Income, Inheritance and Estate Taxes
CHAPTER 11. Personal Income Tax
Subchapter VII. Withholding of Tax
(a) General. — Every employer maintaining an office, or transacting business, within this State and making payment of any wages or other remuneration taxable under this chapter to a resident or nonresident individual whose wages or other remuneration are subject to withholding under the Internal Revenue Code shall deduct and withhold from such wages for each payroll period a tax computed in such manner as to result, insofar as practicable, in withholding from the employee’s wages during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due from the employee under this chapter with respect to the amount of such wages included in the taxable income during the calendar year. The method of determining the amount to be withheld shall be prescribed by rules or forms of the State Tax Department. The State Tax Department is authorized to promulgate withholding tables for this purpose.
(b) Withholding exemptions. — For purposes of this section, an employee shall be entitled to the same number of withholding exemptions as the number of withholding exemptions to which the employee is entitled for federal income tax withholding purposes. An employer may rely upon the number of federal withholding exemptions claimed by the employee.
(c) Withholding agreements. — The State Tax Commissioner may enter into agreements with the tax departments of other states (which require income tax to be withheld from the payment of wages or other remuneration and salaries) so as to govern the amounts to be withheld from the wages and salaries of residents of such states under this chapter. Such agreements may provide for recognition of anticipated tax credits in determining the amounts to be withheld and, under rules prescribed by the State Tax Commissioner, may relieve employers in this State from withholding income tax on wages or other remuneration and salaries paid to nonresident employees. The agreements authorized by this subsection are subject to the condition that the tax department of such other states grant similar treatment to residents of this State.30 Del. C. 1953, § 1151; 57 Del. Laws, c. 737, § 1; 58 Del. Laws, c. 257, §§ 3, 4; 61 Del. Laws, c. 136, § 1; 70 Del. Laws, c. 186, § 1;
Every employer required to deduct and withhold tax under this chapter from the wages or other remuneration of an employee shall furnish to each such employee, in respect to the wages or other remuneration paid by such employer to such employee during the calendar year, on or before January 31 of the succeeding year, or, if such employee’s employment is terminated before the close of such calendar year, within 30 days from the date on which the last payment of wages or other remuneration is made, a written statement, as prescribed by the Director of the Division of Revenue, showing:
(1) The amount of wages or other remuneration paid by the employer to the employee;
(2) The amount deducted and withheld as tax;
(3) All information required by the Internal Revenue Service regarding the employee’s eligibility for the federal earned income tax credit; and
(4) Such other information as the Director of the Division of Revenue shall prescribe.30 Del. C. 1953, § 1152; 57 Del. Laws, c. 737, § 1; 58 Del. Laws, c. 257, § 5; 69 Del. Laws, c. 443, § 2;
Wages upon which tax is required to be withheld shall be taxable under this chapter as if no withholding were required, but any amount of tax actually deducted and withheld under this chapter in any calendar year shall be deemed to have been paid to the State Tax Department on behalf of the person from whom withheld and such person shall be credited with having paid that amount of tax for the taxable year beginning in such calendar year.30 Del. C. 1953, § 1153; 57 Del. Laws, c. 737, § 1;
(a) Every employer required to deduct and withhold tax under this chapter shall file a withholding return as prescribed by the Division of Revenue and pay over such tax to the Division of Revenue, or to a depository designated by the Division of Revenue, at a frequency to be determined as follows:
(1) An employer whose aggregate amount of taxes required by this subchapter to be deducted and withheld during the lookback period did not exceed the applicable threshold of $4,500 shall be a quarterly filer;
(2) An employer whose aggregate amount of taxes required by this subchapter to be deducted and withheld during the lookback period exceeded the applicable threshold of $4,500 but did not exceed the applicable threshold of $25,000 or which had no employees within Delaware during the lookback period shall be a monthly filer; and
(3) An employer whose aggregate amount of taxes required by this subchapter to be deducted and withheld during the lookback period exceeded the applicable threshold of $25,000 shall be an eighth-monthly filer.
The levels of the applicable thresholds in this subsection are subject to annual adjustment as more fully set forth in § 515 of this title.
(b) The Division of Revenue may modify the filing frequency defined in paragraphs (a)(1)-(3) of this section for any taxpayer, in response to a request from the taxpayer, upon a showing by the taxpayer that they would suffer a hardship if required to comply with the statutory filing frequency.
(c) A quarterly filer shall file a return and pay over taxes required to be deducted and withheld under this chapter not later than the last day of the month following the close of each calendar quarter.
(d) A monthly filer shall, for each month, file a return and pay over taxes required to be deducted and withheld during such month on or before the fifteenth day of the month following the end of such month.
(e) An eighth-monthly filer shall file a return and pay over taxes required to be deducted and withheld under this chapter not later than 3 working days following the end of any deposit or return period during which an employer made any payment subject to a requirement to withhold tax under this chapter. For purposes of this subsection, each month shall be divided into 8 deposit or return periods. These deposit or return periods end on the third, seventh, eleventh, fifteenth, nineteenth, twenty-second, twenty-fifth and last day of every month.
(f) For purposes of this subchapter, the term “lookback period” shall refer to the 12-month period between July 1 and June 30 immediately preceding the calendar year for which the filing frequency is determined by reference to the lookback period.
(g) Any employer required under the provisions of § 6302 (or successor provision) of the Internal Revenue Code [26 U.S.C. § 6302] to deposit federal employment taxes by electronic funds transfer shall be required to deposit taxes withheld under this subchapter by electronic funds transfer, except that, for purposes of this subsection, 1 year shall be added to the “applicable effective date” on which deposit by electronic funds transfer is required of a particular employer under regulations promulgated pursuant to the provisions of § 6302 (or successor provision) of the Internal Revenue Code [26 U.S.C. § 6302]. The Director of Revenue shall prescribe such regulations as may be necessary for the development and implementation of an electronic funds transfer system which is required to be used for the collection of taxes withheld under this chapter. Such system shall be designed in such manner as may be necessary to ensure that such taxes will be credited to an account maintained by the State Treasurer on the date on which the return and taxes would otherwise have been required to be filed under this subchapter.
(h) Any employer that demonstrates it filed and paid over withholding taxes under this chapter on or before the date on which it was required to deposit federal employment taxes shall be deemed to have established reasonable cause for late filing and payment of withheld taxes for purposes of Chapter 5 of this title.
(i) Information returns. — Any person:
(1) Required to withhold, account for, and pay over taxes under this chapter for which federal information return form W-2 is required;
(2) Making any payment of salary, fee, commission or other compensation for services to any Delaware resident individual or to any individual nonresident for work done or services performed or rendered within Delaware for which federal information returns form 1099 MISC or successor form is required;
(3) Otherwise withholding Delaware taxes from payment of any wage, pension, distribution or other remuneration; or
(4) Making any payment of any other remuneration to any Delaware resident individual for which any other federal information return is required,
shall also file with the Division of Revenue information returns with respect to each such individual to whom such federal forms are required to be issued. If a person is required to make and return such information reports to the Internal Revenue Service on magnetic media or in other machine-readable form under Internal Revenue Code § 6011 (26 U.S.C. § 6011) and regulations thereunder or successor provision, then the information returns required to be made under this section shall, unless excepted by the Director, also be made on magnetic media or in other machine-readable form. All returns required to be filed under this section shall be filed with the Division of Revenue on or before the date on which such returns are required to be filed with the Internal Revenue Service.30 Del. C. 1953, § 1154; 57 Del. Laws, c. 737, § 1; 58 Del. Laws, c. 56, § 1; 60 Del. Laws, c. 17, § 1; 60 Del. Laws, c. 276, §§ 1, 2; 62 Del. Laws, c. 56, § 2; 64 Del. Laws, c. 6, §§ 1-3; 65 Del. Laws, c. 402, §§ 1, 2; 70 Del. Laws, c. 186, § 1; 70 Del. Laws, c. 371, §§ 1, 2; 73 Del. Laws, c. 131, § 2; 80 Del. Laws, c. 195, § 6; 81 Del. Laws, c. 19, § 3; 83 Del. Laws, c. 107, § 2;
Every employer required to deduct and withhold tax under this chapter is made liable for such tax. For purposes of assessment and collection, any amount required to be withheld and paid over to the State Tax Department, and any additions to tax, penalties and interest with respect thereto, shall be considered the tax of the employer. Any amount of tax actually deducted and withheld under this chapter shall be held to be a special fund in trust for the State Tax Department. No employee shall have any right of action against an employer in respect to any money deducted and withheld from wages and paid over to the State Tax Commissioner in compliance, or in intended compliance, with this chapter.30 Del. C. 1953, § 1155; 57 Del. Laws, c. 737, § 1; 70 Del. Laws, c. 186, § 1;
If an employer fails to deduct and withhold tax as required, and thereafter the tax against which such tax may be credited is paid, the tax so required to be deducted and withheld shall not be collected from the employer, but the employer shall not be relieved from liability for any additions to tax, penalties or interest otherwise applicable in respect to such failure to deduct and withhold.30 Del. C. 1953, § 1156; 57 Del. Laws, c. 737, § 1;
(a) Every employer required to deduct and withhold tax under this chapter shall, within 20 days after the date the employer hires the employee, notify the State Directory of New Hires established pursuant to § 2208 of Title 13 of the hiring of the employee; provided, however, that:
(1) An employer that transmits reports magnetically or electronically shall so notify the State Directory by 2 monthly transmissions (if necessary) not less than 12 days nor more than 16 days apart; and
(2) An employer that has employees in this State and at least 1 other State and that transmits reports magnetically or electronically may comply with the requirements of this subsection by designating either this State or another state in which the employer has employees, as the state to which the employer will transmit the report required under this section, providing written notification to the Secretary of the federal Department of Health and Human Services of such designation and transmitting the report to such state.
(b) Such report shall include the name, address and social security number of the newly hired employee, the date services for remuneration were first performed by the employee, and the name and address of, and identifying number assigned under § 6109 of the Internal Revenue Code of 1986 (26 U.S.C. § 6109) to, the employer.
(c) Each report shall be made on a W-4 form or, at the option of the employer, an equivalent form, and may be transmitted to the State Directory of New Hires by first-class mail, magnetically, or electronically.
(d) An employer who fails or refuses to report the hiring of a new employee as required by this section shall be punished by a fine of $25 for each such failure or refusal. An employer or employee who conspires not to report the hiring of an employee as required by this section, or to supply a false or incomplete report as required by this section, shall be punished by a fine of $500 for each offense. A fine under this section may not be suspended. If the employer is a corporation, criminal liability shall be established pursuant to §§ 281-284 of Title 11. Family Court shall have jurisdiction over violations of this section.
(e) For purposes of this section, the following terms shall have the following meanings:
(1) “Business day” means a day on which state offices are open for regular business.
(2) “Employee” means an individual who is an employee within the meaning of Chapter 24 of the Internal Revenue Code of 1986 (26 U.S.C. § 3401 et seq.), and does not include an employee of a federal or state agency performing intelligence or counterintelligence functions, if the head of such agency has determined that reporting pursuant to the federal law with respect to the employee could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission.
(3) “Employer” has the meaning given such term in § 3401(d) of the Internal Revenue Code of 1986 (26 U.S.C. § 3401(d)), and includes any entity and any labor organization. The term “labor organization” has the meaning given such term in § 2(5) of the National Labor Relations Act (29 U.S.C. § 152(5)), and includes any entity (also known as a “hiring hall”) which is used by the organization and an employer to carry out requirements described in § 8(f)(3) (29 U.S.C. § 158(f)(3)) of such act of an agreement between the organization and the employer.
(4) “Newly hired employee” means an employee who has not previously been employed by the employer, or who was previously employed by the employer but has been separated from such prior employment for at least 60 consecutive days.71 Del. Laws, c. 216, § 7; 78 Del. Laws, c. 311, § 2; 79 Del. Laws, c. 114, § 1;
Repealed by 73 Del. Laws, c. 179, § 6, effective July 12, 2001.
(a) Every corporation that is an S corporation for federal income tax purposes for any taxable year beginning on or after January 1, 1992, in which it has any shareholder who is a nonresident individual, shall pay, at the times and in the percentages set forth in § 1905 of this title, on behalf of each such nonresident, tax in an amount equal to the highest rate of tax set forth in § 1102(a) of this title multiplied by such nonresident’s distributive share of the income of such corporation determined in accordance with § 1124 of this title.
(b) Any payment of tax under subsection (a) of this section by a corporation shall be considered to have been distributed or advanced by such corporation to the nonresident individual on whose behalf such tax was paid on the date such payment was made by such corporation. Such nonresident shall be credited for purposes of §§ 1169 and 1170 of this title with having made a declaration and payment of estimated tax on the date such payment under subsection (a) of this section was made by such corporation, but such deemed payment of estimated tax shall be taken into account for the taxable year of such nonresident in which such nonresident is required to include in taxable income the distributive share of the income of such corporation for which such payment under subsection (a) of this section was made.
(c) If an S corporation fails to pay any tax required to be paid by such corporation under subsection (a) of this section, such corporation shall be liable for any penalties, interest and additions to tax applicable to such failure in the same manner as if such tax were required to be paid by the corporation on its own behalf. Notwithstanding any other provision of this title, a nonresident individual who is a shareholder of an S corporation shall not be liable for any penalties, interest or additions to tax as a result of such nonresident’s failure to make any payment of estimated tax otherwise required by § 1170 of this title with respect to such nonresident’s distributive share of such corporation’s income.
(d) Any payment of tax made by a corporation under § 1905 of this title with respect to any taxable year of such corporation ending on or before March 31, 1993, for which any payment is required to be made by such corporation under subsection (a) of this section shall be treated as a payment that was made under subsection (a) of this section for all purposes of this section, and no refund of any part of such payment shall be allowable solely on the basis that such payment was not required by § 1905 of this title.68 Del. Laws, c. 423, § 5;
Repealed by 73 Del. Laws, c. 179, § 6, effective July 12, 2001. For present law, see §§ 1185 and 1187 of this title.