SENATE BILL NO. 87
AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO COLLECTION OF TAXES AND ENFORCEMENT
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE :
Section 1. Amend § 352, Title 30 of the Delaware Code, by striking said section in its entirety and substituting in lieu thereof a new § 352 to read as follows:
“Section 352. Accounts Receivable.
The Secretary of Finance may authorize the Director of Revenue to write off and remove from active collection any account receivable arising from the assessment of any tax or addition to tax if it is determined that the account is uncollectible. An account is uncollectible if the Director finds after reasonable investigation that the potential recovery or administrative costs of collection would not warrant further collection efforts and: (a) the debtor has received a discharge in bankruptcy with respect to the taxable periods in question; (b) the debtor is deceased and reasonable additional collection measures will not cause the debt to be collected from the assets of the debtor or the debtor’s estate; (c) the taxes are debts of a business that is no longer in business and the Director is unable to find that either the business or any other person responsible for the debts has assets from which the debt may be paid; or (d) the debt has been outstanding on the records of the Division of Revenue for more than six years.”
Section 2. Amend § 554(a), Title 30 of the Delaware Code, by inserting between the word “certificate” and the word “specifying” as they appear in said subsection the words “by paper or electronic transaction”.
Section 3. Amend § 556, Title 30 of the Delaware Code striking said section in its entirety and enacting a new § 556 to read as follows:
“§ 556. Execution of judgments.
(a) In general --- If any person liable to pay any assessed amount of tax, interest, penalty, additional amount or addition to the tax imposed under this title or other titles subject to this chapter neglects or refuses to pay such amount after a judgment has been obtained pursuant to §554 of this title, or otherwise, the Director may execute upon such judgment as provided herein.
(b) Warrants for levy and sale of property --- The Director may issue a warrant directed to the sheriff of any county of this state commanding such sheriff to levy upon and sell the personal or real property of such person for the payment of the amount of the judgment and the cost of executing the warrant. The sheriff shall return such warrant to the Director and pay to the Director the money collected by virtue thereof within 60 days after receipt of the warrant. A copy of the warrant shall be filed with the Prothonotary and noticed on the regular judgment docket. All sales of real and personal property under authority of this section shall be made pursuant to the provisions of Title 10.
(c) Garnishment of bank accounts --- The Director may issue a notice of garnishment directed to any bank, commanding said garnishee, notwithstanding the provisions of §§ 3502 or 4913(b) of Title 10, to set aside, account for, and pay over to the Division of Revenue on account of the debt any property owed to or held for the debtor by said bank. A copy of the notice of garnishment or an abstract thereof shall be filed with the Prothonotary and the fact of the garnishment noticed on the regular judgment docket.
(d) Garnishment of wages, salaries, and other amounts due --- The Director may issue a notice of garnishment directed to any person (other than a bank) owing to or holding for a judgment debtor any wages, salaries, money, credits and effects, contract rights, or securities. The notice of garnishment shall command said garnishee to set aside, account for, and pay over to the Division of Revenue on account of the judgment all such property then in its possession or which may become due the judgment debtor by such person from time to time, until the judgment and costs of execution are paid. A copy of the notice of garnishment or an abstract thereof shall be filed with the Prothonotary and the fact of the garnishment noticed on the regular judgment docket. The Director shall notify the garnishee in writing when the judgment and costs have been satisfied.
(e) Duties of garnishee --- A person receiving a notice of garnishment pursuant to subsections (c) or (d) of this section shall respond to the Director or Revenue within 20 days after service of the notice, not counting the date of service. A garnishee who fails to comply with a notice of garnishment may, after notice and assessment pursuant to this chapter, be liable for a penalty equal to the amount the garnishee was instructed to set aside, account for, and pay over to the Division of Revenue. Thirty days after the mailing of the notice of proposed assessment of such penalty, it shall become final, excepting only those amounts for which the garnishee has filed a timely written protest with the Director under § 523 of this title.”.
Section 4. Amend § 2124, Title 30 of the Delaware Code, by striking said section in its entirety and enacting a new § 2124 to read as follows:
“§ 2124. Revocation, denial or non-renewal of licenses for nonpayment of taxes.
(a) Revocation, denial or non-renewal of licenses. --- Whenever there has remained unpaid by a person for a period in excess of 180 days any final assessment of tax and/or penalty or interest due under this Title (other than Chapters 51 and 52, and Chapter 30 of this Title with the exception of §§3004 and 3005 of said chapter) exceeding $2,500, the Director may issue a notice of intent to revoke any license issued to such person (provided such license shall be the license for the business or occupation from which the liability arose and also provided that, in case of delinquent withholding or corporate income taxes, any license issued to such person) or, in the case of an application for a new license or renewal of an existing license, a notice of intent, respectively, to deny or withhold the license.
(b) Other persons affected. --- The Director may revoke, deny or withhold a license under the preceding subsection when he finds that:
(1) the license is sought by or was issued to a person who is related, as defined in § 2125 of this Title, to a revokee; and
(2) the chapter of this Title under which the previous license was revoked, denied, or withheld is the same as the chapter under which the subsequent license is sought or was issued; and
(3) the business being or to be conducted is substantially the same as the revokee’s business.
(c) Notice. --- Notice of proceedings pursuant to subsections (a) or (b) of this section shall set forth the reasons for its issuance (including the amount of such unpaid liability) and shall be sent by certified mail to the last known address of the licensee or applicant.
(d) Finality of revocation, denial, or non-renewal; right to protest. --- Thirty days after the issuance of the notice of intent, the revocation, denial or non-renewal shall become final, unless within that time the taxpayer has filed a written protest with the Director under § 523 of this Title.
(1) The sole grounds for protest under subsection (a) of this section shall be (i) the absence of any unpaid liability as of the date of the protest; (ii) the absence of an unpaid liability exceeding $2,500 as of the date of the notice under subsection (a); or (iii) that the assessment creating the liability was contrary to law and the taxpayer did not have opportunity to protest the assessment.
(2) In the case of revocation, denial, or withholding of licenses under subsection (b) of this section, a protest may be made on the grounds set forth for instances arising under paragraph (1) of this subsection and, in addition, on the grounds that (i) the conditions required under subsection (b) do not exist; or (ii) notwithstanding the conditions required under subsection (b), the other affected person acquired the business or its assets in an arms’ length transaction and neither the revokee nor any owner of 25% or more of the revokee has any interest in the acquired business.
(3) The decision of the Director under this subsection shall be final and shall not be reviewed under § 544 of this title. However, in any matter where the State shall place in issue the non-licensure of a business, including any action under subsection (e) of this section, any person may raise any defense that may be or may have been raised under this subsection.
(e) Injunctions. --- The Court of Chancery shall have jurisdiction to enjoin any person who has not first obtained a license under this part, or whose license has been revoked, denied, or withheld under subsections (a) or (b) of this section, from transacting any occupation or business in this State. The Director of Revenue may proceed for this purpose by complaint in any county in which such person is doing business.
(f) Relief from this section. --- The Director may issue, renew, or reissue any license which has been revoked, denied, or withheld under this section upon full payment of the amount stated in the Notice described in this section plus interest to the date of payment; or upon agreement for full payment plus interest and current tax obligations under such terms and conditions as the Director may deem suitable to preserve the revenues of the State.
(g) Remedies not exclusive --- Nothing in this section shall prevent the Director from:
(1) Seeking to enjoin the conduct of business by a subsequent licensee in the case of a business whose license was revoked on the ground that change of identities between the revoked licensee and the subsequent licensee is substantially without substance or a sham.
(2) Invoking remedies related to fraudulent conveyances under title 6; or
(3) Invoking remedies related to transferee liability under this title.”
Section 5. Amend § 2125, Title 30 of the Delaware Code, by striking said section in its entirety and enacting a new § 2125 to read as follows:
“§ 2125. Definitions applied to § 2124; Burden of persuasion.
(a) For purposes of remedies under § 2124 of this title,
(1) ‘revokee’ means a person whose business license has been revoked, denied, or withheld under § 2124;
(2) ‘related person’ A related person is any sibling or any natural person identified in Section 318(a) of the Internal Revenue Code (Title 26 U.S. Code Section 318) or, by applying the constructive ownership rules of Section 318(a), any entity in which 25% or more of whose equity is owned by a revokee, or any natural person or entity owning 25% or more of the equity of the revokee;
(3) ‘substantially same business’ a business is substantially the same as a revokee’s business if any of the following conditions exist:
(1) The business location is substantially the same as the revokee’s;
(2) The customers are substantially the same as the revokee’s;
(3) The employees are substantially the same as the revokee’s; or
(4) The physical assets of the business are substantially the same as the revokee’s.
(b) ‘burden of proof’ Provided the Director shall show that a license was properly revoked, denied or withheld under § 2124, in any proceeding initiated under § 2124(e) of this Title or in any other proceeding in which the State shall put in issue the non-licensure of a business, the burden of proof shall be upon the person whose license has been revoked, denied or withheld to prove the defenses specified in §2124(d).”.
Section 6. Sections 1, 2, 4, and 5 of this Act shall be effective upon its enactment into law. Section 3 of this Act shall be effective as of the date of entry or issuance of all judgments, warrants, attachments, or levies existing or issued on or before the date of enactment and all entered or issued thereafter.
Approved July 15, 2003