Q. What is the Delaware Gross Receipts Tax?
A. Delaware’s Gross Receipts Tax is a tax on the total gross revenues of a business, regardless of their source. This tax is levied on the seller of goods or services, rather than on the consumer. Gross receipts tax rates currently range from .0945% to .7468%, depending on the business activity. To determine the gross receipts tax rate for a specific business activity in the State of Delaware, please visit the Tax Tip for your business type.
Q. Who is required to pay Delaware’s Gross Receipts Tax?
A. When you engage in business in the State of Delaware, you may be required to pay Gross Receipts Tax. This tax is paid by the seller of goods (tangible or otherwise) or the provider of services in the state. There are no deductions for the cost of goods or property sold, material or labor costs, interest expense, discounts paid, delivery costs, state or federal taxes, or any other expenses allowed.
Q. Are there any Gross Receipts Tax Exclusions available?
A. When determining the gross receipts tax due, most businesses are entitled to an exclusion, which varies depending on the business activity conducted. These exclusions, provided monthly or quarterly, generally start at $100,000 per month and can be as high as $1,250,000. To determine the exclusion for a specific business activity in the State of Delaware, please visit the Tax Tip for your business type.
Q. As a Delaware ‘Retail’ or ‘Wholesale’ business, am I liable for Delaware gross receipts tax on merchandise shipped out of state?
A. No. You do not have to pay gross receipts tax on goods shipped by you directly to your customer outside of Delaware, but you need to keep documentation of the interstate shipment.
Q. As a Delaware ‘Retail’ business, if my customer takes possession of the merchandise in Delaware but takes it out of state, am I liable for gross receipts tax on that sale?
A. Yes. Delaware gross receipts tax is due in instances when the retail customer picks up or takes delivery of the product in Delaware, regardless of the ultimate destination.
Q. As a Delaware ‘Wholesale’ business, if my customer takes possession of the merchandise in Delaware for subsequent delivery and consumption outside this state, am I liable for gross receipts tax on that sale?
A. No. But only if you complete Form 373 Wholesale Exemption Certificate prior to or concurrent with the sale. Form 373 is used to substantiate exempt sales to out of state purchasers which are picked up in Delaware. Please note that failure by the seller to maintain a list of exemption certificates and to note on each sales invoice that an exemption is being claimed will cause the sale to be taxable.
Q. When are the gross receipts tax returns due?
A. Delaware Gross Receipts tax returns and payments are due either monthly or quarterly, depending on a business’ total gross receipts. The Division of Revenue uses a “look-back period” to determine whether a business is a monthly or quarterly filer.
If you are set-up as a monthly filer, then your gross receipts tax is due on or before the 20th day of each month with respect to the aggregate gross receipts for the immediately preceding month.
If you are set-up as a quarterly filer, then your gross receipts tax is due on or before the last day of the first month following the close of the quarter.
Please note that all new businesses are automatically set-up as quarterly gross receipts tax filers.
Q. What penalties apply to late filing and/or payment of gross receipts tax?
A. Gross receipts tax returns filed late are subject to a penalty of 5% per month, plus interest of 0.5% per month from the original due date until paid. In addition to the above penalties and interest, an additional penalty of 1% per month (not to exceed 25%) is imposed for failure to pay (in whole or in part) the tax liability shown to be due on a timely filed return. (30 Del.C., Sec. 533 & 534)
Q. Am I required to file gross receipts tax coupons electronically?
A. Starting January 1, 2021, Delaware mandates online filing for gross receipts taxes, as detailed in TIM 2020-2. To file, visit tax.delaware.gov, where you can submit your tax forms and payments electronically using a credit/debit card or bank transfer. To complete Portal registration you’ll need your Federal Employer Identification or Social Security Number and Business License Number. For more details on exceptions where paper filing may be allowed, refer to TIM 2020-2 or contact the Delaware Division of Revenue. Remember, timely filing avoids penalties and interest.
Q. How do I file an amended gross receipts tax coupon?
A. To amend Delaware gross receipts tax or license/excise tax returns for ONE TAX PERIOD ONLY, you must submit the applicable Amended GR Return to correct any previously filed monthly or quarterly gross receipts or License/Excise tax return.
Please note that if your amended return pertains to more than one tax period or includes tax periods other than the current calendar year, you must use the Claim for Revision Form.
Q. How do I submit a Request for Change for my gross receipts tax coupons?
A. A Request for Change form allows you to make certain corrections or changes to your gross receipts tax coupons, such as changes to your name or address. The form is also used to notify the Division of Revenue if you have gone out of business. You may either download a Request for Change form for your business type or you may call our gross receipts tax department at (302) 577-8780 to request a change.
Please note that this form does not allow a business to change its account number or the way the business is formed (i.e., sole proprietorship, corporation, limited liability company). For this, you would need a new business license application.