TITLE 30

State Taxes

Occupational and Business Licenses and Taxes

CHAPTER 27. Manufacturers’ License Requirements and Taxes

§ 2701. Definitions.

As used in this chapter the following definitions shall apply:

(1) “Gross receipts” includes all proceeds received by any person engaged in manufacturing within this State for products manufactured in whole or in part within this State where such products are sold to another person, or the fair market value of any such products consumed by the manufacturer or any person affiliated with it, where the fair market value of such products is not received; provided, however, if a product is partially manufactured within this State and partially manufactured elsewhere by the same manufacturer, the gross receipts realized on the ultimate sale, transfer or consumption of said product to be included for purposes of this chapter shall be apportioned to this State in the proportion that the cost of manufacturing thereof in Delaware bears to the full cost of manufacturing the product expended by the same manufacturer, such apportionment to be computed in accordance with regulations of the Secretary of Finance. Notwithstanding the foregoing, however, gross receipts shall not include:

a. Proceeds received by a petroleum product refiner (as defined in § 2901(13) of this title) from sales of intermediate petroleum products (as defined in § 2901(9) of this title) to an intermediate petroleum products wholesaler (as defined in § 2901(10) of this title); or

b. Proceeds received by any person for products sold to a buyer licensed under this chapter; provided, that such products are purchased for the purpose of their inclusion as a part of a product manufactured by the buyer within this State.

The product shall be considered to be included in the subsequent product manufactured by the buyer irrespective of whether it is included in an altered or unaltered form. The Secretary of Finance shall prescribe such rules, regulations and forms as the Secretary may deem necessary to carry out the purposes of this chapter.

(2) “Manufacturing,” except as provided in the definition of “wholesaler” in § 2901 of this title, includes any processing, working, development, change, conditioning or reconditioning of raw materials or products into products of a different character, finished or unfinished, or effecting any combination or composition of materials the inherent nature of which is changed, including clean energy technology device manufacturing (as defined in § 2010(24) of this title) and automobile manufacturing, but does not include the making, crafting, or painting of art or craft objects by individual artists or craftpersons.

(3) “Person” includes an individual, partnership, firm, cooperative, corporation or any association of persons acting individually or as a unit.

(4) “Product” includes any goods, materials, wares, merchandise, machinery, vehicles, solids, liquids or gases or any other item, object or thing which is produced as part of a manufacturing process.

(5) Whenever a person:

a. Is engaged in the activity of manufacturing within this State as described in paragraph (2) of this section;

b. Performs such activity exclusively on raw materials or products provided under bailment by another person engaged in manufacturing; and

c. The product produced by such person is intended for inclusion as a part of a product manufactured by the other manufacturer, then such person shall himself or herself be licensable as a manufacturer and such person’s gross receipts shall include all proceeds paid to such person for services rendered in this State as described in this subdivision, including the fair market value of any products produced as the result of such services and consumed by such person, where the fair market value of such products is not received.

In all other cases where a person is engaged in, and receives consideration for, manufacturing as a service apart from or in addition to the sale of a product, then such person shall be licensed under Chapter 23 of this title, and shall not to that extent be considered subject to license under this chapter.

14 Del. Laws, c. 24, §  118 Del. Laws, c. 247, §  122 Del. Laws, c. 1726 Del. Laws, c. 13, §  127 Del. Laws, c. 2827 Del. Laws, c. 2927 Del. Laws, c. 30, §§  1-3;  Code 1915, §§  196, 226A;  40 Del. Laws, c. 2540 Del. Laws, c. 30, §  1;  Code 1935, §  171;  47 Del. Laws, c. 385, §  1;  30 Del. C. 1953, §  2701;  57 Del. Laws, c. 136, §  1557 Del. Laws, c. 741, §  13A65 Del. Laws, c. 481, §  166 Del. Laws, c. 149, §  170 Del. Laws, c. 142, §  570 Del. Laws, c. 186, §  172 Del. Laws, c. 202, §  175 Del. Laws, c. 199, §  3778 Del. Laws, c. 1, §  478 Del. Laws, c. 47, §  1678 Del. Laws, c. 100, §§  4-6

§ 2702. License requirements; license fee; additional fee on aggregate gross receipts; statements required.

(a) Any person desiring to engage in business in this State as a manufacturer shall first obtain a license from the Division of Revenue and pay therefor a fee of $75 for each place of business. Such license shall be valid until January 1 at which time it may be renewed for a full year and every year thereafter; provided, that the manufacturer makes application therefor and payment of $75 for each place of business, plus the license fee required by subsection (b) of this section.

(b) (1) In addition to the license fee required by subsection (a) of this section, every manufacturer, except those subject to paragraph (b)(2) of this section, shall pay a license fee of 0.126% of the aggregate gross receipts of such manufacturer, which fee shall be payable monthly on or before the twentieth day of each month with respect to the aggregate gross receipts for the immediately preceding month. In computing the fee due on such aggregate gross receipts for each month, there shall be allowed a deduction of $1,250,000. For purposes of this subsection, all branches or entities comprising an enterprise with common ownership or common direction and control shall be allowed only 1 monthly deduction from the aggregate gross receipts of the entire enterprise. The monthly returns shall be accompanied by a certified statement on such forms as the Department of Finance shall require in computing the fee due.

(2) In addition to the license fee required by subsection (a) of this section, every clean energy technology device manufacturer shall pay a license fee of 0.0945% of the aggregate gross receipts of such clean energy technology device manufacturer, which fee shall be payable monthly on or before the twentieth day of each month with respect to the aggregate gross receipts for the immediately preceding month. In computing the fee due on such aggregate gross receipts for each month, there shall be allowed a deduction of $1,250,000. For purposes of this subsection, all branches or entities comprising an enterprise with common ownership or common direction and control shall be allowed only 1 monthly deduction from the aggregate gross receipts of the entire enterprise. The monthly returns shall be accompanied by a certified statement on such forms as the Department of Finance shall require in computing the fee due.

(3) Notwithstanding paragraph (b)(1) or (b)(2) of this section, if the taxable gross receipts prescribed therein during the lookback period as defined in § 2122 of this title do not exceed the applicable threshold of $1,500,000, the return and payment of the additional license fee imposed for such month shall be due on or before the last day of the first month following the close of the quarter. (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 such return, in computing the fee due on such aggregate gross receipts for each quarter, there shall be allowed a deduction of $3,750,000. For purposes of this paragraph, all branches or entities comprising an enterprise with common ownership or common direction and control shall be allowed only 1 quarterly deduction from the aggregate gross receipts of the entire enterprise. The quarterly return shall be accompanied by a certified statement on such forms as the Department of Finance shall require in computing this fee due.

(c) [Repealed.]

14 Del. Laws, c. 24, §  126 Del. Laws, c. 13, §  127 Del. Laws, c. 2927 Del. Laws, c. 30, §§  1-3;  Code 1915, §§  196, 226A;  40 Del. Laws, c. 2540 Del. Laws, c. 30, §  1;  Code 1935, §  171;  41 Del. Laws, c. 12, §  1;  30 Del. C. 1953, §  2702;  57 Del. Laws, c. 136, §  1557 Del. Laws, c. 188, §  4657 Del. Laws, c. 741, §  13B58 Del. Laws, c. 29060 Del. Laws, c. 21, §§  4, 560 Del. Laws, c. 22, §§  1-360 Del. Laws, c. 548, §  161 Del. Laws, c. 117, §  363 Del. Laws, c. 314, §  365 Del. Laws, c. 184, §  265 Del. Laws, c. 388, §  165 Del. Laws, c. 402, §§  5, 666 Del. Laws, c. 381, §  967 Del. Laws, c. 261, §  1068 Del. Laws, c. 80, §  569 Del. Laws, c. 289, §  570 Del. Laws, c. 484, §  570 Del. Laws, c. 489, §§  7, 871 Del. Laws, c. 351, §§  3, 13, 2072 Del. Laws, 1st Sp. Sess., c. 245,, §  175 Del. Laws, c. 199, §  576 Del. Laws, c. 282, §§  3, 1677 Del. Laws, c. 83, §§  6, 2578 Del. Laws, c. 47, §§  17-1978 Del. Laws, c. 73, §§  12, 13, 33, 3479 Del. Laws, c. 13, §§  3, 480 Del. Laws, c. 195, § 13

§ 2703. Automobile manufacturers.

(a) Every person engaged in the business of automobile manufacturing shall be exempt from the provisions of § 2702 of this title and shall be subject to the provisions of this section. For purposes of this section, “automobile manufacturing” shall mean the manufacturing operations of an automobile assembly plant and shall not include the manufacture of component parts of an automobile outside an automobile assembly plant.

(b) Any person desiring to engage in business in this State as an automobile manufacturer shall first obtain a license from the Division of Revenue and pay therefor a fee of $75 for each place of business. Such license shall be valid until January 1 at which time it may be renewed for a full year and every year thereafter; provided, that the automobile manufacturer makes application therefor and payment of $75 for each place of business, plus the license fee required by subsection (c) of this section.

(c) (1) In addition to the license fee required by subsection (b) of this section, every automobile manufacturer shall pay a license fee of 0.0945% of the aggregate gross receipts of such automobile manufacturer, which fee shall be payable monthly on or before the twentieth day of each month with respect to the aggregate gross receipts for the immediately preceding month. In computing the fee due on such aggregate gross receipts for each month, there shall be allowed a deduction of $1,250,000. For purposes of this subsection, all branches or entities comprising an enterprise with common ownership or common direction and control shall be allowed only 1 monthly deduction from the aggregate gross receipts of the entire enterprise. The monthly returns shall be accompanied by a certified statement on such forms as the Department of Finance shall require in computing the fee due.

(2) Notwithstanding paragraph (c)(1) of this section, if the taxable gross receipts prescribed therein during the lookback period as defined in § 2122 of this title do not exceed the applicable threshold of $1,500,000, the return and payment of the additional license fee imposed for such month shall be due on or before the last day of the first month following the close of the quarter. (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 such return, in computing the fee due on such aggregate gross receipts for each quarter, there shall be allowed a deduction of $3,750,000. For purposes of this paragraph, all branches or entities comprising an enterprise with common ownership or common direction and control shall be allowed only 1 quarterly deduction from the aggregate gross receipts of the entire enterprise. The quarterly return shall be accompanied by a certified statement on such forms as the Department of Finance shall require in computing this fee due.

75 Del. Laws, c. 199, §  3877 Del. Laws, c. 83, §§  7, 2578 Del. Laws, c. 73, §§  14, 15, 3579 Del. Laws, c. 13, §  580 Del. Laws, c. 195, § 14

§ 2704. Exemptions.

This chapter shall not apply to the production or manufacture of steam, gas or electricity for heat, light or power or to the production of the usual farm products for home consumption or market purposes.

14 Del. Laws, c. 24, §  127 Del. Laws, c. 29;  Code 1915, §§  196, 226A;  40 Del. Laws, c. 25, §  140 Del. Laws, c. 30, §  1;  Code 1935, §  171;  30 Del. C. 1953, §  2703;  57 Del. Laws, c. 136, §  1575 Del. Laws, c. 199, §  36

§ 2705. Exemption of gross receipts attributable to intermediate products.

(a) Notwithstanding any other provision of this chapter, for purposes of this chapter “gross receipts” shall not include that portion of the receipts realized by a manufacturer on the sale, transfer or consumption of an ultimate product that is attributable to the manufacturer’s cost of manufacturing an intermediate product in a new or expanded facility. The portion of such receipts attributable to the cost of manufacturing the intermediate product shall be that proportion of such receipts allocated to this State pursuant to § 2701(1) of this title that the manufacturer’s cost of manufacturing the intermediate product in the new or expanded facility bears to the manufacturer’s total cost in Delaware of manufacturing the ultimate product.

(b) As used in this section:

(1) “Existing facility” is any property placed in service by the manufacturer as owner, lessee or sublessee before July 1, 1985.

(2) “Intermediate product” is any product manufactured by the manufacturer and used by the manufacturer in connection with any subsequent manufacturing process or procedure that results in an ultimate product.

(3) “New or expanded facility” is any qualified property within the meaning of § 2010(2) of this title that is located within this State and that:

a. Is placed in service by the manufacturer as owner, lessee or sublessee after June 30, 1985;

b. Is used by the manufacturer in or in connection with a manufacturing process or procedure not engaged in by the manufacturer within this State prior to the date such property was placed in service by the manufacturer; and

c. Is employed by the manufacturer in the manufacture of an intermediate product that, in or in connection with the subsequent manufacture by the manufacturer of an ultimate product in an existing facility, is consumed or becomes an integral part of the ultimate product.

“New or expanded facility” shall not include any existing facility but shall include any improvements or additions to an existing facility other than any improvement or addition resulting from a repair, refurbishing, retooling (such as retooling by an automobile manufacturer), recycling or other similar process or procedure that merely preserves or restores the value of an existing facility.

(4) “Placed in service” shall have the meaning ascribed to such phrase under § 167 of the Internal Revenue Code (26 U.S.C. § 167) and regulations promulgated thereunder.

(5) “Ultimate product” is any product:

a. The manufacture of which involves the consumption of an intermediate product; or

b. That contains an intermediate product as an integral part.

(6) The manufacturer and each related person with respect to the manufacturer within the meaning of § 2010(10) of this title shall be treated as 1 person.

(c) Subsection (a) of this section shall not apply to any gross receipts realized by the manufacturer prior to the date upon which the manufacturer’s aggregate investment in the new or expanded facility first equals or exceeds $200,000. In the case of a facility owned by the manufacturer, investment by the manufacturer shall equal the original cost of such facility to the manufacturer. In the case of a facility leased or subleased by the manufacturer, investment by the manufacturer shall equal 8 times the net annual rent paid by the manufacturer for the use of such facility, less any gross rental income received by the manufacturer from sublessees of any portion of such facility during the period of time to which such net rent paid by the manufacturer relates.

(d) Subsection (a) of this section shall not apply to any gross receipts realized by the manufacturer prior to the date on which the manufacturer first employs in or in connection with the new or expanded facility 5 or more employees on a regular and full-time basis, at least 25 percent of whom are residents of this State on such date.

(e) The Secretary shall prescribe such rules and regulations as the Secretary may deem necessary to carry out the purposes of this section.

65 Del. Laws, c. 169, §  170 Del. Laws, c. 186, §  175 Del. Laws, c. 199, §  36