How Delaware Collects Overdue Taxes & How Taxpayers Get Tax Help
The Division of Revenue of the Department of Finance regulates individual and business tax returns in the State of Delaware. They look at tax returns to see if there are any mistakes, send refunds and investigate if they suspect that someone is underpaying their taxes.
If a taxpayer ignores their tax obligations by not filing tax returns and paying what they owe on time it’s the job of the Division to aggressively take steps to collect the debt. On the other hand, if the Division of Revenue has sent you a notice claiming that you are behind on your taxes, you should understand that you do have options. Give them a call to discuss your situation before you are faced with the following:
Failure to Pay
If you ignore your tax obligations entirely and fail to pay your Delaware back taxes, the Division of Revenue could take any or all of the following collection actions:
- A Notice of Judgment being filed against you
- A Notice of Warrant being served on you, which could lead to wage garnishment
- Seize your residential and/or commercial property
- Seize your personal property
- If you owe the State withholding taxes, you will be charged a 100% penalty
In the meantime, you could have your wages garnished and bank account(s) levied to pay off your tax debt. Also, any future tax refunds that may be coming to you could be seized to offset your tax debt. This will affect your credit rating until the judgment against you has been lifted.
Notice of Judgment
If you are assessed with a tax obligation that you don’t pay or don’t pay in full and you’ve been sent a Demand for Payment and still not paid the tax you owe or taken steps to resolve the matter, you may have a Notice of Judgment filed against you. This judgment would be for the amount you owe in taxes and apply to everything of value that you own, including your home and car. It would also apply to accounts receivable that may be due you. A judgment is a public notice that there is a government claim on your property and will damage your credit.
This is a very serious step so before this happens it would be wise to consult with a tax professional regarding the tax help you seriously need. If you still do not find a way to resolve your tax problems and the debt isn’t paid, the judgment will remain in effect for 20 years after being filed. To have the Notice of Judgment released you would need to pay your delinquent taxes or have your full tax bill adjusted, including interest, penalties and other charges. The release would be carried out within 30 days.
If you are delinquent in paying your State taxes but have other tax refunds owed to you, your refund will be offset so that it can be applied to your outstanding tax bill.
Garnishment of Wages
If you have been issued a warrant attaching your wages, your employer will have no choice but to withhold your garnished wages and send the money to the Division of Revenue to pay off your taxes.
The Division of Revenue has the right to seize any property you own or partly own, whether personal or real estate, and sell it if you do not pay your taxes or make payment arrangements. This could include residential or commercial property. Before something like this happens it would be wise to hire a CPA or tax consultant to provide some tax help so you can avoid having your property seized. Once the property is seized there must be a public notice posted of its pending sale. Once the Division has given notice a waiting period of 10 days must pass before the property is sold, unless it is something perishable.
Options That Offer Delaware Taxpayers Tax Help or Tax Relief if Needed
If the Delaware Division of Revenue has sent you a notice claiming that you are behind on your taxes, you should understand that you have payment options. One option is to seek tax relief with an installment payment plan that would involve an agreement for monthly payments. You can also request an Offer in Compromise if you meet the qualifications, which if approved would allow you to pay less than you owe to settle your taxes.
The Delaware Division of Revenue Department of Finance insists that taxpayers who cannot pay the entire amount they owe in taxes in a single payment do the following:
- Pay as much as you can before doing anything else. Send the check to the address noted on your tax bill.
- Phone the installment payment line at (302) 577-8586 to explain your financial situation.
- You may also send a letter detailing why you cannot pay the full amount you owe in taxes. You will need to include the following information: Your full name printed, a copy of your tax bill, the tax period that appears on your bill, and your taxpayer ID number. Call (302) 577-8586 to find out where to mail your letter.
Once the Department of Finance receives your phone call or letter, they will discuss your options with you to figure out how best to work with you on collecting the taxes you owe. Even as you make payments, until the entire tax debt is paid off, you will continue to accrue interest and penalties. You are welcome to call (302) 577-8586 with any additional questions you may have.
If the Delaware Division of Revenue has already sent you a notice claiming that you are behind on your taxes, you need to know that there are payment options. One option is to seek tax relief with an installment payment plan that would involve an agreement for monthly payments. You can also request an Offer in Compromise if you meet the qualifications, which if approved would allow you to pay less than you owe to settle your taxes. Here are the details:
Installment Payment Plans
If you do not have the money to pay your taxes in full you may be able to make payment arrangements and pay your taxes off in installments that typically do not extend beyond 24 months. To avoid having a lien filed against you it would require that you agree to have your tax payments deducted from your paycheck or automatically taken out of your bank account each month.
How long you would be permitted to make payments depends on how much you owe. If you do not have the means to fully pay your taxes you should reach out by phone to the collections office at (302) 577-8586 to determine what your options are. In the meantime, you might want to consult with a tax professional to get their expert opinion on what type of tax help or tax relief you might qualify for. If you would rather do this in writing send your request to the Division of Revenue. Your request must include the following:
- Your full name (printed)
- Your taxpayer ID number
- A copy of your tax statement
- The tax period this request applies to
You may also be required to fill out a Collection Information Statement that states your assets, your income and monthly expenses. The Division will consider this information in determining how much your monthly payments would be under your installment payment plan.
To secure the interests of the State of Delaware the Division of Revenue would have to file a Notice of Judgment if your installment payment plan was to last more than 5 years. You would still have interest and penalties added to your tax bill and the same would be charged on your overdue interest and penalty charges. Furthermore, if you were expecting any tax refunds from the IRS, the State of Maryland or Delaware, that money would be applied to your unpaid taxes to offset the balance.
Once you agree to an installment payment plan you must comply with all the terms, which would be making your payments on time, not missing any payments, filing all future tax returns when due and paying what you owe on time. The Division of Revenue will likely ask you from time to time to provide information on your current financial situation. This would be so they could assess whether you could be paying more towards your tax bill or not. If they decide to make any changes to your payment plan you will be sent a letter 30 days before any changes would take effect.
Offer in Compromise
In cases in which it is impossible to fully pay the tax debt due to all the interest and penalties accruing, taxpayers may qualify for an Offer in Compromise. If your offer were to be accepted by the Division of Revenue, you would be allowed to settle your tax debt for less than what you actually owe.
These are the situations that qualify for an Offer in Compromise:
Taxpayer does not have the financial ability to every pay the full amount he/she owes. If this is due to an illness, he/she must include medical documentation from the physician with the submission.
There is serious doubt that the taxpayer owes the amount supposedly owed.
If you think you qualify for this form of tax relief, you need to know that your offer will only be considered if you are completely up-to-date on all your tax filing. Also, you need to know that the Offer in Compromise is only for the interest and penalties you’ve been charged. To get these reduced through an OIC, you need to have already fully paid off your initial tax debt.
To request an Offer in Compromise, you are required to write a letter asking the Division of Revenue to lower the interest and penalties you’ve been charged on your taxes. You must also fill out a Delaware Collection Information Statement, and mail all this paperwork to your account assignee, which will be stated on your correspondence with the Division. If you have at any time received an IRS Offer in Compromise, you will need to provide a copy of your acceptance and documentation showing the amount previously owed to the IRS before the compromise. Send all this paperwork to the following address:
Delaware Division of Revenue
ATTN: [Name of your account assignee]
820 N. French St.
Wilmington, DE 19801
Offer in Compromises are never calculated or under consideration from January 1st to April 30th of any given year. If you are owed a tax refund for that year, it will be used to pay off or pay down your tax debt.
It usually takes the Division of Revenue 2-3 months before they come to a decision. If your offer is accepted, you have to sign the compromise agreement and return it before it would be valid.
As part of the agreement you promise to file your tax returns on time and include the full amount owed for the following 5 years. In the event you do not do this, the agreement is null and void and the amount that the Division deducted from the total amount you owed, will be added right back on and collection efforts will commence.
At the current time the Delaware Division of Revenue is not accepting any new requests for an Offer in Compromise. This is because the Compromise Procedures are being revised.
Power of Attorney
You can either represent yourself before the Delaware Division of Revenue or authorize someone else to deal with them on your behalf. This could be an enrolled agent, a lawyer, a certified public accountant or someone enrolled by the Division of Revenue to practice before them in representing your interests. For this representative to be allowed access to your Delaware tax information you would need to properly write and submit your own Power of Attorney, fill out IRS Form 8821 – Tax Information Authorization, or use IRS Form 2848 – Power of Attorney & Declaration of Representative.
Contact Information to Receive Tax Help from the Division of Revenue
For information on the options that may be available for resolving your unpaid taxes, please contact the Delaware Division of Revenue at the following phone numbers:
Assistance with Personal Income Taxes: (302) 577-8200
Assistance with Business Taxes: (302) 577-8205
Account Management or Collections: (302) 577-8785
Installment Payment Plans: (302) 577-8586
Written requests should be mailed to:
Delaware Division of Revenue
820 N. French Street
Wilmington, DE 19801Contact Us