.
  
  
• You missed a payment on a plan you had before.
  
  
• You could have your wages taken away or your bank account seized immediately.
  
  
• Your business owes several different types of state taxes that remain unpaid.
  
  
• You don't know how to complete a collection information statement or read your tax bill.
  
  

Different kinds of tax professionals:

• Enrolled Agents (EAs) have a federal license to represent taxpayers before the IRS and state revenue agencies.
  
  
• CPAs, or Certified Public Accountants, help with tax planning, preparation, and financial analysis.
  
  
• Tax lawyers: Focus on tax issues and legal disputes that are hard to understand.
  
  
• Tax preparers with a license can help you fill out your returns and apply for a payment plan.
  
  

Low-income taxpayers may qualify for free assistance through programs like the IRS Taxpayer Advocate Service, Low-Income Taxpayer Clinics (LITCs), or VITA.

FAQs – Delaware Tax Payment Plan Questions Answered

How much does it cost to set up a Delaware tax payment plan?

The cost will depend on the plan you pick and how much money you have. Short-term plans usually don't have setup fees, but long-term installment agreements might have fees for paperwork. But if you can show that you are having trouble paying your bills, the Delaware Division of Revenue may let you off the hook or lower the amount you owe. Before you apply, ask about possible costs when you first call the division.

Can I get a payment plan if I haven't filed all of my taxes?

No, the Delaware Division of Revenue won't review your application until you've filed your Delaware tax returns. Do your taxes as soon as possible, even if you can't pay the full amount. You need to file your returns before you can get a payment plan, and doing so shows that you are honest.

Will penalties and interest stop when I'm on a plan?

Even if you agree to a payment plan, you will still have to pay interest on the rest of your tax bill. However, once your plan is active and in excellent standing, it may reduce or suspend many penalties for non-payment. You can deal with your Delaware tax debt over time by setting up a payment plan, but you won't be able to avoid all the extra fees.

Can I change or cancel my payment plan later?

You can ask to change your current payment plan if your finances change. If you want to change the amount of your monthly payment or plan length, call the Delaware Division of Revenue. You might be asked to send in new financial documents. You can pay off the rest of the balance early without any penalties. 

What kinds of monthly payments can you make?

You can pay the Delaware Division of Revenue with credit cards, ACH bank withdrawals, personal checks, and money orders, among other things. The Delaware Taxpayer Portal is a quick and easy way to pay your taxes online, so we suggest using it. To apply the credit correctly, include your taxpayer identification number, the tax year in question, and a reference to your installment agreement.

Will the payment plan show up on my credit report?

The payment plan itself won't usually be on your credit report. If the division files a tax lien as part of the deal, that claim will become public record and could hurt your credit score. This is especially true if the payment plans extend over a long duration. If you don't default and stay compliant, your chances of having a lien put on your assets go down.

What should I do if I get collection letters during the application process?

During the review of your application, you may receive notices about collections. Please continue making partial payments and contact the Delaware Division of Revenue at (302) 577-8586 to inquire about the status of your application. We usually put harsh actions like garnishment or levy on hold as long as we review your case in good faith.

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