TITLE 30

State Taxes

General Provisions; State Tax Agencies; Procedure and Enforcement

CHAPTER 5. PROCEDURE, ADMINISTRATION AND ENFORCEMENT

Subchapter III. Procedure and Administration


(a) Deficiency or overpayment. — As soon as practicable after any return is filed, the Director shall examine it to determine the correct amount of tax. If the Director finds that the amount of tax shown on the return is less than the correct amount, the Director shall notify the taxpayer in writing of the amount of the deficiency proposed to be assessed. If the Director finds that the tax that has been paid by the taxpayer is more than the correct amount, the Director shall credit the overpayment against any taxes to which this chapter applies and which are due to this State by the taxpayer and shall refund the difference to the taxpayer.

(b) No return filed. — If the taxpayer fails to file any return of tax required to be filed, the Director shall estimate from any available information the taxpayer's taxable amount, and the tax thereon, and shall notify the taxpayer in writing of the amount proposed to be assessed against the taxpayer as a deficiency.

(c) Notice of proposed assessment. — A notice of proposed assessment shall:

(1) Be in writing,

(2) State that tax, interest, penalty, additional amount, or addition to tax is proposed for assessment and is due, and

(3) Set forth the amount and the reason for the proposed assessment.

Such notice shall be sent by mail to the taxpayer at the taxpayer's last known address within the time limit provided by § 531 of this title. If the amount of the proposed assessment exceeds the applicable threshold of $1,000, such notice shall be sent by certified or registered mail. (The applicable threshold in this paragraph is subject to annual adjustment as more fully set forth in § 515 of this title.) In the case of a joint return of personal income tax, a notice of proposed assessment shall be a single joint notice, except that if the Director is notified by either spouse in writing that separate addresses have been established, the Director shall mail a joint notice to each spouse at each such address. In the case of a combined separate return of personal income tax, a single notice of proposed assessment shall be sent by the Director to the taxpayers' last known address except that, if the Director is notified by either spouse in writing that separate addresses have been established, the Director shall mail separate notices to each spouse, using reasonable means to allocate the proposed assessment between the spouses. If the taxpayer is deceased, under a legal disability or is a corporation which has terminated its existence, a notice of proposed assessment shall be mailed to such taxpayer's last known address, except that if the Director has received notice of the existence of a fiduciary relationship with respect to such taxpayer, such notice shall be mailed to the last known address of such fiduciary. Except where the Director determines that collection would be jeopardized by delay, no notice of proposed assessment of any tax shall be mailed prior to the last date, including any date fixed by extension, prescribed for the payment of such tax.

(d) Supplemental notice of proposed assessment. — The Director may, at any time within the period prescribed for issuance of a notice of proposed assessment, issue a supplemental notice of proposed assessment, subject to the other provisions of this section, whenever it is found that any notice is imperfect or incomplete in any material respect. Any reference in this title to a notice of proposed assessment shall be deemed to include a reference to a supplemental notice of proposed assessment issued under the authority of this subsection.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1; 80 Del. Laws, c. 195, § 3.;

Sixty days after the date on which it was mailed (30 days in the case of a proposed assessment of withholding taxes, or, in the case of other taxes imposed by Chapter 11 of this title, 120 days if the taxpayer is outside the United States), a notice of proposed assessment under § 521(c) of this title shall constitute a final assessment of the amount of tax, interest, penalties, additional amounts and additions to the tax specified in such notice, excepting only those amounts as to which the taxpayer has filed a timely protest with the Director under § 523 of this title.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

Within 60 days (30 days in the case of withholding taxes, or, in the case of other taxes imposed by Chapter 11 of this title, 120 days if the taxpayer is outside the United States) after the date of the mailing of a notice of proposed assessment under § 521(c) of this title or the date of the mailing of a notice of the disallowance of a claim for credit or refund under § 542 of this title, the taxpayer may file with the Director a written protest against the proposed assessment or disallowance in which the taxpayer shall set forth the grounds upon which the protest is based. If such a protest is filed, the Director shall reconsider the proposed assessment or disallowance of claim for credit or refund and, if the taxpayer has so requested, shall grant the taxpayer or the taxpayer's authorized representative an oral hearing.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

Written notice of the Director's determination under § 523 of this title shall be mailed to the taxpayer by certified or registered mail, and such notice shall set forth the Director's findings of fact and the basis of any determination which is adverse, in whole or in part, to the taxpayer.

68 Del. Laws, c. 187, § 1.;

The determination of the Director under § 524 of this title on the taxpayer's protest shall be final (and such determination shall constitute a final assessment of any amount determined by the Director to be due) upon the expiration of 60 days (30 days in the case of withholding taxes, or, in the case of other taxes imposed by Chapter 11 of this title, 120 days if the taxpayer is outside the United States) from the date when the Director mails notice of the determination to the taxpayer, unless within such period the taxpayer seeks review of the Director's determination pursuant to § 544 of this title.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

(a) In any proceeding before the Director under this chapter, the burden of proof shall be on the taxpayer, except with respect to the following issues, as to which the burden of proof shall be on the Director:

(1) Whether the taxpayer has been guilty of fraud;

(2) Whether the petitioner is liable as the transferee (within the meaning of § 560 of this title) of property of a taxpayer (but not to show that the taxpayer was liable for the tax); and

(3) Whether the taxpayer is liable for any increase in a deficiency where such increase is asserted initially after the notice of proposed assessment under § 521(c) of this title was mailed and a protest under § 523 of this title was filed, unless such increase in deficiency is the result of a change or correction of federal tax liability required to be reported under § 514 of this title and of which change or correction the Director had no notice at the time the Director mailed the notice of proposed assessment.

(b) In any proceeding before the Tax Appeal Board under this chapter, the burden of proof shall be upon the taxpayer, except with respect to the issues described in paragraphs (a)(1) and (2) of this section, as to which the burden of proof shall be on the Director.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

A federal administrative determination of issues raised in a proceeding under § 523 or § 544 of this title shall be admissible as presumptive evidence in such proceeding, but such determination shall not be conclusive.

68 Del. Laws, c. 187, § 1.;

(a) If the amount of tax shown on the taxpayer's return is understated due to a mathematical or clerical error, the Director shall notify the taxpayer in writing that an amount of tax in excess of that shown on the return is due and has been assessed. Each notice under this subsection shall expressly state the error alleged. Such additional tax and any interest thereon shall, subject to the right of protest under subsection (b) of this section, be deemed assessed on the date of filing or the due date of the return, whichever is later.

(b) Notwithstanding the provision for immediate assessment under subsection (a) of this section, a taxpayer may file with the Director, within 60 days after notice of the assessment is sent, a written protest of the assessment under the provisions of § 523 of this title. In the taxpayer's protest, the taxpayer shall set forth the reasons the taxpayer believes there was no mathematical or clerical error made in the preparation of the return or calculation of the tax due.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

(a) In the case of an individual serving in the armed forces of the United States, or serving in support of such armed forces, in an area designated by the President of the United States by Executive Order as a "combat zone" for purposes of § 112 of the Internal Revenue Code (26 U.S.C. § 112), at any time during the period designated by the President by Executive Order as the period of combatant activities in such zone for purposes of such section, or hospitalized as a result of injury received while serving in such an area during such time, the period of service in such area, plus the period of continuous qualified hospitalization attributable to such injury, and the next 195 days thereafter, shall be disregarded in determining under this title (other than Chapters 30, 51 and 52), in respect of any tax liability (including any interest, penalty, additional amount, or addition to the tax) of such individual:

(1) Whether any of the following acts was performed within the time prescribed therefor:

a. Filing any return of income or estate (except income tax withheld at source);

b. Payment of any income or estate (except income tax withheld at source) or any installment thereof or any other liability to this State in respect thereof;

c. Filing a protest with the Director under § 523 of this title, filing a petition with the Tax Appeal Board under § 544 of this title or filing an appeal of a decision rendered by the Tax Appeal Board under § 331 of this title;

d. Allowance of a credit or refund of any tax;

e. Filing a claim for credit or refund of any tax;

f. Assessment of any tax;

g. Giving or making any notice or demand for the payment of any tax, or with respect to any liability to this State in respect of any tax;

h. Collection of the amount of any liability in respect of any tax;

i. Bringing suit or commencing any action, including the filing of any certificate or warrant, by this State or any officer on its behalf, in respect of any liability in respect of any tax; and

j. Any other act required or permitted under this title (other than Chapters 30, 51 and 52) specified in regulations prescribed under this section by the Director;

(2) The amount of any credit or refund (including interest).

(b)(1) Except to the extent provided in paragraph (a)(2) of this section shall not apply for purposes of determining the amount of interest on any overpayment of tax.

(2) If an individual is entitled to the benefits of subsection (a) of this section with respect to any return and such return is timely filed (determined after the application of subsection (a) of this section), interest shall be allowed on any overpayment commencing with the forty-sixth day after the due date for the return (determined after the application of subsection (a) of this section).

(c) The provisions of this section shall apply to the spouse of any individual entitled to the benefits of subsection (a) of this section. Except in the case of the combat zone designated for purposes of the Vietnam conflict, the preceding sentence shall not cause this section to apply to any spouse for any taxable year beginning more than 2 years after the date designated under § 112 of the Internal Revenue Code (26 U.S.C. § 112) as the date of termination of combatant activities in a combat zone.

(d) The period of service in the area referred to in subsection (a) of this section shall include the period during which an individual entitled to benefits under said subsection (a) of this section is in a missing status, within the meaning of § 6013(f)(3) of the Internal Revenue Code (26 U.S.C. § 6013(f)(3)).

(e)(1) Notwithstanding the provisions of subsection (a) of this section, any action or proceeding authorized by § 560, § 561 or § 1221 [repealed] of this title (regardless of the taxable period for which the tax arose), as well as any other action or proceeding authorized by law in connection therewith, may be taken, begun or prosecuted. In any other case in which the Director determines that collection of the amount of any assessment would be jeopardized by delay, the provisions of subsection (a) of this section shall not operate to stay collection of such amount as authorized by law. There shall be excluded from any amount assessed or collected pursuant to this paragraph the amount of interest, penalty, additional amount and addition to the tax, if any, in respect of the period disregarded under subsection (a) of this section. In any case to which this paragraph relates, if the Director is required to give any notice to or make any demand upon any person, such requirement shall be deemed to be satisfied if the notice or demand is prepared and signed, in any case in which the address of such person last known to the Director is in any area for which United States post offices under instructions of the Postmaster General of the United States are not, by reason of combatant activities, accepting mail for delivery at the time the notice or demand is signed. In such case the notice or demand shall be deemed to have been given or made upon the date it is signed.

(2) The assessment or collection of any tax or of any liability to this State in respect of any tax, or any action or proceeding by or on behalf of this State in connection therewith, may be made, taken, begun or prosecuted in accordance with law, without regard to the provisions of subsection (a) of this section, unless prior to such assessment, collection, action or proceeding it is ascertained that the person concerned is entitled to the benefits of subsection (a) of this section.

(f)(1) Any individual who performed Desert Shield services (and the spouse of such individual) shall be entitled to the benefits of this section in the same manner as if such services were referred to in subsection (a) of this section.

(2) For purposes of this subsection, the term "Desert Shield services" means any services in the armed forces of the United States or in support of such armed forces if:

a. Such services are performed in the area designated by the President pursuant to this subparagraph as the "Persian Gulf Desert Shield Area"; and

b. Such services are performed during the period beginning on August 2, 1990, and ending on the date on which any portion of the area referred to in subparagraph a is designated by the President as a combat zone pursuant to § 112 of the Internal Revenue Code (26 U.S.C. § 112).

(g) For purposes of subsection (a) of this section, the term "qualified hospitalization" means:

(1) Any hospitalization outside the United States; and

(2) Any hospitalization inside the United States, except that not more than 5 years of hospitalization may be taken into account under this paragraph.

Paragraph (2) of this subsection shall not apply for purposes of applying this section with respect to the spouse of any individual entitled to the benefits of subsection (a) of this section.

68 Del. Laws, c. 187, § 1; 71 Del. Laws, c. 353, § 13; 71 Del. Laws, c. 385, § 6.;

(a) The amount of tax which is shown to be due on any return (including any additional amount subject to notice under § 528(a) of this title as a result of a mathematical or clerical error) shall be deemed to be assessed on the date of filing such return, and an increase in such tax which is shown on an amended return shall be deemed to be assessed on the date of filing such amended return. In the case of a return filed without the computation of the tax, the tax computed by the Director shall be deemed to be assessed on the date when payment of such tax is due. If a notice of proposed assessment has been mailed pursuant to § 521(c) of this title, the amount of the proposed assessment shall be deemed to be assessed, if no protest under § 523 of this title is timely filed, on the date provided in § 522 of this title, or, if such a protest is timely filed, on the date when the determination of the Director becomes final pursuant to § 525 of this title; provided, however, that, if the taxpayer seeks review of the Director's determination pursuant to § 544 of this title, the amount of the proposed assessment shall not be deemed to be assessed until the expiration of 60 days (30 days in the case of withholding taxes, or, in the case of other taxes imposed by Chapter 11 of this title, 120 days if the taxpayer is outside the United States) from the first date when (i) the determination of the Tax Appeal Board under § 544 of this title becomes final and not subject to judicial review under § 331 of this title, or (ii) if the taxpayer appeals from the Tax Appeal Board determination pursuant to § 331 of this title, an order of the Superior Court of the State or the Supreme Court of the State entered upon the decision on such appeal becomes final and not subject to appeal. If an amended return or report filed pursuant to § 514 of this title concedes the accuracy of a federal change or correction, any deficiency in tax under this title resulting therefrom shall be deemed to be assessed on the date of filing such amended return or report, and such assessment shall be deemed timely notwithstanding any other provisions of this chapter. Any amount paid as a tax, or in respect of a tax, other than amounts withheld at the source or paid as estimated income tax, shall be deemed to be assessed upon the date of the Director's receipt of payment, notwithstanding any other provision of this title.

(b) If the mode or time for the assessment of any tax under this title or Title 4, including interest, penalties, additional amounts and additions to the tax, is not otherwise provided for, the Director may establish the same by regulations.

(c) The Director may, at any time within the period prescribed for assessment, make a supplemental assessment, subject to the provisions of § 521 of this title where applicable, whenever it is found that any assessment is imperfect or incomplete in any material respect.

68 Del. Laws, c. 187, § 1.;

(a) Except as otherwise provided in this section, a notice of proposed assessment under § 521(c) of this title shall be mailed to the taxpayer within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed). No deficiency shall be assessed or collected with respect to the taxable period for which a return was filed unless such notice is mailed within such 3-year period, or within the period otherwise prescribed in this section.

(b) In the case of a deficiency in any license fee or tax under Part III of this title, a notice of proposed assessment under § 521(c) of this title shall be mailed to the taxpayer within 3 years after the expiration date of the license to which the proposed assessment relates.

(c) If no return is filed, or if a false and fraudulent return is filed with intent to evade any tax imposed by this title or Title 4, a notice of proposed assessment under § 521(c) of this title may be mailed to the taxpayer at any time.

(d) If the taxpayer fails to comply with the requirement of § 514 of this title by not reporting a change or correction to the federal income or estate tax return, or by not filing an amended return under this title, a notice of proposed assessment under § 521(c) of this title may be mailed to the taxpayer at any time.

(e) If the taxpayer shall, pursuant to § 514 of this title, report a change or correction or file an amended federal income or estate tax return increasing the federal tax liability, a notice of proposed assessment under § 521(c) of this title with respect to such change or correction (if not otherwise deemed to have been assessed under § 530(a) of this title upon the filing of such report or amended return) may be mailed to the taxpayer at any time within 2 years after such report or amended return was filed.

(f) Where, before the expiration of the time prescribed in this section for the mailing of a notice of proposed assessment under § 521(c) of this title, both the Director and the taxpayer shall have consented in writing to such assessment after such time, the proposed assessment may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. An agreement between the taxpayer and the Internal Revenue Service providing for the extension of the period for assessment of federal income taxes shall constitute an agreement with the Director to extend the period for assessment of income taxes under this title. A copy of any such agreement between the taxpayer and the Internal Revenue Service shall be filed by the taxpayer with the Director within 30 days after its execution.

(g) For purposes of this section, a return filed before the last day prescribed by law or by regulation promulgated pursuant to law for the filing thereof shall be considered as filed on such last day.

(h) The running of the period of limitations provided for in this section on the making of assessments shall, in a case under Title 11 of the United States Code, be suspended for the period during which the Director is prohibited by reason of such case from making the assessment plus 60 days thereafter.

(i) If a taxpayer omits from a return any amount of income, gross gifts or gross estate properly includible therein which exceeds 25% of the amount stated on the return, the tax may be assessed at any time within 6 years after the return was filed. If a taxpayer omits from a return any amount of license fee or tax under Part III of this title includible therein which exceeds 25% of the amount stated on the return, the tax may be assessed at any time within 6 years after the expiration date of the license to which the proposed assessment relates.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 144, § 1; 71 Del. Laws, c. 385, §§ 7, 8; 72 Del. Laws, c. 112, § 3; 81 Del. Laws, c. 19, § 1.;

(a) An erroneous refund shall be considered an underpayment of tax on the date such refund was made, and a notice of proposed assessment under § 521(c) of this title with respect to such refund may be mailed to the taxpayer at any time within the later of:

(1) Two years from the making of such refund; or

(2) The limitation period provided by § 531 of this title.

(b) As to any part of an erroneous refund that was induced by fraud or by the intentional misrepresentation of a material fact, a notice of proposed assessment under § 521(c) of this title with respect to such refund may be mailed to the taxpayer at any time.

68 Del. Laws, c. 187, § 1.;

(a) If any amount of tax, including tax required to be withheld by an employer, and including penalties, additional amounts and additions to the tax, imposed by this title or Title 4 is not paid on or before the last date prescribed for payment, interest on such amount at the rate of 0.5% per month, or fraction thereof, shall be payable for the period from such last date to the date such amount is paid, and from and after the date the assessment of such interest becomes final under § 522 or § 530 of this title to the date such amount is paid, such interest shall compound monthly. No interest shall be imposed if the amount due is less than $1.00, nor shall this section apply to any failure to pay estimated income tax under § 1170 or § 1904 of this title.

(b) For purposes of this section, the last date prescribed for payment of any tax shall be determined without regard to any extension of time.

(c) Interest prescribed under this section on any tax, including tax required to be withheld by an employer, and including penalties, additional amounts and additions to the tax, shall be assessed, collected and paid in the same manner as taxes. After an initial assessment of interest upon any amount of tax, penalty, additional amount or addition to the tax, interest shall continue to accrue on the unpaid balance of such amount until such amount has been paid in full, except as otherwise provided in subsection (e) of this section, and no further assessment of such interest shall be made.

(d) Interest shall be imposed under this section in respect of any penalty, additional amount or addition to the tax from the date of the notice of proposed assessment under § 521(c) of this title of such penalty, additional amount or addition to the tax to the date of payment thereof.

(e) If a proposed assessment is made with respect to any amount, and if such amount is paid within 10 days after the date of the notice of proposed assessment thereof under § 521(c) of this title, interest under this section on the amount so paid shall not be imposed for the period after the date of such notice.

(f) If any portion of a tax is satisfied by credit of an overpayment, then no interest shall be imposed under this section on the portion of the tax so satisfied for any period during which, if the credit had not been made, interest would have been allowable with respect to such overpayment.

(g) Any portion of any tax imposed, or any interest, penalty, additional amount or addition to the tax, which has been erroneously refunded and which is recoverable by the Director, shall bear interest at the rate of 0.5% per month, or fraction thereof, from the date of payment of such refund to the date of its recovery by the Director, and from and after the date the assessment of such interest becomes final under § 522 or § 530 of this title to the date of such recovery, such interest shall compound monthly.

(h) Interest prescribed under this section on any tax may be assessed and collected at any time during the period within which the tax, penalty, additional amount or addition to the tax to which such interest relates may be collected.

(i) If the Secretary of the Treasury of the United States extends the time for filing income tax returns under § 6081 of the Internal Revenue Code (26 U.S.C. § 6081) and the time for paying income tax with respect to such returns under § 6161 of the Internal Revenue Code (26 U.S.C. § 6161) for any taxpayer located in a Presidentially-declared disaster area, the Director shall abate for such period the assessment of any interest prescribed under this section and penalties for failure to file a return under § 534(a) of this title or to pay the tax under § 534(b) of this title on such taxpayer's income and business license tax. For purposes of this subsection, the term "Presidentially-declared disaster area" means, with respect to any taxpayer, any area which the President of the United States has determined warrants assistance by the Federal Government under the Disaster Relief and Emergency Assistance Act.

68 Del. Laws, c. 187, § 1; 72 Del. Laws, c. 112, § 2; 75 Del. Laws, c. 411, §§ 1, 2.;

(a) In case of failure to file any return required under authority of this title or Title 4 on or before the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to wilful neglect, there shall be added to the amount required to be shown as tax on such return 5% of the amount of such tax if the failure is for not more than 1 month, with an additional 5% for each additional month or fraction thereof during which such failure continues, not exceeding 50% in the aggregate. For purposes of this subsection, the amount of tax required to be shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the date prescribed for payment of the tax and by the amount of any credit against the tax which may be claimed on the return.

(b)(1) In case of failure to pay the amount shown as tax on any return specified in subsection (a) of this section on or before the date prescribed for payment of such tax (determined with regard to any extension of time for payment), unless it is shown that such failure is due to reasonable cause and not due to wilful neglect, there shall be added to the amount shown as tax on such return 1% of the amount of such tax if the failure is for not more than 1 month, with an additional 1% for each additional month or fraction thereof during which such failure continues, not exceeding 25% in the aggregate. For purposes of computing such addition for any month, the amount of tax shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the beginning of such month and by the amount of any credit against the tax which may be claimed on the return. If the amount required to be shown as tax on the return is less than the amount shown as tax on the return, this paragraph shall be applied by substituting such lower amount.

(2) In the case of failure to pay any amount in respect of any tax required to be shown on a return specified in subsection (a) of this section which is not so shown (including an assessment made pursuant to § 528(a) of this title) within 10 days after any assessment thereof becoming final, unless it is shown that such failure is due to reasonable cause and not due to wilful neglect, there shall be added to the amount of tax stated in the notice of proposed assessment 1% of the amount of such tax if the failure is for not more than 1 month, with an additional 1% for each additional month or fraction thereof during which such failure continues, not exceeding 25% in the aggregate. For purposes of computing such addition for any month, the amount of tax stated in the notice of proposed assessment shall be reduced by the amount of any part of the tax which is paid before the beginning of such month.

(c)(1) For tax periods beginning after December 31, 1999, if any pass-through entity required to file a return under § 1605(a)(1) of this title for any taxable year fails to file such return by the date prescribed therefor (determined with regard to any extension of time for filing) or files a return which fails to show the information required under § 1605(a)(1) of this title, such pass-through entity shall be liable for a penalty determined under paragraph (c)(2) of this section for each month, or fraction thereof, during which such failure continues (but not to exceed 5 months), unless it is shown that such failure was due to reasonable cause.

(2) For purposes of paragraph (c)(1) of this section, the amount of penalty for any month is the product of $25, multiplied by the number of persons who were members in the pass-through entity during any part of the taxable year; provided, however, that the maximum penalty for any taxable year shall not exceed $10,000.

(3) The penalty prescribed by this subsection shall be assessed against and shall be payable by the pass-through entity, and the deficiency and appeal procedures provided in §§ 521-526 of this title shall not apply; provided, however, that the Director shall mail written notice of such penalty to the pass-through entity, which may, within 60 days from the date of the mailing of such notice, institute a protest of such penalty to the Director, whose determination shall be final.

(d)(1) For tax periods beginning after December 31, 1999, if any pass-through entity fails to comply with the provisions of § 1605(a)(2) of this title, such pass-through entity shall be liable for a penalty determined under paragraph (d)(2) of this section for each month, or fraction thereof, during which such failure continues (but not to exceed 5 months), unless it is shown that such failure was due to reasonable cause.

(2) For purposes of paragraph (d)(1) of this section, the amount of penalty for any month is $25, multiplied by the number of persons who were members of the pass-through entity at any time during the tax year, provided, however, that the maximum penalty for any taxable year shall not exceed $10,000.

(3) The penalty prescribed by this subsection shall be assessed against and shall be payable by the pass-through entity and the deficiency and appeal procedures provided in §§ 521-526 of this title shall not apply; provided, however, that the Director shall mail written notice of such penalty to the pass-through entity, which may, within 60 days from the date of the mailing of such notice, institute a protest of such penalty to the Director, whose determination shall be final.

(e) This section shall not apply to any failure to file a declaration of estimated tax or to pay any estimated tax.

(f)(1) In case of each failure to file a statement of payment to another person required under the authority of this title, including the duplicate statement of tax withheld on wages, by the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to wilful neglect, there shall be paid by the person so failing to file such statement, in the same manner as tax, a penalty of $2.00 for each such failure, but the total amount imposed on the delinquent person for all such failures during any calendar year shall not exceed $2,000.

(2) Any person required to file an information return pursuant to § 1154(h) of this title who fails to file such return on or before the date prescribed for its filing or who fails to include all the information required to be shown on the return or who includes incorrect information on the return or who fails to file in the required manner, shall unless it is shown that such failure is due to reasonable cause and not due to wilful neglect, pay a penalty in an amount equal to one half the amount specified in the Internal Revenue Code, as it may be amended from time to time, for such failure.

(g) The Director shall assess a penalty of $500 against any individual who files what purports to be a return of any tax imposed by this title or Title 4 but which:

(1) Does not contain information on which the substantial correctness of the self-assessment may be judged or contains information that on its face indicates that the self-assessment is substantially incorrect; and

(2) Evidences a position that is frivolous or a desire to delay or impede the administration of the revenue laws of this State.

(h) In the case of failure of an employer required to deposit taxes by electronic funds transfer under the provisions of § 1154(f) of this title to make transfer by such means, unless it is shown that such failure is due to reasonable cause and not due to wilful neglect, there shall be added to the amount shown as tax required to have been electronically transferred 5% of the amount or $500 per required payment, whichever is less.

(i) For tax periods beginning after December 31, 1994, with respect to any return, the amount of the addition to the tax under subsection (a) of this section shall be reduced by the amount of the addition to the tax under subsection (b) of this section for any month (or fraction thereof) to which an addition to the tax is applied under both subsections (a) and (b) of this section.

(j) If any failure to file any return is fraudulent, subsection (a) of this section shall be applied by substituting "15" for "5%" each place it appears and by substituting "75%" for "50%."

(k) For purposes of subsection (a) of this section, reasonable cause shall be deemed established in the case of failure to file a return in the time prescribed by Part III of this title, where the taxpayer filed within the time prescribed in a written notification by the Director that the taxpayer is eligible to file returns on a basis less frequent than is actually the case.

(l ) In the case of failure of any person to obtain or renew a business license required under the provisions of Part III of this title, unless it is shown that such failure is due to reasonable cause and not due to wilful neglect, there shall be added to the amount of the business license fee required to be paid a penalty in the amount of $200. Whenever a penalty has been proposed for assessment under this subsection, the Director shall not be required to issue a business license to the taxpayer to whom such assessment has been proposed unless and until the taxpayer has paid any license fee necessary for issuance of such license and has either:

(1) Paid the assessment provided under this subsection (subject to any claim for refund); or

(2) Filed a written protest regarding such assessment of penalty pursuant to § 523 of this title.

The penalty described in this subsection shall not be assessed in the instance of self-disclosure by a taxpayer of delinquency in meeting the licensing requirements of Part III. The penalty described in this subsection shall, only with respect to the same failure to obtain or renew a license and not with respect to failure to pay taxes on gross receipts or any other acts or omissions, be in lieu of the penalty described in subsection (a) of this section, except where such penalty determined under subsection (a) of this section shall exceed the penalty determined under this subsection, in which event subsection (a) of this section shall apply, and this subsection shall not apply.

(m) Any person who fails to file any return in the manner prescribed by law and required under authority of this title or Title 4 on or before the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to wilful neglect, shall be liable for a penalty of not more than $50, in addition to any other amounts prescribed under this title that shall be assessed and collected by the Director.

68 Del. Laws, c. 187, § 1; 69 Del. Laws, c. 289, § 13; 70 Del. Laws, c. 117, § 3; 71 Del. Laws, c. 314, § 7; 72 Del. Laws, c. 220, § 1; 73 Del. Laws, c. 131, § 3; 75 Del. Laws, c. 411, § 3; 77 Del. Laws, c. 79, §§ 2, 3; 79 Del. Laws, c. 120, §§ 1, 2; 79 Del. Laws, c. 142, §§ 2-4; 81 Del. Laws, c. 103, § 4.;

(a) If any part of any underpayment of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 75% of the portion of the underpayment which is attributable to fraud. If the Director establishes that any portion of an underpayment is attributable to fraud, the entire underpayment shall be treated as attributable to fraud, except with respect to any portion of the underpayment which the taxpayer establishes (by a preponderance of the evidence) is not attributable to fraud. In the case of a joint return, this section shall not apply with respect to a spouse unless some part of the underpayment is due to the fraud of such spouse. For purposes of this subsection, "underpayment" shall have the meaning ascribed to such term in § 6664(a) of the Internal Revenue Code (26 U.S.C. § 6664(a)), or successor provisions. The penalty prescribed by this subsection shall apply only in cases where a return of tax is filed.

(b) If an individual subject to tax under Chapter 11 of this title fails to file a declaration of estimated tax, or fails to pay all or any part of an installment of tax imposed under Chapter 11 of this title, such individual shall be deemed to have made an underpayment of estimated tax, and there shall be added to the tax an amount equal to 1 1/2% per month, or fraction thereof, of the amount of such underpayment for the period of the underpayment. The Director shall determine the amount of an underpayment of estimated tax by an individual in a manner consistent with the internal revenue laws of the United States.

(c)(1) In the case of any underpayment of tentative tax or installment of estimated tax required by Chapter 19 of this title, there shall be added to the tax for the taxable year an amount equal to 1 1/2% per month, or fraction thereof, of the amount of such underpayment for the period of the underpayment.

(2) For purposes of paragraph (1) of this subsection, the amount of the underpayment shall be the excess of:

a. The amount of the tentative tax or installment payment which would be required to be made if the estimated tax were equal to 80% of the tax shown on the final return for the taxable year, or, if no such return was filed, 80% of the tax for such taxable year, over

b. The amount, if any, of the tentative tax or the installment paid on or before the last date prescribed for payment.

(3) For purposes of paragraph (c)(1) of this section, the period of the underpayment shall run from the date the tentative tax or installment was required to be paid to the first day of the fourth month following the close of the taxable year, or to the date on which paid, whichever is earlier.

(4) Notwithstanding the foregoing provisions of this subsection, no addition to tax shall be imposed under this subsection if the total amount of all payments of estimated tax made on or before the last date prescribed for the payment thereof equals or exceeds the amount which would have been required to be paid on or before such date if the estimated tax were the tax shown on the final return of the taxpayer for the preceding taxable year.

(5) Paragraph (c)(4) of this section shall apply only in the case of a small corporation. For purposes of this paragraph, the term "small corporation" shall have the meaning set forth in § 1905(5) of this title.

(d) If any employer fails to pay the amount shown as tax on any withholding return filed pursuant to § 1154 of this title, there shall be added to the tax an amount equal to 1% of the tax required to be shown on such return for each month, or fraction thereof, during which such failure continues, not exceeding 25% in the aggregate. Such employer shall be liable for the payment of such additions to tax, and it shall not be collected from the employee.

(e) For tax periods beginning after December 31, 1999, any person required under this title to collect, account for and pay over any tax imposed by this title, other than § 3002 and Chapters 51 and 52 of this title, who wilfully fails to collect or truthfully account for and pay over such tax, or wilfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable for a penalty equal to the total amount of the tax evaded, or not collected or not accounted for and paid over. No addition to tax under subsection (a) of this section shall be imposed for any action or failure to act to which this subsection applies. The term "person" as used in this subsection, includes an officer or employee of a corporation, or a member, officer or employee of a pass-through entity, as defined in § 1601 of this title, who, as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs.

(f) In addition to any criminal penalty provided by law, any person who wilfully fails to pay, or to deduct or withhold and pay, any tax imposed under authority of this title or Title 4, or to make tender, sign or certify any return or declaration of estimated tax, or to supply any information within the time required by or under this title or Title 4, shall be liable for a penalty of not more than $3,000, in addition to any other amounts prescribed under this title, that shall be assessed and collected by the Director.

(g)(1) In addition to any criminal penalty provided by law, the Director shall assess a penalty of $500 whenever:

a. Any individual makes a false statement under § 1151 of this title which results in a decrease in the amounts deducted and withheld under subchapter VII of Chapter 11 of this title; and

b. As of the time such statement was made, there was no reasonable basis for such statement.

(2) The Director may waive in whole or in part the penalty imposed under paragraph (g)(1) of this section if the taxes imposed with respect to the individual under subchapter VII of Chapter 11 of this title for the taxable year are equal to or less than the sum of:

a. The credits against such taxes allowed by said subchapter; and

b. The payments of estimated tax on account of such taxes.

(h) Penalties prescribed under the provisions of this chapter shall be additions to tax and shall be assessed, collected and paid in the same manner as taxes.

(i) For purposes of subsection (a) of this section (relating to underpayments due to fraud), the amount shown as the tax by the taxpayer upon the return shall be taken into account in determining the amount of the underpayment only if such return was filed on or before the due date of such return, determined with regard to any extension of time for such filing.

(j) If any check or money order in payment of any amount receivable under this title or Title 4 is not duly paid, in addition to any other penalties provided by law, there shall be paid as a penalty by the person who tendered such check or money order an amount equal to 2% of the amount of such check or money order, except that if the amount of such check or money order is less than $750, the penalty under this subsection shall be $15 or the amount of such check or money order, whichever is the lesser. This subsection shall not apply if the person tendered such check or money order in good faith and with reasonable cause to believe it would be duly paid. For purposes of this subsection, any other method of payment, including but not limited to payment by electronic funds transfer, payment by means of the automated clearing house, or payment by credit card, debit card or charge card shall be considered a payment by check or money order.

(k)(1) If:

a. Any part of any understatement of liability with respect to any return or claim for refund is due to a position for which there was not a realistic possibility of being sustained on its merits;

b. Any person who is an income tax return preparer with respect to such return or claim knew (or reasonably should have known) of such position; and

c. The relevant facts affecting the tax treatment of the item affected by such position were not adequately disclosed in such return or claim or in a statement attached to such return or claim (or in a federal return or a statement attached thereto, a copy of which was filed with such return or claim) or indicate such position was frivolous;

such person shall pay a penalty of $250 with respect to such return or claim unless it is shown that there is reasonable cause for the understatement and such person acted in good faith.

(2) If any part of any understatement of liability with respect to any return or claim for refund is due:

a. To a wilful attempt in any manner to understate the liability for tax by a person who is an income tax return preparer with respect to such return or claim; or

b. To any reckless or intentional disregard of rules or regulations by any such person;

such person shall pay a penalty of $1,000 with respect to such return or claim. With respect to any return or claim, the amount of the penalty payable by any person by reason of this paragraph shall be reduced by the amount of any penalty paid by such person by reason of paragraph (k)(1) of this section.

(3)a. If at any time there is a final administrative determination or a final judicial decision that there was no understatement of liability in the case of any return or claim for refund with respect to which a penalty under paragraph (k)(1) or (2) of this section has been assessed, such assessment shall be abated, and if any portion of such penalty has been paid the amount so paid shall be refunded to the person who made such payment as an overpayment of tax without regard to any period of limitations which, but for this subparagraph, would apply to the making of such refund.

b. For purposes of this subsection, the term "understatement of liability" means any understatement of the net amount payable with respect to the tax imposed under Chapter 11 or Chapter 19 of this title or any overpayment of the net amount creditable or refundable with respect to any such tax. Except as otherwise provided in paragraph (k)(3)a. of this section, the determination of whether or not there is an understatement of liability shall be made without regard to any administrative or judicial action involving the taxpayer.

(l ) Any person who:

(1) Aids or assists in, procures, or advises with respect to, the preparation or presentation of any portion of a return, affidavit, claim or other document;

(2) Knows or has reason to believe that such portion will be used in connection with any material matter arising under this title or Title 4; and

(3) Knows that such portion (if so used) would result in an understatement of the liability for tax of another person;

shall pay a penalty with respect to each such document in the amount determined in accordance with, and subject to the limitations contained in, § 6701 of the Internal Revenue Code (26 U.S.C. § 6701), or successor provisions. Except as provided in subsection (m) of this section, the penalty imposed by this subsection shall be in addition to any other penalty provided by law.

(m) No penalty shall be assessed under subsection (k) of this section on any person with respect to any document for which a penalty is assessed on such person under subsection (l) of this section.

(n) In addition to any other penalty provided by law, any person who is a paid tax preparer with respect to any return or claim for refund who fails to sign the return or claim for refund and to provide their preparer tax identification number as required by § 548 of this title, shall pay a civil penalty of $50 for each such failure, unless it can be shown that the failure was due to reasonable cause. The civil penalty imposed on any paid tax preparer with respect to returns or claims for refund filed during any calendar year shall not exceed $25,000. The Division of Revenue may use an amount equal to the total penalties collected under this section to regulate paid tax preparers, including, without limitation, commencing actions permitted under § 549 of this title.

68 Del. Laws, c. 187, § 1; 69 Del. Laws, c. 188, § 1; 70 Del. Laws, c. 142, § 10; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 131, § 4; 75 Del. Laws, c. 411, § 5; 79 Del. Laws, c. 142, § 5; 80 Del. Laws, c. 195, § 5; 81 Del. Laws, c. 386, § 2.;

(a) If this section applies to any portion of an underpayment of any tax imposed by this title or Title 4 required to be shown on a return, there shall be added to the tax an amount equal to 20% (40% in the case of gross valuation misstatements) of the portion of the underpayment to which this section applies.

(b) This section shall apply to the portion of any underpayment which is attributable to 1 or more of the following:

(1) Negligence or disregard of rules and regulations.

(2) Any substantial understatement of tax.

(3) Any substantial valuation misstatement with regard to any tax imposed by Chapter 11 or Chapter 19 of this title.

(4) Any substantial estate or gift tax valuation understatement with respect to any tax imposed by Chapter 15 of this title.

(c) For purposes of subsection (b) of this section, the following terms shall have the meanings ascribed to such terms in § 6662 of the Internal Revenue Code (26 U.S.C. § 6662), or successor provisions, except that "$1,500" shall be substituted for "$5,000" and "$3,000" shall be substituted for "$10,000" each place such dollar amounts appear in the said § 6662:

(1) "Negligence";

(2) "Disregard";

(3) "Substantial understatement of income tax";

(4) "Substantial valuation misstatement";

(5) "Substantial estate or gift tax valuation understatement"; and

(6) "Gross valuation misstatement."

(d) For purposes of determining under subsection (b) of this section whether a portion of any underpayment is attributable to 1 or more of the items specified in paragraphs (b)(1)-(4) of this section, the provisions of § 6662 of the Internal Revenue Code (26 U.S.C. § 6662), or successor provisions, shall be applied in the same manner as if such provisions were applicable to the taxes imposed by this title or Title 4.

(e) For purposes of this section, "underpayment" shall have the meaning ascribed to such term in § 6664(a) of the Internal Revenue Code (26 U.S.C. § 6664(a)), or successor provisions. The penalty prescribed by this section shall apply only in cases where a return of tax is filed.

68 Del. Laws, c. 187, § 1; 71 Del. Laws, c. 353, § 15; 71 Del. Laws, c. 385, § 9.;

(a) In the case of any overpayment, the Director, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of any tax imposed by the tax laws of this State on the person who made the overpayment, and the balance shall be refunded by the Director to such person.

(b) If the amount allowable as a credit for tax withheld from the taxpayer exceeds the tax to which the credit relates, the excess shall be considered an overpayment by the taxpayer for purposes of subsection (a) of this section.

(c)(1) If more than the correct amount of tax required to be paid under the provisions of § 1154 of this title is paid with respect to any payment of remuneration, proper adjustments, with respect to both the tax and the amount to be deducted, shall be made, without interest, in such manner and at such times as the Director may by regulations prescribe.

(2) If more than the correct amount of tax required to be paid under the provisions of § 1154 of this title is paid or deducted with respect to any payment of remuneration and the overpayment cannot be adjusted under paragraph (c)(1) of this section, the amount of the overpayment shall be refunded to the employer, subject to the limitations of paragraph (c)(3) of this section, with interest calculated from the forty-sixth day following the date of the claim for the refund, and in such manner and at such times (subject to the statute of limitations properly applicable thereto) as the Director may by regulations prescribe.

(3) In the case of an overpayment of tax required to be deducted and withheld under § 1151 of this title, refund or credit shall be made to the employer only to the extent that the amount of such overpayment was not deducted and withheld by the employer.

(d) If any amount of tax is assessed or collected after the expiration of the period of limitations properly applicable thereto, such amount shall be considered an overpayment for purposes of subsection (a) of this section.

68 Del. Laws, c. 187, § 1; 69 Del. Laws, c. 188, § 2.;

(a) The Director is authorized to abate the unpaid portion of the assessment of any tax, interest, penalty, additional amount or addition to the tax, or any liability in respect thereof, which is:

(1) Excessive in amount;

(2) Assessed after the expiration of the period of limitations properly applicable thereto; or

(3) Erroneously or illegally assessed.

(b) The Director is authorized to abate any portion (whether or not theretofore paid) of the assessment of any tax, interest, penalty, additional amount or additions to the tax, or any liability in respect thereof, if the Director determines under uniform rules prescribed by the Director that the administration and collection costs involved would not warrant collection of the amount due.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

(a) Claim for credit or refund of an overpayment of any tax imposed by this title or Title 4 shall be filed by the taxpayer within 3 years from the last date prescribed for filing the return (or in the case of license fees or taxes under Part III of this title, 3 years from the expiration date of the license to which such overpayment relates) or within 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid. No credit or refund shall be allowed or made after the expiration of the period of limitation prescribed in the preceding sentence for the filing of a claim for credit or refund, unless a claim for credit or refund is filed with the Director by the taxpayer within such period.

(b)(1) If the claim for credit or refund was filed by the taxpayer during the 3-year period prescribed in subsection (a) of this section, the amount of the credit or refund shall not exceed the portion of the tax paid within the period immediately preceding the filing of the claim, equal to 3 years plus the period of any extension of time for filing the return.

(2) If the claim was not filed within such 3-year period, the amount of the credit or refund shall not exceed the portion of the tax paid during the 2 years immediately preceding the filing of the claim.

(3) If no claim was filed, the credit or refund shall not exceed the amount which would be allowable under either paragraph (b)(1) or (2) of this section, as the case may be, if claim was filed on the date the credit or refund is allowed.

(c) If an agreement under the provisions of § 531(f) of this title extending the period for assessment of a tax imposed by this title or Title 4 is made within the period prescribed in subsection (a) of this section for the filing of a claim for credit or refund:

(1) The period for filing claim for credit or refund or for making credit or refund if no claim is filed, provided in subsection (a) of this section, shall not expire prior to 6 months after the expiration of the period within which an assessment may be made pursuant to the agreement or any extension thereof under § 531(f) of this title; and

(2) If a claim is filed, or a credit or refund is allowed when no claim was filed, after the execution of the agreement and within 6 months after the expiration of the period within which an assessment may be made pursuant to the agreement or any extension thereof, the amount of the credit or refund shall not exceed the portion of the tax paid after the execution of the agreement and before the filing of the claim or the making of the credit or refund, as the case may be, plus the portion of the tax paid within the period which would be applicable under subsection (b) of this section if a claim had been filed on the date the agreement was executed.

(d) If the taxpayer is required by § 514 of this title to report a change or correction in federal income or estate liability reported on the federal tax return for any taxable period, or to file an amended tax return under this title with the Director, a claim for credit or refund of any resulting overpayment of tax under this title shall be filed by the taxpayer within 2 years from the time such report or amended return was required to be filed with the Director. If such a report or amended return required by § 514 of this title is not filed within the 90-day period specified in that section, interest on any resulting credit or refund shall not accrue for the period after such ninetieth day and prior to the forty-fifth day after the date of filing the claim for credit or refund. The amount of any such credit or refund shall not exceed the amount of the reduction in tax attributable to such federal change or correction or attributable to the items amended on the taxpayer's amended federal tax return. This subsection shall not affect the time within which a claim for credit or refund may be filed, or the amount for which a credit or refund may be made, without regard to this subsection.

(e) If the claim for credit or refund relates to an overpayment attributable to a net operating loss carry back or a capital loss carry back, in lieu of the 3-year period of limitation prescribed in subsection (a) of this section, the period shall be that period which ends 3 years after the time prescribed by law for filing the return (including extensions thereof) for the taxable year of the net operating loss or net capital loss which results in such carry back, or the period prescribed in subsection (c) of this section in respect of such taxable year, whichever expires later. In the case of such a claim, the amount of the credit or refund may exceed the portion of the tax paid within the period provided in subsection (b) or (c) of this section, whichever is applicable, to the extent of the amount of the overpayment attributable to such carry back.

(f) For purposes of this section, tax shall be deemed to have been paid on the date determined in accordance with § 540(c) of this title.

(g) In the case of an individual:

(1) The running of the periods specified in this section with respect to individuals shall be suspended during any period of such individual's life that such individual is financially disabled.

(2) For purposes of paragraph (g)(1) of this section, an individual is financially disabled if such individual is unable to manage that individual's own financial affairs by reason of a medically determinable physical or mental disability (excluding disability caused by voluntary use of alcohol or unlawful use of a controlled substance defined in Chapter 47 of Title 16) which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

(3) An individual shall not be treated as financially disabled during any period that such individual's spouse, guardian or any other person is authorized to act on behalf of such individual in financial matters.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 385, § 10; 72 Del. Laws, c. 112, § 1; 78 Del. Laws, c. 179, § 319.;

(a) General. — Subject to the limitations specified in subsection (b) of this section, interest shall be allowed and paid upon any overpayment in respect of any tax imposed by this title or Title 4 at the rate of 0.5% per month, or fraction thereof.

(b) Limitations.

(1) No interest shall be allowed or paid on any overpayment of less than $1.00.

(2) Interest shall be allowed and paid on any overpayment in respect of any tax from the forty-sixth day (ninety-first day in the case of the tax imposed under Chapter 19 of this title) after the date on which a claim for credit or refund (or an amended return claiming a credit or refund) is filed, to (i) in the case of a refund, the date of the refund, or (ii) in the case of a credit, the due date of the amount against which the credit is taken.

(3) [Repealed.]

(c) Early returns and advance payments. — For purposes of this section and § 539 of this title:

(1) Any return filed before its due date shall be considered as filed on such due date.

(2) Any tax paid by the taxpayer before its due date shall be considered as paid on such due date.

(3) For purposes of paragraphs (c)(1) and (2) of this section, the due date for filing a return or paying the tax shall be determined without regard to any extension of time granted the taxpayer.

(4) Any income tax actually deducted and withheld from the taxpayer, and any amount paid by the taxpayer as estimated or tentative income tax shall be deemed to have been paid by the taxpayer on the due date of the taxpayer's income tax return (determined without regard to any extension of time for filing) for the taxable year with respect to which such tax constitutes a credit or payment.

(d) Refund of income tax caused by carry back. — For purposes of subsection (a) of this section, if any overpayment of tax imposed by Chapter 11 or Chapter 19 of this title results from a carry back of a net operating loss or net capital loss, such overpayment shall be deemed not to have been made prior to the filing date for the taxable year in which such net operating loss or net capital loss arises.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1; 75 Del. Laws, c. 411, § 4; 77 Del. Laws, c. 79, §§ 4-6.;

A claim for credit or refund shall be filed with the Director in writing and shall state the specific grounds upon which it is founded. The Director may by regulations prescribe the information to be included in a claim. A claim may not be amended after the last date prescribed by § 539 of this title for filing a claim for credit or refund if the net effect of the amendment would be an increase in the amount of the overpayment.

68 Del. Laws, c. 187, § 1.;

If the Director disallows a claim for credit or refund, in whole or in part, the Director shall mail written notice of the disallowance to the taxpayer, and such notice shall set forth the reason for the disallowance. The action of the Director in disallowing all or any part of a claim for credit or refund shall become final upon the expiration of 60 days (30 days in the case of withholding taxes, or, in the case of other taxes imposed by Chapter 11 of this title, 120 days if the taxpayer is outside the United States) from the date on which the Director mailed the notice of disallowance to the taxpayer, unless within such period the taxpayer protests the Director's disallowance pursuant to the provisions of § 523 of this title.

68 Del. Laws, c. 187, § 1.;

If the Director fails to mail written notice of the Director's action on any claim for credit or refund, or on any protest under § 523 of this title of a disallowance of a claim for credit or refund, within 6 months after such claim or protest was filed, the taxpayer may thereafter, and prior to notice of action by the Director, consider such claim or protest to have been disallowed by the Director, and the taxpayer may, at any time prior to the expiration of 3 years from the date on which such claim or protest was filed, proceed pursuant to § 542 or § 544 of this title, as the case may be.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

A determination by the Director on a taxpayer's protest pursuant to § 523 of this title shall be subject to review by the taxpayer's filing a petition with the Tax Appeal Board, in such form as the Tax Appeal Board may prescribe, within the time limits specified in § 525 or § 543 of this title, as the case may be. The determination of the Tax Appeal Board shall be subject to judicial review as provided in § 331 of this title.

68 Del. Laws, c. 187, § 1.;

(a) General. — Upon receiving notice from any claimant agency that a taxpayer owes a debt to such agency, the Director shall:

(1) Reduce the amount of any overpayment of tax payable to the taxpayer, during a period not to exceed 12 months from the date of the receipt of said notice, by the amount of such debt or unpaid portion thereof;

(2) Notify the taxpayer that such overpayment has been reduced by the amount of such reduction;

(3) Pay the amount by which such overpayment is reduced under paragraph (a)(1) of this section to such agency in an order of priority as determined by the Director of Revenue;

(4) Pay to the taxpayer the remainder of such overpayment, if any; and

(5) Notify the Director of the Lottery to pay to the Director of Revenue any prize payable where prizes exceed a threshold established by the Director of the Lottery to a taxpayer who is also a lottery winner, and the Director of the Lottery shall:

a. Reduce the prize payable to the winner by the amount of such debt or unpaid portion thereof;

b. Notify the winner that such prize has been reduced by the amount of such reduction;

c. Pay the amount by which such prize is reduced under paragraph (a)(5)a. of this section to the claimant agency; and

d. Pay to the winner the remainder of such prize, if any.

(b) Definitions. — For purposes of this section:

(1) "Claimant agency" means:

a. Any department or agency of the State, including the University of Delaware, Delaware State University and Delaware Technical and Community College, with respect to any debt owed to it and any political subdivision or school district of this State, with respect to property taxes owed to it; and

b. Any court, office of the court clerk, prothonotary, or Register in Chancery of this State with respect to fines, court costs, assessments and/or restitution.

(2) "Debt" means any liquidated sum which is past due, is legally enforceable and has accrued through contract, subrogation, tort, court assessment or operation of law, whether or not there is an outstanding judgment of such sum, plus, if so agreed between the Director and the claimant agency, the amount of the reimbursement provided in subparagraph (c)(1)e. of this section.

(3) "Lottery winner" means any person who is entitled to a payment on account of winning a prize in a lottery conducted pursuant to the provisions of Chapter 48 of Title 29.

(4) "Taxpayer" means any person or entity identified by a claimant agency for action by the Director of Revenue under this section.

(c) Regulations.

(1) The Director shall promulgate regulations providing for:

a. Procedures and methods to be employed by a claimant agency with respect to the operation of this section;

b. Due notice to the taxpayer (and, in the case of an overpayment of the tax imposed by Chapter 11 of this title, any spouse with whom the taxpayer files a joint return) of the reduction in the overpayment and of the opportunity, upon request, for a hearing before the claimant agency prior to such reduction;

c. Safeguards against the disclosure or inappropriate use of any personally identifiable information regarding the taxpayer obtained or maintained pursuant to this chapter;

d. A minimum debt, amounts below which, in light of administrative expenses and efficiency, shall, in the Director's discretion, not be subject to the collection procedures set forth in this section; and

e. Reimbursement by the claimant agency to the Director of (or reduction in the amount payable to the claimant agency by the Director under subsection (a) of this section by an amount equal to) all costs, direct and indirect, determined on a statistical or actual basis, of effectuating the collection procedures set forth in this section.

(2) Regulations promulgated under the authority of this subsection shall have the force and effect of law.

(d) Remedy not exclusive. — The collection procedures prescribed by this section are in addition to, and not in substitution for, any other remedy available by law.

(e) Joint and combined income tax returns.

(1) If a refund from which the reduction described in paragraph (a)(1) of this section would be made is based upon a joint return of the tax imposed by Chapter 11 of this title, the Director shall:

a. Notify each taxpayer filing such return that the reduction is being made from a refund based upon such return;

b. Include in such notification a description of the right of the nondebtor taxpayer to file a written protest with the Director, within 30 days of the date of mailing such notification, for the purpose of showing the nondebtor taxpayer's proper share of such refund; and

c. If such a showing is made, promptly remit to the nondebtor taxpayer the nondebtor taxpayer's proper share of such refund, and apply the balance of such refund in the manner prescribed in subsection (a) of this section.

(2) In the event the debtor shall be due a refund in combination with a nondebtor by virtue of having filed separately but combined on 1 return of the tax imposed by Chapter 11 of this title, the Director shall regard each spouse as entitled to separate refunds based upon the taxes due and prior payments of each spouse individually. In such a case, the reduction described in paragraph (a)(1) of this section shall not be applicable to such separate refund due to the nondebtor spouse, but such reduction shall be applicable to such separate refund due to the debtor spouse.

(f) Review of reductions. — No court of this State shall have jurisdiction to hear any action, whether legal or equitable, brought to restrain or review a reduction authorized by subsection (a) of this section. Except as otherwise provided in subsection (e) of this section, no such reduction shall be subject to review by the Director in any administrative proceeding. No action brought against this State to recover the amount of any such reduction shall be considered to be a suit for a refund of tax. This subsection shall not be deemed to preclude:

(1) A prior hearing, upon request of the taxpayer, before the claimant agency as set forth in paragraph (c)(1)b. of this section; or

(2) Any legal, equitable or administrative action against the claimant agency after payment to it of such reduction.

(g) Director of Lottery. — When the Director of Revenue shall notify the Director of Lottery pursuant to the provisions of subsection (a) of a debt owed by a taxpayer, and said taxpayer is also a lottery winner, the Director of Lottery shall pay over to the Director of Revenue any prize then payable or becoming payable to said taxpayer, until such time as the Director of Revenue notifies the Director of Lottery that the debt of said taxpayer has been discharged. The Director of Lottery shall maintain a current log of the names and other identification provided by the Director of Revenue of persons owing a debt to a claimant agency.

(h) In addition to the authority set forth in other subsections of this section, the Director may, in the Director's discretion, enter into an agreement with claimant agencies under which the Director shall be authorized to use the Division's agents and employees to collect debts owed to the claimant agency under the same laws, regulations and provisions applicable to the claimant agency and in the same manner as the claimant agency less the amount of reimbursement for the Division of Revenue's cost as may be agreed between the Director and the claimant agency.

68 Del. Laws, c. 187, § 1; 68 Del. Laws, c. 342, § 1; 69 Del. Laws, c. 402, §§ 1-4; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 425, § 115; 71 Del. Laws, c. 330, § 1; 80 Del. Laws, c. 208, § 1.;

(a) Voluntary Tax Compliance Initiative. — For the purpose of encouraging the voluntary disclosure and payment of taxes owed to this State, the Division of Revenue is hereby authorized and directed to establish a Voluntary Tax Compliance Initiative (the "Initiative") for eligible taxes, as provided in this section.

(b) Waiver of penalty and interest; limitation. — If, during the term of the Initiative, a taxpayer

(1) Files a voluntary tax return or returns and pays the eligible taxes reported due, or enters an installment arrangement acceptable to the Director for payment of the eligible taxes reported due, or

(2) Pays eligible taxes the assessment of which is final before the date of commencement of the Initiative, then:

a. The Director shall waive penalty, interest and other collection fees that may otherwise be assessed on such eligible taxes, and

b. The Director shall not assess any tax, interest or penalty for any voluntary tax return reporting eligible taxes under the Initiative for tax periods before January 1, 2004.

(c) Limitation on Initiative. — The Initiative shall be limited to taxpayers who, between September 1, 2009, and October 30, 2009:

(1) File voluntary tax returns and

a. Pay eligible taxes reported on those returns or

b. Enter into payment plans to pay eligible taxes reported on those returns before June 30, 2010, or

(2) Pay eligible taxes the assessment of which is final before September 1, 2009, or enter into payment plans to pay such eligible taxes before June 30, 2010.

(d) Definitions. — As used in this section,

(1) "Eligible taxes" shall include the following taxes (and additions to tax) that were due for any tax period ending before January 1, 2009, and unpaid as of September 1, 2009:

a. Personal income tax levied pursuant to Chapter 11 of this title;

b. Gift tax levied pursuant to Chapter 14 of this title [repealed];

c. Estate tax levied pursuant to Chapter 15 of this title;

d. Income tax on estates and trusts levied pursuant to Chapter 16 of this title;

e. Corporation income tax levied pursuant to Chapter 19 of this title;

f. Occupational license fees and tax levied pursuant to Chapter 23 of this title;

g. Contractors' license fees and tax levied pursuant to Chapter 25 of this title;

h. Manufacturers' license fees and tax levied pursuant to Chapter 27 of this title;

i. Retail and wholesale merchants' license fees and tax levied pursuant to Chapter 29 of this title;

j. Use tax and gross receipts tax on leases of tangible personal property levied pursuant to Chapter 43 of this title;

k. Tobacco product license fees and tax levied pursuant to Chapter 53 of this title;

l. Realty transfer tax levied pursuant to Chapter 54 of this title;

m. Public utilities tax levied pursuant to Chapter 55 of this title; and

n. Lodging tax levied pursuant to Chapter 61 of this title.

o. The above-listed taxes due from partners, shareholders or members of pass-through-entities filing a voluntary tax return.

(2) "Initiative" means the Voluntary Tax Compliance Initiative enacted by this section.

(3) "Pay", "paid", or "payment of the eligible taxes" shall include an installment payment arrangement for payment of eligible taxes acceptable to the Director of Revenue without default by the taxpayer.

(4) "Voluntary tax return" means a complete and accurate tax return that is required to have been filed pursuant to this title but where:

a. The taxpayer did not file a timely return for the same tax type and tax period; and

b. The Division of Revenue has not notified taxpayer that it cannot verify that the taxpayer filed a return for the same tax type and tax period.

A voluntary tax return filed pursuant to the Initiative shall constitute an admission by the taxpayer that it was not filed on or before its due date and that there exists no reasonable cause therefore.

(e) Taxpayer default. — If any eligible tax, or any part thereof, is not paid during the term of the Initiative or if any installment arrangement for payment of eligible taxes acceptable to the Director of Revenue is not executed during the term of the Initiative and paid on or before June 30, 2010, penalty and interest equal to the amount of delinquent penalty and interest imposed by the applicable sections of this title for nonpayment of the tax shall be added thereto and deemed payable without protest.

(f) The Division of Revenue is authorized, notwithstanding the provisions of any other Delaware statute, to

(1) Expend for the purpose of funding the agreements described in the next paragraph, the necessary available funds from the special fund established under the Finance section of the Epilogue of 77 Del. Laws, c. 84, §§ 141 and 142, which constitutes the Fiscal Year 2010 Operating Budget, for purposes of contracting and/or employing personnel for the collection of delinquent state taxes and other debts that the Division of Revenue has undertaken to collect; and

(2) Enter into agreements with third parties to publicly advertise, assist in the collection of eligible taxes, and administer the Voluntary Tax Compliance Initiative under which contingency and other fees may be payable to such third parties.

(g) Ten percent of the funds collected, after expenditures attributable to subsection (f) of this section, shall be transferred into the fund defined in paragraph (f)(1) of this section to provide for personnel costs for the audit of businesses or persons taxable under the supervision of the Division.

(h) Regulations.

(1) The General Assembly finds that there is a need to implement the Initiative on September 1, 2009, and recognizes that this timetable does not allow the Director to observe the normal rule-making procedures in the Administrative Procedures Act, 29 Del. C. §§ 10101 et seq. Accordingly, the General Assembly has determined to waive the rule-making procedures in the Administrative Procedures Act with respect to regulations governing the Initiative and to allow publication of regulations governing the Initiative in final form in the initial instance in the Register of Regulations.

(2) The Director is authorized:

a. To make all regulations consistent with the provisions of 77 Del. Laws, c. 79, that the Director deems necessary to implement the provisions of 77 Del. Laws, c. 79, without complying with the provisions of subchapter II of Chapter 101 of Title 29, but subject to § 10141 of Title 29 governing judicial review of such regulations and,

b. To publish in the Register of Regulations all regulations made in accordance with paragraph (h)(2)a. of this section as final official regulations without having first published such regulations in proposed form, notwithstanding the provisions of subchapter III of Chapter 11 of Title 29 or any rules or regulations promulgated pursuant to that subchapter.

77 Del. Laws, c. 79, § 1; 70 Del. Laws, c. 186, § 1.;

(a) Definitions, as used in this section:

(1) "Debt" means any amount owed for tax (including any interest, additional amounts, additions to tax, and assessable penalties) payable under this title and subchapter VII of Chapter 5 of Title 4 that exceeds, in aggregate, $1,000 and that has been reduced to a judgment pursuant to § 554 of this title.

(2) "Debtor" means a person liable for a debt.

(3) "Director of the Division of Professional Regulation" means the Director of the Division of Professional Regulation of the Department of State or the designee of the Director of the Division of Professional Regulation.

(4) "Director of Revenue" means the Director of the Division of Revenue of the Department of Finance, or the designee of the Director of Revenue.

(5) "License" means a license, permit, certificate, approval, registration or other similar form of permission or authorization to practice or engage in any profession, occupation, calling or business issued or renewed by any commission, board or agency under the authority of the Division of Professional Regulation of the Department of State which is named in § 8735 of Title 29.

(b) Cooperative agreements for tax enforcement. — In order to provide for enforcement of the revenue laws of this State by means of the denial or suspension of licenses issued to or applied for by debtors, the Director of the Division of Professional Regulation shall enter into a cooperative agreement with the Director of Revenue to exchange information about any debtor who owes a debt to this State and who applies for or holds a license issued or renewed by any commission, board or agency under the authority of the Division of Professional Regulation which is named in § 8735 of Title 29. The specific information and the manner and frequency with which it is made available or otherwise exchanged between the Division of Revenue and the Division of Professional Regulation shall be as determined by each cooperative agreement, but such information shall be made available or otherwise provided at least once each calendar year. Each cooperative agreement shall be revised as necessary to effectuate the provisions and purposes of this section. From such information provided by the Division of Professional Regulation, the Division of Revenue, at such intervals as it determines, may identify such applicants or licensees who are debtors, and undertake enforcement action pursuant to this section.

(c) Notice of intent to deny or suspend license. — Subject to the provisions for notice and the right to a hearing provided for by this section, the Director of Revenue shall give written notice to a debtor that a license issued or renewed by any commission, board or agency under the authority of the Division of Professional Regulation which is named in § 8735 of Title 29 may be denied, suspended, or shall not be issued or renewed.

(d) Contents of notice. — The notice provided for in this section shall be sent by registered or certified mail to the debtor's last address known to the Division of Revenue and shall inform the debtor:

(1) Of the nature and amount of the debt;

(2) That the debt has been reduced to judgment in the Superior Court of the State of Delaware pursuant to § 554 of this title (a copy of which judgment shall have been provided to the taxpayer on or before the date of the notice); and

(3) That, pursuant to this section and § 8735 of Title 29, this information will be sent to the Delaware Division of Professional Regulation for the purposes of suspending or denying the issue or renewal of debtor's license unless, within 60 days of the notice, the debtor shall have:

a. Paid the debt in full; or

b. Entered into a written agreement with the Director of Revenue or the Director's designee for payment of the debt with such terms as the Director of Revenue may require; or

c. Requested a hearing pursuant to subsection (e) of this section, at which the debtor may present evidence, be represented by counsel of debtor's choice and at debtor's expense, and appear personally or by other representative and at which the Director of Revenue or the Director's delegate will reach a decision based on the evidence received.

(e) Request for hearing on proposed suspension or denial of license. — Upon written request by the debtor to the Director of Revenue mailed or delivered within 20 days from the date of mailing the notice of intent to deny or suspend a license, the Director of Revenue or the Director's delegate shall conduct a hearing pursuant to the provisions of Chapter 101 of Title 29 for the limited purpose of determining that the debt exceeds $1,000 and that it was reduced to judgment pursuant to § 554 of this title. No evidence may be received at the hearing regarding the appropriateness or validity of the final assessment of the tax (including any interest, additional amounts, additions to tax, and assessable penalties) that has been reduced to judgment pursuant to § 554 of this title. The Director of Revenue shall give written notice of the hearing to the debtor in accordance with Chapter 101 of Title 29.

(f) Denial or suspension of professional or occupation license. — Upon certification by the Director of Revenue to the Director of the Division of Professional Regulation of compliance with the provisions of this section, the latter shall immediately suspend all licenses issued to the debtor by any commission, board or agency under the authority of the Division of Professional Regulation which is named in § 8735 of Title 29; shall deny any applications to issue or renew any such license or licenses by the debtor; and shall give written notice of the suspension or denial to the debtor. The debtor shall remain ineligible for the issuance, renewal or reinstatement of any license until the Director of the Delaware Division of Professional Regulation obtains from the Director of Revenue written certification that the grounds for denial or suspension of a license under this section no longer exist. The Director shall provide such written certification to the Director of the Division of Professional Regulation within 30 days from the time at which the grounds for denial or suspension of a license under this section no longer exist. Whenever the Director provides such written certification to the Director of the Division of Professional Regulation, the debtor shall also be notified by the Director of Revenue that the basis for the denial or suspension of debtor's license no longer exists.

(g) Regulations. — The Director of Revenue may promulgate rules and regulations necessary to implement the provisions of this section.

(h) Disclosures permitted by this statute. — No disclosures or exchanges of information made by the Director of Revenue in a good faith effort to comply with this section shall be a violation of any statute prohibiting disclosure of taxpayer information.

(i) Remedies not exclusive. — The remedies provided in this section shall be in addition to any other remedies for the enforcement of tax obligations.

78 Del. Laws, c. 265, § 3; 81 Del. Laws, c. 19, § 2.;

Any return or claim for refund prepared by a paid tax preparer, as that term is defined under § 502(b) in this title, shall be signed by the paid tax preparer and shall bear the paid tax preparer's tax identification number.

81 Del. Laws, c. 386, § 3.;

(a) In a court of competent jurisdiction, the Director of Revenue may commence suit to enjoin any paid tax preparer, as that term is defined under § 502(b) of this title, from further engaging in any conduct described in subsection (b) of this section or from further acting as a paid tax preparer. If the court issues an injunction under this section, the paid tax preparer shall reimburse the Division of Revenue for all costs and fees incurred in prosecuting such case.

(b) In any action under subsection (a) of this section, the court may enjoin the tax preparer from further engaging in any conduct specified in this subsection if the court finds that injunctive relief is appropriate to prevent the recurrence of this conduct. The court may issue an injunction when the paid tax preparer has done any of the following:

(1) Prepared any return or claim for refund that includes an understatement of a taxpayer's liability due to an unreasonable position.

(2) Prepared any return or claim for refund that includes an understatement of a taxpayer's liability due to wilful or reckless conduct.

(3) Where required, failed to do any of the following:

a. Furnish a copy of a return or claim for refund.

b. Sign a return or claim for refund.

c. Furnish an identifying number.

d. Retain a copy of records.

e. File correct information returns.

f. Determine eligibility for tax benefits.

(4) Negotiated a check issued to a taxpayer by the Division of Revenue without the permission of the taxpayer.

(5) Engaged in any conduct subject to any criminal penalty provided in this title.

(6) Misrepresented the paid tax preparer's eligibility to practice before the Division of Revenue or otherwise misrepresented the paid tax preparer's experience or education.

(7) Guaranteed the payment of any tax refund or the allowance of any tax credit.

(8) Engaged in any other fraudulent or deceptive conduct that substantially interferes with the proper administration of the tax laws of this State.

(c) If the court finds that a paid tax preparer has continually or repeatedly engaged in any conduct prohibited in subsection (b) of this section and that an injunction prohibiting the conduct would not be sufficient to prevent the person's interference with the proper administration of the tax laws of Delaware, the court may enjoin the person from acting as a paid tax preparer in Delaware. The fact that a person has been enjoined from preparing tax returns or claims for refund for the United States or any other state, in the 5 years preceding the petition for an injunction shall establish a prima facie case for an injunction to be issued pursuant to this section.

81 Del. Laws, c. 386, § 3.;