Many people who owe Delaware taxes start by looking for a Delaware offer in compromise. This is understandable because the IRS has a federal program that allows qualifying individuals to settle their tax debt for less than the total amount owed. On the other hand, Delaware doesn't have a state-level offer in compromise, which can make it difficult to know what options are available for paying off taxes that are owed.
You can't lower your Delaware tax bill through a formal compromise, but the state does offer some practical options. The Delaware Division of Revenue provides payment plans, temporary collection delays, and installment agreements, among other things. You can still use the IRS offer in the compromise program, even if you owe federal taxes. This program works separately from state tax enforcement.
This guide will help you learn how Delaware collects unpaid taxes, what help is available, and how to apply for programs to help you with your money problems. Whether you're dealing with a tax lien, refund offsets, or trying to avoid wage garnishment, you’ll find step-by-step strategies to resolve your tax debt responsibly.
No, Delaware does not have an official offer in compromise program like the IRS does. The federal government may let qualified taxpayers pay off their tax debt for less than what they owe, but the Delaware Division of Revenue does not have the power to lower the principal balance of unpaid taxes under the Delaware Code.
If you owe Delaware taxes, whether they are from missed filings, audit adjustments, or back taxes, you have to pay the full amount, including interest and any penalties that have been added. The state does, however, offer ways to help you deal with your Delaware tax debt, such as installment agreements, temporary collection delays, and penalty abatement in some cases.
These programs won't get rid of your debt, but they can help you stay out of trouble with aggressive collection actions like a tax lien, wage garnishment, or a bank account levy. The Division will figure out how much you owe in taxes based on your financial situation and whether or not you qualify for relief.
It's important to know that Delaware's programs focus on repayment, not debt reduction, before getting help from a tax attorney or professional. The IRS offer in compromise is still an option for settling federal tax debt.
The Delaware Division of Revenue has a standard way of determining taxes owed and how to pay them. The goal of the collection process is to ensure that the full amount owed, plus any penalties and interest, is paid off in a reasonable amount of time. The charge could be for missed Delaware tax returns, business taxes, or not paying enough income taxes.
If taxpayers don't respond to a tax bill or don't reach out to the division on their own, collection actions may happen very quickly. If you know how this process works, you can act quickly and avoid harsh penalties like liens or wage garnishment.
The Delaware Division evaluates each taxpayer’s case individually. Factors that may trigger more vigorous enforcement include
Understanding how Delaware collects unpaid taxes is critical to protecting your wages, bank accounts, and property. Acting quickly may qualify you for installment payments or other resolution options that help you manage your Delaware tax debt without aggressive enforcement.
The Delaware Revenue Division does offer practical ways to get help, even though Delaware doesn't let taxpayers settle their tax debts for less than the full amount owed. These choices are meant to help people pay their taxes over time, put off collection for a short time, or lower penalties in certain situations.
These options can help you handle your money responsibly and keep more aggressive collection actions like tax liens, wage garnishment, or bank account levies from happening.
The most common way to get help with Delaware back taxes is to set up a payment plan or installment agreement. These let eligible taxpayers spread out their payments over several months instead of paying the full tax bill all at once.
Payment plans help prevent enforcement actions while keeping your account in good standing, even if the unpaid balance continues to accrue interest and tax penalties.
If your financial condition makes it impossible to make monthly payments immediately, you may qualify for a temporary delay in collection.
Taxpayers recovering from job loss, medical emergencies, or temporary income disruptions often use this option.
Delaware does not offer complete debt forgiveness, but it may reduce or remove assessed penalties in cases of reasonable cause.
While these programs do not eliminate your Delaware tax debt, they can offer meaningful relief. Taxpayers who communicate early with the Delaware Division and demonstrate good-faith efforts to pay generally have more flexibility and better outcomes.
Taxpayers often assume that state and federal tax relief programs operate similarly. However, the IRS and the Delaware Division of Revenue offer significantly different options for resolving unpaid taxes. Understanding these differences is essential when choosing the right strategy to manage your tax debt.
Below are the key distinctions between the federal offer in compromise and Delaware’s payment alternatives:
While the IRS allows taxpayers to reduce the total amount owed through its offer in compromise, Delaware does not provide a comparable settlement mechanism. Instead, the focus is on creating manageable payment plans or temporarily delaying collection based on the taxpayer’s financial condition.
Before submitting any application, review both options with a tax professional or enrolled agent to determine whether your tax debt qualifies for federal settlement or state-managed repayment.
If you cannot pay your Delaware tax bill in full, the Delaware Division of Revenue allows you to request a payment plan to make affordable monthly payments toward your Delaware tax debt. While this won’t reduce the unpaid balance, it can help you avoid more serious collection actions such as a tax lien, wage garnishment, or levy on your bank account.
Below is a step-by-step guide to applying for a payment plan.
Do not wait for collection actions to begin. As soon as you receive a tax bill or know you are unable to pay in full, contact the Division of Revenue:
Prompt communication shows excellent faith and may help you qualify for better repayment terms.
Before applying, prepare a complete picture of your financial situation. You may be asked to submit a collection information statement and supporting documents such as
Having these ready speeds up the process and improves your chances of approval.
Based on your income and expenses, propose an amount you can pay consistently each month. Don't propose a payment that is either too high to sustain or too low for the division to consider seriously. Be truthful about your financial situation; lying could lead to rejection or subsequent default.
In some cases, the division will ask for a formal written request. Your letter should include:
Delaware offers several options for making installment payments:
Plans more extended than 24 months typically require automatic deductions.
Once your plan is accepted, you’ll receive details on:
Failure to meet obligations can result in renewed collection actions or legal enforcement.
Requesting a payment plan is one of the most effective ways to resolve Delaware tax debt without facing property liens or aggressive collection actions. Taking timely steps and communicating openly with the division of revenue significantly increases your chances of approval and successful repayment.
When applying for a tax payment plan in Delaware, the Delaware Division of Revenue may ask for specific forms and supporting documentation to evaluate your financial situation. Submitting complete and accurate information helps determine a realistic monthly payment and reduces the risk of denial or delay.
The application process may require you to provide the key documents listed below.
The collection information statement is a financial disclosure form similar to the IRS Form 433-A. It allows the division to assess your ability to pay.
This form includes:
You must complete this form thoroughly and honestly. Incomplete or inaccurate data can result in rejection or penalties.
Along with the financial disclosure, the division may request
These records help the revenue division verify your financial condition and determine if you qualify for installment payments or temporary collection delays.
You will need to submit if your payment plan uses automatic withdrawals or payroll deductions.
Providing these forms promptly ensures your payment plan can begin without interruption.
Proper documentation is critical to efficiently resolving Delaware's tax debt. Maintaining organization and responsiveness enhances your likelihood of receiving approval.
You don't have to pay Delaware an application or setup fee to start a payment plan. This makes installment agreements easier to get than the IRS offer in compromise, which costs $205. But taxpayers still need to think about the costs that come with managing Delaware tax debt.
Interest keeps adding up on the unpaid balance for the whole time the plan is in effect. The rate is set by law and stays the same each month until the full tax bill is paid. If you don't pay on time, you may also have to pay tax penalties of 1% per month, up to a maximum of 25%.
The Delaware Division of Revenue can file a tax lien to protect the debt for plans that last longer than 48 months. This becomes a public record and could hurt your credit or make it harder to sell your home. You might also have to pay for filing a judgment, which could be added to your unpaid balance.
The total amount owed can go up because of interest and penalties, but setting up monthly payments through an approved plan can help you avoid more serious collection actions, like having your wages garnished or your bank account seized.
It's easy to apply for a payment plan with the Delaware Division of Revenue, but there are a few common mistakes that can cause your application to be denied or defaulted. Knowing what to avoid will speed up the processing of your request and make it more likely to be approved.
Here are some important mistakes that taxpayers should not make when paying off Delaware tax debt:
Missing or incorrect data on the collection information statement is the most frequent cause of payment plan denials. Be sure to:
A complete and honest snapshot of your financial condition is essential to qualify for installment payments.
Offering a payment that is too low may signal you're not serious about repaying your tax debt, while proposing too much can lead to missed payments. The division evaluates whether your suggested monthly payments are reasonable based on your income, expenses, and ability to pay.
You must stay current with all future Delaware tax returns and payments to remain compliant. If you incur new Delaware tax debt under a payment plan, the division may cancel your agreement and resume collection actions, such as wage garnishment or a bank account levy.
If you encounter financial difficulties or cannot make a scheduled payment, we ask that you contact the Division of Revenue as soon as possible. Lack of communication is a common reason for default.
Attempting to conceal property, wages, or bank accounts can result in rejection, fraud investigations, and harsher penalties. Delaware verifies the information you provide and expects complete transparency.
By avoiding these mistakes, you can ensure the acceptance of your Delaware tax relief request and maintain your good standing throughout the plan's duration.
While the Delaware Division of Revenue does not offer a state-level offer in compromise, the IRS Offer in Compromise (OIC) may still be an option if you also owe federal tax debt. This program allows eligible taxpayers to settle their IRS tax debt for less than the full amount owed, based on financial hardship or other qualifying factors.
To qualify, you must meet the following criteria:
Eligibility is primarily based on your income, assets, and expenses. The IRS uses a formula to determine your ability to pay, considering allowable deductions and a minimum living standard.
To submit an OIC, you must complete
You must also submit complete financial documentation, including proof of income, bank statements, and details about your property and debts.
The IRS considers three types of offer scenarios:
Taxpayers often seek help from a tax professional or enrolled agent when applying, especially if the offer involves complex income streams or assets. Remember, the IRS OIC is separate from any Delaware tax relief, and you must address state and federal tax debt individually.
While many taxpayers can successfully apply for a payment plan with the Delaware Division of Revenue on their own, certain situations call for the guidance of a qualified tax professional. An experienced advisor can help ensure your application is accurate, thorough, and strategically prepared to avoid delays or rejections.
We recommend professional assistance in the following common scenarios:
If your combined state and federal tax debt exceeds $25,000, working with a tax attorney, enrolled agent, or CPA can help you:
If you’ve already received notices about a tax lien, wage garnishment, or levy on your bank account, time is critical. A tax professional can help stop collection actions while you work on the resolution.
Taxpayers who have failed to comply with earlier payment agreements may need help re-establishing trust with the division and proposing a workable plan.
If you believe your Delaware tax bill is incorrect, a tax professional can help file an appeal or request an administrative review.
Business owners, self-employed individuals, and taxpayers with rental income, investments, or high-value assets may benefit from expert help when completing a collection information statement.
Professional representation also helps if you plan to apply for an IRS offer in compromise, as federal and state debts require separate filings. Whether you choose a CPA, tax attorney, or enrolled agent, getting qualified guidance can protect your income, assets, and long-term financial stability.
Delaware does not have an official offer in a compromise program under the Delaware Code. Unlike the IRS, the Delaware Division of Revenue has no authority to reduce the principal amount of tax debt. Taxpayers are required to pay the full tax bill; however, options such as payment plans or penalty abatement may help them manage Delaware back taxes more effectively.
If you fail to pay or ignore notices, the Delaware Division may take collection actions to collect unpaid taxes. These can include a tax lien, wage garnishment, or a levy on your bank account. Unpaid balances may become a public record, and penalties and interest will continue to grow. Acting early helps avoid enforcement and protects your financial condition.
The Delaware Division of Revenue may apply refund offsets to reduce your Delaware tax debt. This amount includes your state tax refund and may also include your federal refund in some cases. Refund offsets allow the state to collect unpaid balances without initiating more aggressive actions like wage garnishment or a bank account levy.
Taxpayers may be asked to submit a collection information statement and supporting documents, such as Delaware tax returns, proof of income, bank account statements, and expense details. These help the division determine your financial situation and whether you qualify for a payment plan with manageable installment payments.
A tax lien is a legal claim filed by the Delaware Division of Revenue against your personal property or real estate to secure the payment of unpaid taxes. It becomes a public record and may impact your credit score, ability to refinance, or ability to sell property. Your total tax debt may also include lien filing costs.
A Delaware payment plan allows you to make monthly payments toward the full tax bill. In contrast, the IRS offers an offer in compromise that may let you settle federal tax debt for less than what is owed. Delaware does not reduce principal balance. The revenue division may offer installment agreements or delay collection actions depending on your financial condition.
You should consult a tax professional if you owe Delaware tax debt, face collection actions like a levy or wage garnishment, or have complex income and assets. An enrolled agent or tax attorney can help complete required filings, assess what is owed, negotiate installment agreements, or request penalty abatement with the Division of Revenue.
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