Delaware tax payment plan through the Division of Revenue
You can set up installment agreements with Delaware’s Division of Revenue by mail or by phone. To keep a tax lien from being filed, any plan longer than 24 months must take payments automatically from a bank account or from your wages.
- Plan length with no lien
- At most 24 months
- Auto-debit and no judgment
- At most 48 months
- Interest on late tax
- Monthly interest of 0.5%
- Penalty when you do not pay
- 1%/month, capped at 25%
The 24 and 48 month marks in Delaware
How you pay in Delaware decides how long your plan runs. As the Division of Revenue payment options explain, a plan longer than 24 months needs automatic deductions from a bank account or voluntary deductions from your wages to keep a tax lien from being filed. Automatic deductions let you pay over a term of up to 48 months without a judgment filing.
Any term longer than 48 months results in a judgment being filed. Such a public claim on your property safeguards the state’s interest. The Division may file one under any plan as well, to secure the debt until you make the final payment.
How do I ask Delaware for an installment agreement?
There is no fixed form to begin the process. Pay what you can first. Next, write to the Division or call the Installment Section without delay, as the payment arrangements guidance advises. Include your name, taxpayer ID number, the tax period listed on the bill and a copy of your tax bill.
The Division then reviews your ability to pay. The Division may ask for a Collection Information Statement. This form lists what you earn, what you spend and what you own. The Division may also ask you to sell or borrow against assets or take out a commercial loan if you are able to get one.
Paying on your plan and staying in good standing
You may pay installments with certified funds, a check or money order. You may also pay by credit card, by automatic bank deduction (ACH) or by payroll deductions that your employer agrees to send.
As you make payments, interest and penalties keep growing. Under the personal income tax FAQ, late income tax is charged interest of 0.5% per month. If you do not pay, a penalty of 1% per month applies. The penalty stops at a limit of 25% on net tax. Any refund from Delaware, Maryland or federal sources also goes against your Delaware balance.
The Division can end the agreement if you pay late, miss a payment or skip a required return. The Division can also end the agreement if you do not give updated financial details when asked. Because your finances shape the plan, its terms may change. You get a letter 30 days ahead of any change.
What happens if you take no action
To start, the Division makes an attempt to reach you. Two notices come next on the enforced collections page: the Notice of Judgment and the Notice of Warrant. It also covers the seizure and sale of your home, your car or business property. Under the garnishment rules, the Division can attach wages, commissions and retirement accounts. Banks also have to hold your deposits for 20 days.
Two more steps are visible to the public. When you have unpaid liens, your name is listed on the delinquent taxpayer lists. The listing ends if you pay, prove bankruptcy or enter an acceptable installment agreement. A business with more than $2,500 owed for 180 days may lose its license.
When you cannot pay any amount
When the Division decides you cannot pay anything, collection may be put on hold until your finances improve. While collection is on hold, the debt grows as interest and the late payment penalty keep adding up. To protect the state’s interest, the Division reviews your situation during this period and files a Notice of Judgment.
Delaware taxes and IRS taxes stay separate
Federal tax is not handled by a plan from the Delaware Division of Revenue and Delaware tax is not handled by an IRS installment plan. If you owe both, each one comes with separate agreements and separate rule sets. Two monthly payments are due and you must make both on time.
Nearby states
Do you owe the IRS as well as the Division of Revenue?
Do you owe both the IRS and Delaware Division of Revenue? A licensed tax pro can, on a free call, help you set both payment plans to match your actual budget.
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