RELATING TO INCOME TAX
AN ACT TO AMEND CHAPTER 11 OF TITLE 30, DELAWARE CODE OF 1953 RELATING TO THE INCOME TAX AND APPROPRIATING FUNDS.
Be it enacted by the General Assembly of the State of Delaware:
Section 1. § 1101, Chapter 11, Title 30, Delaware Code of 1953 is amended by striking out paragraph 4 thereof defining "Head of the family" and further by striking out the following words as they appear at the end of the definition of "net income":
"and as herein defined net income received by a person dependent upon another person for his chief support such as to entitle such other person to the exemption as head of family, shall be accounted and included in the return as net income of such other person."
Section 2. § 1101, Chapter 11, Title 30, Delaware Code of 1953 is amended so that the definition of "Taxable" shall read as follows:
(1) a natural person, including a minor, with a gross income of $600 or more, who is a resident of the State of Delaware or who has been a resident of the State at any time during the income year;
(2) each spouse, in the case of a married couple living together with a combined gross income of $1200 or more;
(3) a guardian of a resident of Delaware;
(4) an executor or administrator of a deceased resident of Delaware;
(5) a trustee, if but only to the extent that, the net income of the trust for the income year (i) is distributed or irrevocably set aside for future distribution in whole or in part to a person who at any time during such income year was a resident of Delaware, and/or (ii) may be distributed in whole or in part to the creator of the trust upon the happening of some event or the exercise of any power which he reserved thereunder if at the time of creation of the trust and at any time during such income year he was a resident of Delaware;
(6) Any officer or employee of the State of Delaware or any political subdivision of Delaware;
(7) every natural person who is a non-resident of the State of Delaware if but only to the extent that such person received income during the taxable year as compensation for personal services rendered in the State of Delaware as an employee in the conduct of the business of an employer and/or to the extent that such person derived net profits from a profession, vocation, business, trade or commerce conducted in the State of Delaware.
Section 3. § 1101, Chapter 11, Title 30, Delaware Code of 1953 is amended so as to add the following definitions:
"Blind" means possessed of a central visual acuity not in excess of 20/200 in the better eye with correcting lens, or visual acuity greater than 20/200 but accompanied by a limitation in the fields of vision such that the widest diameter of the vision field subtends an angle no greater than 20 degrees;
"Dependent" means any person receiving his chief support from the taxable if such dependent person is under twenty years of age or is incapable of self-support because mentally or physically defective;
"Medical care" shall include the amounts paid for the diagnosis, cure, medication, treatment or prevention of disease or for the purpose of affecting any structure or function of the body (including amounts paid for accident or health insurance);
"Withholding agent" means and includes any individual, receiver, trustee, guardian, executor or administrator, institution, bank, firm, partnership, church, society, club, fraternity, sorority, lodge, corporation, municipal corporation, or any other political subdivision of the State making payment of salaries, wages, pensions, fees, commissions and other compensation of whatever kind and in whatever form paid or credited to any taxable for personal services provided that such personal services were rendered as a regular employee in the conduct of the business of an employer in the State of Delaware;
"Compensation for personal services" means all remuneration for services performed by an employee including the fair market value of all remuneration paid in any medium other than cash and shall include salaries, wages, bonuses, pensions, fees and commissions.
Section 4. § 1111, Chapter 11, Title 30, Delaware Code of 1953 is amended to read as follows:
§ 1111. Rates of tax
There shall be levied, assessed, collected and paid annually by every taxable a tax on the net income of the preceding calendar year, subject to the exemptions hereinafter named, to be computed as follows:
One per cent of the amount of net income not in excess of $3,000; two per cent of the amount of net income in excess of $3,000 but not in excess of $4,000; three per cent of the amount of net income in excess of $4,000 but not in excess of $6,000; four per cent of the amount of net income in excess of $6,000 but not in excess of $8,000; five per cent of the amount of net income in excess of $8,000 but not in excess of $100,000; six per cent of the amount of net income in excess of $100,000.
Section 5. Subsection 13, § 1116, Chapter 11, Title 30, Delaware Code of 1953 is amended to read as follows:
(13) Amounts received as pensions from employers, the Government of the United States, the State of Delaware or any subdivision thereof; provided that this exclusion may not exceed $2,000.
Section 6. § 1117, Chapter 11, Title 90, Delaware Code of 1953 is amended to read as follows:
§ 1117. Personal exemptions and credits for dependents
(a) There shall be allowed for the purpose of the income tax the following credits against net income:
(1) An exemption of $600 for the taxable;
(2) An additional exemption of $600 for the taxable if he has attained the age of 65 before the close of his income year; and,
(3) An additional exemption of $600 for the taxable if he is blind at the close of his income year;
(4) An exemption of $600 for each dependent other than husband or wife whose gross income for the calendar year in which the income year of the taxable begins is less than $600 except that the exemption shall not be allowed in respect of a dependent who has made a joint return with his spouse under section 1163 of this title for the income year beginning in such calendar year.
(b) For the purposes of this title--
(1) The determination of whether an individual is married shall be made at the close of his income year, unless his spouse dies during his income year, in which case such determination shall be made as of the time of such death; and
(2) An individual legally separated from his spouse under a decree of divorce or separate maintenance, shall not be considered as married.
Section 7. § 1118, Chapter 11, Title 30, Delaware Code of 1953 is amended by striking out the whole of subsection (3) thereof and substituting in lieu thereof, the following:
(3) Taxes imposed upon and accrued or paid by the taxable, including liquor and gasoline taxes, within the income year, except Delaware income tax, taxes assessed for local benefits of a kind tending to increase the value of the property assessed, and Federal Income Taxes in excess of $300.
Section 8. § 1118 (5), Chapter 11, Title 30, Delaware Code of 1953 is amended so that the words "15 per cent" shall read "20 per cent".
Section 9. § 1118, Chapter 11, Title 30, Delaware Code of 1953 is amended by adding a new subsection (15) to read as follows:
(15) Expenses paid during the income year, not compensated for by insurance or otherwise, for medical care of the taxable, his spouse or a dependent.
(a) If neither the taxable nor his spouse has attained the age of 65 before the close of the income year, to the extent that such expenses exceed five per cent of the gross income; or
(b) If either the taxable or his spouse has attained the age of 65 before the close of the income year, (i) the amount of such expenses for the care of the taxable or his spouse; and, (ii) the amount by which such expenses for the care of such dependents exceed five per cent of the gross income. The determination of whether or not an individual is married at any time during the income year shall be made in accordance with the provisions of section 1117 (b).
Section 10. Subchapter II, Chapter 11, Title 30, Delaware Code of 1953 is amended by adding a new section entitled section 1120, to read as follows:
§ 1120. Credit for income taxes paid to other states
There shall be a credit against the tax paid under this chapter for income taxes paid to any state other than Delaware, or any political subdivision of any state other than Delaware, if a similar credit is allowed by said state or political subdivision for taxes imposed by this chapter; provided that no credit may be allowed under this section for taxes which the taxable has reported as a deduction under section 1118 of this chapter.
Section 11. § 1166, Chapter 11, Title 30, Delaware Code of 1953 is amended so that the figure "$800" thereof shall read "$600".
Section 12. Chapter 11, Title 30, Delaware Code of 1953 is amended by adding a new Subchapter VII to read as follows:
SUBCHAPTER VII. WITHHOLDING OF INCOME TAX
§ 1191. Duties of withholding agent; exemption certificates
For the quarterly period beginning July 1, 1953 and for each quarterly period thereafter, every withholding agent shall deduct, withhold and pay over to the State Tax Department on or before the last day of the month following the close of each quarterly period a tax computed according to the rates set out in section 1111 of this chapter on the compensation paid within each quarter for personal services of any taxable in excess of the exemptions and credits. For withholding purposes, every taxable shall be entitled to a personal exemption of Twelve Dollars ($12) per week plus a credit of Twelve Dollars ($12) per week for each dependent. The taxes shall be withheld on the basis of each payroll period, that is weekly, bi-weekly, semi-monthly or monthly, but if, in any case, there is no regularly specified payroll period, then such tax shall be withheld on a per diem basis. Every taxable from whose compensation a tax is to be withheld under this subsection shall file with the withholding agent on or before June 1, 1953, or if employed subsequent to June 1, 1953 at the time of employment, a signed exemption certificate on the form to be provided by the State Tax Department for that purpose indicating the number of exemptions and credits to which he is entitled under this chapter. The tax so withheld and paid by the withholding agent to the State Tax Department shall constitute payments on account of the tax imposed by section 1111 of this chapter and shall be allowed as a credit against the total tax on the return of the taxable from whose compensation such tax was withheld. Any amount withheld which is in excess of the total amount of tax, interest and penalties due under this chapter shall be refunded to the taxable in the manner provided in section 1183 of this chapter. Quarterly withholding returns shall be filed on the forms prescribed by the State Tax Department for that purpose and shall be accompanied by a remittance of the withholding agent in payment of the amount of tax withheld during each quarterly period.
§ 1192. Use of withholding tables
At the election of the withholding agent with respect to any taxable, the withholding agent shall deduct and withhold from the compensation paid to such taxable, in lieu of the taxes required to be paid and withheld under section 1191 of this chapter, a tax to be determined in accordance with withholding tables to be furnished by the State Tax Department.
§ 1193. Exemptions under withholding tables
In computing the tax according to the tables set forth in section 1192 each taxable shall be entitled to one withholding exemption in his or her own right and shall be entitled to one (1) withholding exemption for each dependent.
§ 1194. Personal liability of withholding agents; sums withheld deemed trust funds; penalties
(c) Every withholding agent as herein defined who shall fail to withhold and/or pay to the State Tax Department any sums required by this chapter to be withheld and paid shall be personally and individually liable therefor to the State of Delaware; and any sum or sums withheld in accordance with the provisions of this chapter shall be deemed to be held by the withholding agent in trust for the State of Delaware.
(d) Whoever fails to make any return required by this subchapter to the State Tax Department, or fails to withhold and/or pay any tax required by this subchapter to the State Tax Department, shall be fined not more than One Hundred Dollars ($100.00) or imprisoned not more than six (6) months, or both.
§ 1195. Administrative expenses
The Tax Department may retain out of the sums collected under this subchapter such amounts as it shall deem necessary to defray the expenses of administering and enforcing the duties prescribed by this subchapter provided that not more than $25,000 per year shall be so retained.
§ 1196. Receipts for employees
(a) Every person required to deduct and withhold from an employee a tax under this subchapter shall furnish to each such employee in receipt of the compensation paid by such person to such employee during the calendar year, on or before January 31 of the succeeding year, or, if his employment is terminated before the close of such calendar year, on the day on which the last payment of compensation is made, a written statement showing the following:
(1) The name of such person,
(2) the name of the employee,
(3) the total amount of compensation paid,
(4) the total amount deducted and withheld as tax under this subchapter.
(b) The statements required to be furnished by this section in respect to any compensation shall be furnished at such other times, shall contain such other information, and shall be in such form as the State Tax Department may by regulations prescribe. A duplicate of such statement as made and filed in accordance with the provisions of section 1166 of this chapter shall constitute the return required to be made in respect to such compensation under section 1166.
(c) The State Tax Department may grant to any person a reasonable extension of time (not in excess of 30 days), with respect to the statement required to be furnished under this section.
§ 1197. Penalties for fraudulent statement or failure to furnish statement
(a) In lieu of any other penalty provided by law (except the penalty provided by subsection (b) of this section), any person required under the provisions of section 1196 to furnish a statement, who willfully furnishes a false or fraudulent statement, or who willfully fails to furnish a statement in the manner, at the time, and showing the information required under section 1196, or regulations prescribed thereunder, shall for each such failure be subject to a civil penalty of $50. Such penalty shall be assessed and collected in the same manner as the tax imposed by this chapter.
(b) In addition to the penalty provided in subsection (a) of this section, any person required under the provision of section 1196 to furnish a statement who willfully furnishes a false or fraudulent statement, or who willfully fails to furnish a statement in the manner, at the time, and showing the information required under section 1196, or regulations prescribed thereunder, shall for each such failure, upon conviction thereof, be fined not more than $1,000 or imprisoned for not more than one year, or both.
Section 13. There is appropriated to the State Tax Department the sum of Ten Thousand Dollars ($10,000.00), to enable the said State Tax Department to commence operations under this Act. The said sum of Ten Thousand Dollars ($10,000.00) shall be in addition to all other moneys appropriated to the State Tax Department and shall be a supplementary appropriation, to be paid by the State Treasurer during the remainder of the fiscal year ending June 30, 1953, and during the fiscal year ending June 30, 1954, upon warrants of the State Tax Department out of any moneys in the General Fund not otherwise appropriated.
Section 14. Except as otherwise specifically provided in this act, the effective date of this act shall be January 1, 1953. All acts or parts of acts inconsistent with this Act are repealed to the extent of such inconsistency only; provided that Chapter 11, Title 30 of the Delaware Code of 1953 as it existed prior to this Act shall be continued in full force and effect as to all taxes, assessments, proceedings, suits and matters arising out of or in connection with returns required to be made for the year 1952 and all prior years and shall so continue until such time as all of said taxes, assessments, proceedings, suits and matters shall have been finally collected, determined or disposed of.
Approved June 2, 1953.