CHAPTER 737
AN ACT TO REVISE THE INCOME TAX LAW RELATING TO INDIVIDUALS, TRUSTS, ESTATES AND CERTAIN CORPORATIONS; TO INCORPORATE BY REFERENCE CERTAIN OF THE FEDERAL INCOME TAX STATUTES, RULES AND REGULATIONS; AND TO PROVIDE FOR IMPROVED ADMINISTRATION AND ENFORCEMENT.
Be it enacted by the General Assembly of the State of Delaware:
Section 1. Chapter 11, Title 30, Delaware Code, is hereby amended by striking said Chapter and substituting a new Chapter 11 as follows:
CHAPTER 11. PERSONAL INCOME TAX
SUBCHAPTER I. GENERAL PROVISIONS
§ 1101. Meaning of terms
Any terms used in this chapter shall have the same meaning as when used in a comparable context in the laws of the United States referring to federal income taxes, unless a different meaning is clearly required. Any reference to the laws of the United States shall mean the provisions of the Internal Revenue Code of 1954, and amendments thereto, other provisions of the laws of the United States relating to federal income taxes, as the same may be or become effective, at any time or from time to time, for the taxable year.
§ 1102. Imposition and rate of tax
A tax is hereby imposed for each taxable year on the entire taxable income of every resident of this State and on the taxable income of every nonresident which is derived from sources within this State. The amount of the tax shall be determined as follows:
1 1/2% of the amount of taxable income not in excess of $1,000; 2% of the amount of taxable income in excess of $1,000 but not in excess of $2,000; of the amount of taxable income in excess of $2,000 but not in excess of $3,000; 4% of the amount of taxable income in excess of $3,000 but not in excess of $4,000; 5% of the amount of taxable income in excess of $4,000 but not in excess of $5,000; 6% of the amount of taxable income in excess of $5,000 but not in excess of $6,000; 7% of the amount of taxable income in excess of $6,000 but not in excess of $8,000; 8% of the amount of taxable income in excess of $8,000 but not in excess of $30,000; 9% of the amount in excess of $30,000 but not in excess of $50,000; 10% of the amount in excess of $50,000 but not in excess of $100,000; 11% of the amount in excess of $100,000.
§ 1103. Resident individual defined
A resident individual of this State means an individual who either
(1) is domiciled in this State for any part of the taxable year to the extent of the period of such domicile; or
(2) maintains a place of abode in this State and spends an aggregate of more than 183 days of the taxable year in this State.
§ 1104. Nonresident individual defined
A nonresident individual of this State means an individual who is not a resident individual of this State.
SUBCHAPTER II. RESIDENT INDIVIDUALS
§ 1105. Taxable income
The entire taxable income of a resident of this State shall be his federal adjusted gross income as defined in the laws of the United States with the modifications and less the deductions and personal exemptions provided in this subchapter.
§ 1106. Modifications
(a) Additions. There shall be added to federal adjusted gross income:
(1) Interest or dividends on obligations or securities of any state or of a political subdivision or authority thereof (other than this State and its political subdivision and authorities);
(2) The amount of any long-term capital gains deduction allowable under the laws of the United States attributable to long-term capital gains realized before January 1, 1972.
(b) Subtractions. There shall be subtracted from federal adjusted gross income:
(1) Interest or dividends on obligations of the United States and its territories and possessions or of any authority, commission or instrumentality of the United States to the extent includable in gross income for federal income tax purposes but exempt from state income taxes under the laws of the United States;
(2) Amounts received as pensions from employers, the United States, this State or any subdivision thereof, not to exceed $2,000; and
(3) The amount of income taxes paid to the United States, but not in excess of $300 for a separate return nor $600 for a joint return.
(c) Fiduciary adjustment. There shall be added to or subtracted from Federal adjusted gross income, as the case may be, the taxpayer's share of the fiduciary adjustment determined under section 1134 of this title.
§ 1107. Deduction
The deduction of a resident individual shall be his standard deduction unless he elects to itemize his deductions as provided in section 1109 of this title.
§ 1108. Standard deduction
The standard deduction of a resident individual or of a resident husband and wife who file a joint return shall be 10% of his or their adjusted gross income as modified by Subchapter I, or $1,000, whichever is less. The standard deduction of a married person who files a separate return shall not exceed $500.
§ 1109. Itemized deductions
(a) General. If a resident individual has itemized his deductions from adjusted gross income in determining his federal taxable income, he may elect, in determining his taxable income under this chapter to deduct the sum of such itemized deductions (other than deductions for personal exemptions):
(1) Reduced by the amount thereof representing income taxes imposed by this State; and
(2) Reduced by the amount of any charitable contributions in excess of twenty per cent (20%) of federal adjusted gross income as modified by section 1106 of this title.
(3) Reduced by the amount of any income tax imposed on him for the taxable year by another state of the United States or a political subdivision thereof or the District of Columbia on income derived from sources therein if he elects to take such amount as a credit in accordance with Section 1111 (a) of this Chapter.
(b) Husband and wife. A husband and wife both of whom are required to file returns under this chapter shall be allowed to itemize their deductions only if both elect to do so.
§ 1110. Personal exemptions
A resident shall be allowed an exemption of $600 for each exemption to which he is entitled for the taxable year for federal income tax purposes.
§ 1111. Credit for income tax paid to another state
(a) Allowance of credit. A resident individual shall be allowed a credit against the tax otherwise due under this chapter for the amount of any income tax imposed on him for the taxable year by another state of the United States or a political subdivision thereof or the District of Columbia on income derived from sources therein and which is also subject to tax under this chapter.
(b) Limitation on credit. The credit allowable under this section with respect to the income tax imposed upon the taxpayer for the taxable year by each other taxing jurisdiction shall not exceed the amount computed by multiplying the tax otherwise due under this chapter by a fraction, the numerator of which is the amount of the taxpayer's taxable income derived from sources in the other taxing jurisdiction (applying the rules of section 1122 of this title), and the denominator of which is his entire taxable income.
SUBCHAPTER III. NONRESIDENT INDIVIDUALS
§ 1121. Taxable income
The taxable income of a nonresident individual shall be that part of his federal adjusted gross income derived from sources within the State determined by reference to section 1122 of this title, less the deductions and personal exemptions provided in this subchapter.
§ 1122. Taxable income derived from sources within this State
(a) General. The adjusted gross income of a nonresident which is derived from sources within this State shall be the sum of the following:
(1) The amount of items of income, gain, loss, and deduction entering into his federal taxable income which are derived from or conected with sources in this State, including (i) his distributive share of partnership income and deductions determined under the provisions of section 1145 of this title, and (ii) his share of estate or trust income and deductions determined under the provisions of section 1139 of this title; and
(2) the portion of the modifications described in subsections (a), (b) and (c) of section 1106 of this title which relate to income derived from sources in this State, including any modifications attributable to him as a partner.
(b) Income and deductions having source within this State. Items of income, gain, loss and deduction derived from or connected with sources within this State are those items attributable to:
(1) compensation, other than pensions, as an employee in the conduct of the business of an employer, for personal services
(i) rendered in this State, or (ii) attributable to employment in this State and not required to be performed elsewhere;
(2) the ownership or disposition of any interest in real or tangible personal property in this State; and
(3) a business, trade, commerce, profession or vocation carried on in this State.
(c) Intangibles. Income from intangible personal property, including annuities, dividends, interest, and gains from the disposition of intangible personal property, shall constitute income derived from sources within this State only to the extent that such income is from property employed by the taxpayer in a business, trade, commerce, profession or vocation carried on in this State.
(d) Deduction for losses. Deductions for capital losses, net long-term capital gains, and net operating losses shall be based solely on income, gains, losses, and deductions derived from or connected with sources in this State, but otherwise shall be determined in the same manner as the corresponding federal deductions.
(e) Small business corporation shareholder. For a nonresident individual who is a shareholder of a corporation which is an electing small business corporation for federal income tax purposes, the undistributed taxable income of such corporation shall not constitute income derived from sources within this State, and a net operating loss of such corporation shall not constitute a loss or deduction connected with sources in this State.
(f) Apportionment and allocation. If a business, trade, commerce, profession or vocation is carried on partly within this State and partly without this State, the items of income and deduction derived from or connected with sources within this State shall be determined by apportionment and allocation under rules prescribed by the State Tax Commissioner.
(g) Service in armed forces. Compensation paid by the United States for service in the armed forces of the United States performed by a nonresident shall not constitute income derived from sources within this state.
§ 1123. Standard deduction
The standard deduction of a nonresident individual or husband and wife who file a joint return shall be 10 per cent of his or their adjusted gross income from sources within this State or $1,000, whichever is less. The standard deduction of a nonresident married person who files a separate return shall not exceed $500.
§ 1124. Itemized deductions
If the federal taxable income of a nonresident individual is determined by itemizing deductions from his federal adjusted gross income, he may elect to deduct his itemized deductions connected with income derived from sources within this State in lieu of taking the standard deduction. Subject to the limitation in section 1126, the itemized deductions of a nonresident individual shall be the same as for a resident individual determined under section 1109. A husband and wife both of whom are required to file returns under this chapter shall be allowed to itemize deductions connected with income derived from sources within this State only if both elect to itemize their deductions.
§ 1125. Personal exemptions
A nonresident individual shall be allowed the same personal exemptions allowed to resident individuals under section 1110, subject to the limitations in section 1126.
§ 1126. Limitation on itemized deductions and personal exemptions
If the amount of adjusted gross income a nonresident individual would be required to report under section 1105 if he were a resident exceeds by more than $100 the amount of adjusted gross income he receives from sources within this State, his itemized deductions shall be limited by the percentage which his adjusted gross income from sources within this State is to the adjusted gross income he would be required to report if he were a resident. For purposes of this apportionment, a nonresident individual may elect to treat his federal adjusted gross income as adjusted gross income from sources within this State unless the amount of the modifications increasing federal adjusted gross income under section 1106 would exceed $100.
SUBCHAPTER IV. ESTATES, TRUSTS
AND BENEFICIARIES
§ 1131. Imposition of tax
The tax imposed by this Act on individuals shall apply to the taxable income of estates and trusts.
§ 1132. Computation and payment
The taxable income of an estate or trust shall be computed in the same manner as in the case of an individual except as otherwise provided by this subchapter. The tax shall be computed on such taxable income and shall be paid by the fiduciary.
§ 1133. Tax not applicable
(a) Association taxable as corporations. An association, trust or other unincorporated organization which is taxable as a corporation for federal income tax purposes shall not be subject to tax under this chapter.
(b) Exempt associations, trusts and organizations. An association, trust, or other unincorporated organization which by reason of its purpose or activities is exempt from federal income tax shall be exempt from the tax imposed by this chapter except with respect to its unrelated business taxable income.
§ 1134. Fiduciary adjustment
(a) Fiduciary adjustment defined. The fiduciary adjustment shall be the net amount of the modifications described in section 1106 of this title (including subsection (c) if the estate or trust is a beneficiary of another estate or trust) which relates to items of income or deduction of an estate or trust.
(b) Shares of fiduciary adjustment. The respective shares of an estate or trust and its beneficiaries (including solely for the purpose of this allocation, nonresident beneficiaries) in the fiduciary adjustment shall be in proportion to their respective shares of federal distributable net income of the estate or trust. If the estate or trust has no federal distributable net income for the taxable year, the share of each beneficiary in the fiduciary adjustment shall be in proportion to his share of the estate or trust income for such year, under local law or the terms of the instrument, which is required to be distributed currently and any other amounts of such income distributed in such year. Any balance of the fiduciary adjustment shall be allocated to the estate or trust.
§ 1135. Resident and nonresident estate defined
(a) Resident estate. A resident estate of this State means the estate of a decedent who at his death was domiciled in this State.
(b) Nonresident estate. A nonresident estate of this State means every estate which is not a resident estate of this State.
§ 1136. Resident and nonresident trust defined
(a) Resident trust. A resident trust of this State means: a trust created by the will of a decedent who at his death was domiciled in this State; or a trust created by, or consisting of property of, a person domiciled in this State; or a trust with respect to which the conditions of one of the following paragraphs are met during more than one-half of any taxable year —
(1) The trust has only one trustee who or which is (i) a resident individual of this State, or (ii) a corporation, partnership, or other organization having an office for the conduct of trust business in this State.
(2) The trust has more than one trustee, and one of such trustees is a corporation, partnership, or other organization having an office for the conduct of trust business in this State, or
(3) The trust has more than one trustee, all of whom are individuals and one-half or more of whom are resident individuals of this State.
(b) Nonresident trust. A nonresident trust of this State means every trust which is not a resident trust of this State.
§ 1137. Taxable income of resident estate or trust
The taxable income of a resident estate or trust means its federal taxable income modified by the addition or subtraction, as the case may be, of its share of the fiduciary adjustment determined under section 1134.
§ 1138. Nonresident beneficiary deduction for resident estates or trusts
(a) Allowance of deduction. A resident estate or trust shall be allowed a deduction against the taxable income otherwise computed under this chapter, for any taxable year for the amount of its federal taxable income as modified by section 1106 of this title which is, under the terms of the governing instrument, set aside for future distribution to nonresident beneficiaries.
() Rules of application. The following rules shall apply in determining whether or to what extent income is set aside for future distribution to nonresident beneficiaries:
(1) If all or part of the federal taxable income of the estate or trust as modified by section 1106 of this title is distributable in future taxable years (whether or not added in the meantime to estate or trust corpus for estate or trust accounting purposes), to or for the benefit of a class of beneficiaries, and if on the last day of the taxable year if the estate or trust one or more members of such class was living, then the portion of the federal taxable income of the estate or trust as modified by section 1106 of this title considered set aside for future distribution to nonresident beneficiaries shall be computed by first determining who the members of the class would be and the share of each beneficiary in such income if the estate or trust terminated on the last day of the taxable year, and then determining the portion of such income of each such share realized by the estate or trust during the taxable year while the beneficiary thereof was a nonresident of this State.
(2) If all or part of the federal taxable income of the estate or trust as modified by section 1106 of this title is distributable in future taxable years (whether or not added in the meantime to estate or trust corpus for estate or trust accounting purposes), to or for the benefit of a class of beneficiaries, and if on the last day of the taxable year of the estate or trust none of the members of such class was living, then the portion of the federal taxable income of the estate or trust as modified by section 1106 of this title considered set aside for future distribution to nonresident beneficiaries shall be determined in the manner provided in paragraph (1) of this subsection, except that it will be presumed that members of the class were living and residing with the person, relationship to whom determines or defines the membership in the class.
(3) For purposes of determining under paragraphs (1) and (2) of this subsection the share of each beneficiary of an estate or trust in the federal taxable income as modified by section 1106 of this title, the discretion in any person over the distribution of such income (whether or not acting in a fiduciary capacity and whether or not subject to a standard) shall be presumed not to have been exercised, unless such discretion was irrevocably exercised as of the last day of the taxable year.
(4) For purposes of determining under paragraphs (1) and (2) of this subsection when federal taxable income as modified by section 1106 of this title was realized, the following rules shall apply:
(i) interest income shall be considered realized when payable;
(ii) dividend income shall be considered realized on the day the dividend is payable;
() gains and losses from the sale or exchange of property shall be considered realized or deductible, as the case may be, on the settlement date of the sale or the effective date of the exchange; and
(i) commissions on income or principal shall be deemed deductible on the date charged.
(5) The State Tax Commissioner is authorized to establish more detailed rules to apply the foregoing paragraphs (1), (2), (3) and (4) in any manner not inconsistent with the provisions of such paragraphs.
§ 1139. Credit for income tax of another state
A resident estate or trust shall be allowed the credit provided under section 1111 of this title for resident individuals, except that references in that section to resident individuals shall for purposes of this section be deemed to refer to a resident estate or trust.
§ 1140. Accumulation distribution credit for resident beneficiary of trust
(a) Allowance of credit. A resident beneficiary of a trust whose taxable income includes all or part of an accumulation distribution by such trust as defined in section 665 of the Internal Revenue Code, shall be allowed a credit against the tax otherwise due under this chapter for all or a proportionate part of any tax paid by the trust for any preceding taxable year which would not have been payable if the trust had in fact made distribution to its beneficiaries at the times and in the amounts specified in section 666 of the Internal Revenue Code.
(b) Limitation on credit. The credit under this section shall not reduce the tax otherwise due from the beneficiary to an amount less than would have been due if the accumulation distribution or his part thereof were excluded from his taxable income as modified by section 1106 of this title.
§ 1141. Taxable income of a nonresident estate or trust
(a) General Rules. For purposes of this subchapter:
(1) Items of income, gain, loss, and deduction mean those derived from or connected with sources in this State.
(2) Items of income, gain, loss, and deduction entering into the definition of federal distributable net income includes such items from another estate or trust of which the first estate or trust is a beneficiary.
(3) The source of items of income, gain, loss, or deduction shall be determined under rules or regulations prescribed by the State Tax Commissioner in accordance with the general rules in section 1122 of this title as if the estate or trust were a nonresident individual.
(b) Determination of taxable income. The taxable income of a nonresident estate or trust consists of (i) its share of items of income, gain, loss, and deduction which enter into the federal definition of distributable net income; (ii) increased or reduced by the amount of any items of income, gain, loss, or deduction which are recognized for federal income tax purposes but excluded from the federal definition of distributable net income of the estate or trust; (iii) less the amount of the deduction for its federal exemption.
§ 1142. Share of a nonresident estate, trust, or its beneficiaries in income from sources within this State
The share of a nonresident estate or trust, and the share of a nonresident beneficiary of any estate or trust, of items of estate or trust income, gain, loss and deduction for purposes of section 1124 of this title shall be determined as follows:
(a) To the amount of items of income, gain, loss and deduction which enter into the definition of distributable net income there shall be added or subtracted, as the case may be, the modifications described in section 1102 of this title to the extent they relate to items of income, gain, loss and deduction which also enter into the definition of distributable net income. No modification shall be made under this section which has the effect of duplicating an item already reflected in the definition of distributable net income;
(b) The amount determined under subsection (a) of this section shall be allocated among the estate or trust and its beneficiaries, (including, solely for the purposes of this allocation, resident beneficiaries), in proportion to their respective shares of federal distributable net income. The amounts so allocated shall have the same character as for federal income tax purposes. Where an item entering into the computation of such amounts is not characterized for federal income tax purposes, it shall have the same character as if realized directly from the source from which realized by the estate or trust, or incurred in the same manner as if incurred by the estate or trust; and
(c) If the estate or trust has no federal distributable net income for the taxable year, the share of each beneficiary in the net amount determined under subsection (a) of this section shall be in proportion to his share of the estate or trust income distributed in such year. Any balance of such net amount shall be allocated to the estate or trust.
SUBCHAPTER V. PARTNERS AND PARTNERSHIPS
§ 1143. Partnership entity not taxable
A partnership as such shall not be subject to the tax imposed by this chapter. Persons or their authorized representatives carrying on business as partners shall be liable for the tax imposed by this chapter only in their separate or individual capacities.
§ 1144. Character of items
Each item of partnership income, gain, loss or deduction shall have the same character for a partner under this chapter as it has for federal income tax purposes. Where an item is not characterized for federal income tax purposes, it shall have the same character for a partner as if realized directly from the sources from which realized by the partnership or incurred in the same manner as incurred by the partnership.
§ 1145. Special rules for nonresident partners
(a) Taxable income from sources within this State. In determining the tax liability of a nonresident partner of any partnership under this chapter attributable to his partnership interest, there shall be included only that part of the partner's distributive share of items of partnership, income, gain, loss and deduction entering into his federal taxable income as modified by section 1106 of this title derived from or connected with sources within this State as such part is determined in accordance with the general rules of section 1122 of this title.
(b) Tax avoidance rules. In determining the sources of a nonresident partner's income, no effect shall be given to a provision in the partnership agreement which —
(1) Characterizes payments to the partner as being for services or for the use of capital, or allocates to the partner, as income or gain from sources outside this State, a greater proportion of his distributive share of partnership income or gain than the ratio of partnership income or gain from sources outside this State to partnership income or gain from all sources; or
(2) Allocates to the partner a greater proportion of a partnership item of loss or deduction connected with sources in this State than his proportionate share, for federal income tax purposes, of partnership loss or deduction generally.
(c) Partner's modifications. Any modification described in subsections (a), (b) and (c) of section 1106 of this title which relates to an item of partnership income, gain, loss or deduction, shall be made in accordance with the partner's distributive share, for federal income tax purposes, of the item to which the modification relates, but limited to the portion of such item derived from or connected with sources in this State.
SUBCHAPTER VI. ACCOUNTING PERIODS AND
METHODS OF ACCOUNTING
§ 1146. Taxable year
A taxpayer's taxable year for purposes of this chapter shall be the same as his taxable year for federal income tax purposes. If a taxpayer's taxable year is changed for federal income tax purposes, his taxable year for purposes of this chapter shall be similarly changed.
§ 1147. Method of accounting
A taxpayer's method of accounting for purposes of this chapter shall be the same as his method of accounting for federal income tax purposes. If a taxpayer's method of accounting is changed for federal income tax purposes, his method of accounting for purposes of this chapter shall be similarly changed.
§ 1148. Adjustments
In computing taxpayer's taxable income for any taxable year under a method of accounting different from the method under which the taxpayer's taxable income for the previous year was computed, there shall be taken into account those adjustments which are determined under rules or regulations prescribed by the State Tax Commissioner to be necessary solely by reason of the change in order to prevent amounts from being duplicated or omitted.
§ 1149. Basis adjustments
In computing a taxpayer's taxable income for any taxable year under this chapter involving the basis of assets which on the effective date of this chapter was different from the taxpayer's basis in such assets under the laws of this State in effect immediately prior to the effective date of this chapter (prior basis), the State Tax Commissioner by rules or regulations shall provide that the taxpayer shall compute his taxable income under this chapter with reference to such prior basis, adjusted from the effective date of this chapter to the date of the taxable event with respect to which his taxable income is being determined under this chapter.
SUBCHAPTER VII. WITHHOLDING OF TAX
§ 1151. Employer to withhold tax from wages
(a) General. Every employer maintaining an office or transacting business within this State and making payment of any wages taxable under this chapter to a resident or nonresident individual whose wages 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 his 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. This section shall not apply to payments by the United States for service in the armed forces of the United States.
(b) Withholding exemptions. For purposes of this section:
(1) An employee shall be entitled to the same number of withholding exemptions as the number of withholding exemptions to which he 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 and salaries) so as to govern the amounts to be withheld from the wages and salaries of residents of such states under provisions of 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 and salaries paid to nonresident employee. 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.
§ 1152. Information statement for employee
Every employer required to deduct and withhold tax under this chapter from the wages of an employee shall furnish to each such employee in respect to the wages paid by such employer to such employee during the calendar year on or before February 15 of the succeeding year, or, if his employment is terminated before the close of such calendar year, within thirty days from the date on which the last payment of wages is made, a written statement as prescribed by the State Tax Commissioner showing the amount of wages paid by the employer to the employee, the amount deducted and withheld as tax, and such other information as the State Tax Commissioner shall prescribe.
§ 1153. Credit for tax withheld
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.
§ 1154. Employer's return and payment of tax withheld
(a) General. Every employer required to deduct and withhold tax under this Chapter shall, for each calendar quarter, on or before the last day of the month following the close of such calendar quarter, file a withholding return as prescribed by the State Tax Department and pay over to the State Tax Department or to a depository designated by the State Tax Commission, the taxes so required to be deducted and withheld. The State Tax Commissioner may, if he believes such action necessary for the protection of the revenue, require any employer to make such return and pay the tax deducted and withheld at any time, or from time to time. Where the amount of wages paid by an employer is not sufficient under the chapter to require the withholding of tax from the wages of any of his employees, the State Tax Commissioner may permit such employer to file an annual return on or before January 31 of the succeeding calendar year.
(b) Deposit in trust for State Tax Commissioner. Whenever any employer fails to collect, truthfully account for, pay over the tax, or make returns of the tax as required by this section, the State Tax Commissioner may serve a notice requiring such employer to collect the taxes which became collectible after service of such notice, to deposit such taxes in a bank approved by the State Tax Commissioner, in a separate account, in trust for and payable to the State Tax Department, and to keep the amount of such tax in such account until paid over to the State Tax Department. Such notice shall remain in effect until a notice of cancellation is served by the State Tax Commissioner.
§ 1155. Employer's liability for withheld taxes
Every employer required to deduct and withhold tax under this chapter is hereby 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 his employer in respect to any money deducted and withheld from his wages and paid over to the State Tax Commissioner in compliance or in intended compliance with this chapter.
§ 1156. Employer's failure to withhold
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.
SUBCHAPTER VIII. RETURNS AND
PAYMENTS OF TAX
§ 1161. Persons required to make returns of income
An income tax return with respect to the tax imposed by this chapter shall be made by the following:
(a) Every resident individual who —
(1) is required to file a federal income tax return for the taxable year, or
(2) Would be required to file a federal income tax return for the taxable year if the additions provided under section 1102 of this title were included in his federal gross income;
(b) Every nonresident individual who has income from sources in this State;
(c) Every resident estate or trust which —
(1) is required to file a federal income tax return for the taxable year or would be required to file a federal income tax return for the taxable year if the additions provided under section 1106 of this title were included in its federal gross income, and
(2) which has not distributed, or set aside for distribution, to nonresident beneficiaries, its entire federal taxable income as modified by section 1106 of this title;
(d) Every nonresident estate or trust which has income from sources within this State.
§ 1162. Joint or separate returns of husband and wife
(a) Separate federal returns. If for any taxable year the federal income tax liability of husband and wife, either both residents of this State or both nonresidents of this State, is determined on separate federal income tax returns, then their tax liabilities under this chapter for such taxable year shall be separately determined, and they shall file separate returns.
(b) Joint federal returns. If for any taxable year the federal income tax liability of husband and wife, either both residents of this State or both nonresidents of this State, is determined on a joint federal income tax return, then they may file either a joint return or separate returns under this chapter, whichever they elect.
(c) No federal returns required. If for any taxable year neither spouse is required to file a federal income tax return and either or both are required to file a return under this chapter, they may elect to file separate or joint returns, and, pursuant to such election, their tax liabilities under this chapter for such taxable year shall be either separately or jointly determined, as the case may be.
(d) One spouse a nonresident. If either husband or wife is a nonresident and the other a resident for any taxable year, they shall file separate returns on such forms as the State Tax Commissioner shall prescribe and their tax liabilities under this chapter shall be separately determined, unless both elect to file a joint tax return in this State as if both were residents.
§ 1163. Returns by fiduciaries
(a) Decedents. An income tax return for any deceased individual shall be made and filed by his executor, administrator or other person charged with the care of his property. A joint or separate final return of a decedent shall be due when it would have been due if the decedent had not died.
(b) Individuals under a disability. An income tax return for an individual who is unable to make a return by reason of minority or other disability shall be made and filed by his duly authorized agent, guardian, fiduciary, or other person charged with the care of his person or property other than a receiver in possession of only a part of the individual's property.
(c) Estates and trusts. The income tax return of an estate or trust shall be made and filed by the fiduciary thereof.
(d) Joint fiduciaries. If two or more fiduciaries are acting jointly, the return may be made by any one of them.
§ 1164. Notice of qualification as receiver
Every receiver, personal representative, trustee in bankruptcy, assignee for the benefit of creditors, or other like fiduciary, shall give notice of his qualification as such to the State Tax Commissioner as may be required by the State Tax Commissioner.
§ 1165. Change of status as resident or nonresident during the year
If an individual changes his status during the taxable year from resident to nonresident or from nonresident to resident, he shall file a return for that portion of the year during which he is a resident and the State Tax Commissioner may by forms or instructions require him to file a return for that portion of the year during which he is a nonresident.
§ 1166. Computation of tax as resident and nonresident
If an individual for any taxable year is required to file returns as a resident and/or as a nonresident under section 1165 of this title, then his tax under this chapter shall be computed as provided in subchapter II of this chapter for that portion of the year during which he is a resident and as provided in subchapter III of this chapter for that portion of the year during which he is a nonresident, as if the individual's taxable year for federal income tax purposes were limited to the period of his resident and nonresident status respectively.
§ 1167. Minimum tax and prorating of exemptions
If an individual for any taxable year is required to file returns both as a resident and/or as a nonresident under section 1165 of this title —
(a) Personal exemptions and the standard deduction shall be prorated between the two returns, to reflect the proportions of the taxable year during which the individual was a resident and a nonresident; and
(b) Notwithstanding the provisions of section 1166, the total of the taxes due thereon shall not be less than would be due if the total of the taxable incomes reported on the two returns were includable in one return.
§ 1168. Time and place for filing returns and paying tax
The income tax returns required by this chapter shall be filed on or before the fifteenth day of the fourth month following the close of the taxpayer's taxable year. A person required to make and file a return under this chapter shall, without assessment, notice or demand, pay and tax due thereon to the State Tax Department on or before the date fixed for filing such return (determined without regard to any extension of time for filing the return). The State Tax Commissioner shall prescribe the place for filing any return, declaration, statement or other document required pursuant to this chapter and for the payment of any tax.
§ 1169. Declarations of estimated tax
(a) Requirement of declaration. Every resident and nonresident individual shall make a declaration of his estimated tax for the taxable year, in such form as the State Tax Commissioner may prescribe, in the case of a resident, if he is required to file a declaration of estimated tax for federal income tax purposes for the taxable year, or, in the case of a nonresident, if the estimated tax can reasonably be expected to exceed forty dollars.
(b) Estimated tax defined. The term "estimated tax" means the amount which the individual estimates to be his income tax under this chapter for the taxable year, less the amount which he estimates to be the sum of any credits allowable for tax withheld.
(c) Joint declaration of husband and wife. If they are eligible to do so for federal tax purposes, a husband and wife may make a joint declaration of estimated tax as if they were one taxpayer, in which case the liability with respect to the estimated tax shall be joint and several. If a joint declaration is made but husband and wife determine their taxes under the chapter separately, the estimated tax for such year may be treated as the estimated tax of either husband or wife, or may be divided between them, as they may elect.
(d) Amendment of declaration. An individual may amend a declaration as prescribed by the State Tax Commissioner.
§ 1170. Filing of estimated tax returns and payment of estimated tax
(a) General. The declaration and payment of estimated tax shall be filed or paid, as the case may be, on or before the dates prescribed by the laws of the United States for filing declarations and payment of estimated federal income tax, except that the State Tax Commissioner may establish other dates for filing declarations and payment of estimated tax.
() Short taxable years. The application of the provisions of this section to taxable years of less than twelve months shall be in accordance with rules prescribed by the State Tax Commissioner.
(a) Payment of account. Payment of the estimated income tax or any installment thereof, shall be considered payment on account of the income tax imposed under the provisions of this chapter for the taxable year.
§ 1171. Extension of time for filing and payment
(a) General. The State Tax Commissioner may grant a reasonable extension of time for payment of income tax or estimated tax or any installment thereof, or for filing any return, declaration, statement, or other document required, on such terms and conditions as he may require; provided that an extension of time for filing any such return, declaration, statement, or other document granted by the Internal Revenue Service shall operate as an extension hereunder.
(b) Security. If any extension of time is granted for payment of any amount of tax, the State Tax Commissioner may require the taxpayer to furnish a bond or other security in an amount not exceeding twice the amount of the tax for which the extension of time for payment is granted, on such terms and conditions as the State Tax Commissioner may require.
§ 1172. Signing of returns and other documents
(a) General. Any return, declaration, statement or other document required to be made pursuant to this chapter shall be signed in accordance with rules or instructions prescribed by the State Tax Commissioner. The fact that an individual's name is signed to a return, declaration, statement or other document, shall be prima facie evidence for all purposes that the return, declaration, statement or other document was actually signed by him.
() Partnerships. Any return, statement or other document required of a partnership shall be signed by one or more partners. The fact that a partner's name is signed to a return, statement or other document, shall be prima facie evidence for all purposes that such partner is authorized to sign on behalf of the partnership.
(a) Certifications. The making or filing of any return, declaration, statement or other document or copy thereof required to be made or filed pursuant to this chapter, including a copy of a federal return, shall constitute a certification by the person making or filing such return, declaration, statement or other document or copy thereof that the statements contained therein are true and that any copy filed is a true copy.
§ 1173. General requirements concerning returns; notices; records and statements
The State Tax Commissioner may prescribe rules or regulations as to the keeping of records, the content and form of returns and statements and the filing of copies of federal income returns and determinations. The State Tax Commissioner may require any person, by regulation or notice served on such person, to make such returns, render such statements, or keep such records, as the State Tax Commissioner may deem sufficient to show whether or not such person is liable under this chapter for tax or for the collection of tax.
§ 1174. Partnership return
Every partnership having a resident partner or having any income derived from sources in this State, determined in accordance with the applicable rules of section 1124 of this title as in the case of a nonresident individual, shall make a return for the taxable year setting forth all items of income, gain, loss and deduction, and the names and addresses of the individuals whether residents or nonresidents who would be entitled to share in the net income if distributed and the amount of the distributive share of each individual, and such other pertinent information as the State Tax Commissioner may prescribe by rules or instructions. Such return shall be filed on or before the date prescribed for filing a federal partnership return. For purposes of this section, "taxable year" means a year or period which would be a taxable year of the partnership if it were subject to tax under this chapter.
§ 1175. Information returns
The State Tax Commissioner may prescribe rules and instructions requiring returns of information to be made and filed not inconsistent with the information returns required by the laws of the United States.
§ 1176. Report of change in federal tax liability
If the amount of a taxpayer's federal tax liability reported on his federal income tax return for any taxable year is changed or corrected by the Internal Revenue Service or other competent authority, the taxpayer shall report to the State Tax Department such change or correction in federal tax liability within ninety days after the final determination of such change, correction, or renegotiation and shall concede the accuracy of such determination or state wherein it is erroneous. Any taxpayer filing an amended federal income tax return shall also file within ninety days thereafter an amended income tax return under the provisions of this chapter, and shall give such information as the State Tax Commissioner may require.
SUBCHAPTER IX. PROCEDURE AND ADMINISTRATION
§ 1181. Examination of return
(a) Deficiency or overpayment. As soon as practical after the return is filed, the State Tax Commissioner shall examine it to determine the correct amount of tax. If the State Tax Commissioner finds that the amount of tax shown on the return is less than the correct amount, he shall notify the taxpayer of the amount of the deficiency proposed to be assessed. If the State Tax Commissioner finds that the tax paid is more than the correct amount, he shall credit the overpayment against any taxes clue to the State of Delaware by the taxpayer and refund the difference.
() No return filed. If the taxpayer fails to file an income tax return, the State Tax Commissioner shall estimate the taxpayer's taxable income and the tax thereon on from any available information and notify the taxpayer of the amount proposed to be assessed as in the case of a deficiency.
(a) Notice of deficiency. A notice of deficiency shall set forth the reason for the proposed assessment. The notice may be mailed by ordinary certified or registered mail to the taxpayer at his last known address. In the case of a joint return, the notice of deficiency may be a single joint notice, except that if the State Tax Commissioner is notified by either spouse that separate residences have been established, he shall mail joint notices to each spouse. If the taxpayer is deceased or under a legal disability, a notice of deficiency may be mailed to his last known address unless the State Tax Commissioner has received notice of the existence of a fiduciary relationship with respect to such taxpayer.
§ 1182. Assessment final if no protest
Ninety days after the date on which it was mailed (150 days if the taxpayer is outside the United States), a notice of proposed assessment of a deficiency shall constitute a final assessment of the amount of tax specified together with interest, additions to tax and penalties except only for such amounts as to which the taxpayer has filed a protest with the State Tax Commissioner.
§ 1183. Protest by taxpayer
Within 90 days (150 days if the taxpayer is outside the United States) after the mailing of a deficiency notice, or any extension of such period granted by the State Tax Commissioner, the taxpayer may file with the State Tax Commissioner a written protest against the proposed assessment in which he shall set forth the grounds on which the protest is based. If a protest is filed, the State Tax Commissioner shall reconsider the assessment of the deficiency and, if the taxpayer has so requested, shall grant the taxpayer or his authorized representatives an oral hearing.
§ 1184. Notice of determination after protest
Notice of the State Tax Commissioner's determination shall be mailed to the taxpayer by certified or registered mail and such notice shall set forth briefly the State Tax Commissioner's findings of fact and the basis of decision in each case decided in whole or in part adversely to the taxpayer.
§ 1185. Action of State Tax Commissioner final
The action of the State Tax Commissioner on the taxpayer's protest is final upon the expiration of 90 days from the date when he mails notice of his action to the taxpayer unless within this period the taxpayer seeks review of the State Tax Commissioner's determination.
§ 1186. Burden of proof in proceedings before the State Tax Commissioner
In any proceeding before the State Tax Commissioner under this chapter the burden of proof shall be on the taxpayer except for the following issues, as to which the burden of proof shall be on the State Tax Commissioner:
(a) Whether the taxpayer has been guilty of fraud with attempt to evade tax;
(b) Whether the petitioner is liable as the transferee of property of a taxpayer (but not to show that the taxpayer was liable for the tax); or
(c) Whether the taxpayer is liable for any increase in a deficiency where such increase is asserted initially after the notice of deficiency was mailed and a protest under section 1183 of this title filed, unless such increase in deficiency is the result of a change or correction of federal taxable income required to be reported under section 1176 of this title, and of which change or correction the State Tax Commissioner had no notice at the time he mailed the notice of deficiency.
§ 1187. Evidence of related federal determination
Evidence of a federal determination relating to issues raised in a proceeding under section 1183 of this title shall be admissible, under rules established by the State Tax Commissioner.
§ 1188. Mathematical error
In the event that the amount of tax is understated on the taxpayer's return due to a mathematical error, the State Tax Commissioner shall notify the taxpayer that an amount of tax in excess of that shown on the return is due and has been assessed. Such a notice of additional tax due shall not be considered a notice of a deficiency assessment nor shall the taxpayer have any right of protest of appeal as in the case of a deficiency assessment based on such notice, and the assessment and collection of the amount of tax erroneously omitted in the return is not prohibited by any provision of this chapter.
§ 1189. Waiver of restriction
The taxpayer at any time, whether or not a notice of deficiency has been issued, shall have the right to waive the restrictions on assessment and collection of the whole or any part of the deficiency by a signed notice in writing filed with the State Tax Commissioner.
§ 1190. Assessment of tax
(a) Date of assessment. The amount of tax which is shown to be due on the return (including revisions for mathematical errors) shall be deemed to be assessed on the date of filing of the return including any amended returns showing an increase of tax. In the case of a return properly filed without the computation of the tax, the tax computed by the State Tax Commissioner shall be deemed to be assessed on the date when payment is due. If a notice of deficiency has been mailed, the amount of the deficiency shall be deemed to be assessed on the date provided in section 1182 of this title if no protest is filed; or, if a protest is filed then upon the date when the determination of the State Tax Commissioner becomes final. If an amended return or report filed pursuant to section 1176 of this title concedes the accuracy of a federal change or correction, any deficiency in tax under this chapter resulting therefrom shall be deemed to be assessed on the date of filing such report or amended return and such assessment shall be 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 receipt of payment, notwithstanding any other provision of this chapter.
(b) Other assessment powers. If the mode or time for the assessment of any tax under this chapter, including interest, additions to tax and penalties is not otherwise provided for, the State Tax Commissioner may establish the same.
(c) Supplemental assessment. The State Tax Commissioner may, at any time within the period prescribed for assessment, make a supplemental assessment, subject to the provisions of section 1181 of this title where applicable, whenever it is found that any assessment is imperfect or incomplete in any material aspect.
§ 1191. Limitations on assessment
(a) General. Except as otherwise provided in this chapter, a notice of a proposed deficiency assessment shall be mailed to the taxpayer within three years after the return was filed. No deficiency shall be assessed or collected with respect to the year for which the return was filed unless the notice is mailed within the three year period or the period otherwise fixed.
(b) No return filed or fraudulent return. If no return is filed or a false and fraudulent return is filed with intent to evade the tax imposed by this chapter, a notice of deficiency may be mailed to the taxpayer at any time.
(c) Failure to report federal change. If a taxpayer fails to comply with the requirement of section 1176 of this chapter by not reporting a change or correction increasing his federal taxable income, or in not reporting a change or correction which is treated in the same manner as if it were a deficiency for federal income tax purposes, or in not filing an amended return, a notice of deficiency may be mailed to the taxpayer at any time.
(d) Report of federal change or correction. If the taxpayer shall, pursuant to section 1176 of this title, report a change or correction or file an amended return increasing his federal taxable income or report a change or correction which is treated in the same manner as if it were a deficiency for federal income tax purposes, the assessment (if not deemed to have been made upon the filing of the report or amended return) may be made at any time within two years after such report or amended return was filed.
(e) Extension by agreement. Where, before the expiration of the time prescribed in this section for the assessment of a deficiency, both the State Tax Commissioner and the taxpayer shall have consented in writing to its assessment after such time, the deficiency may be assessed at any time prior to the expiration of period agreed upon. The period so agreed may be extended by subsequent agreement 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 State Tax Commissioner to extend the period for assessment of income taxes under the provisions of this chapter. A copy of all such agreements and extensions thereof shall be filed with the State Tax Commissioner within thirty days after their execution.
(f) Time return deemed filed. For purposes of this section, an income tax return filed before the last day prescribed by law or by regulation promulgated pursuant to law for the filing thereof, shall be deemed to be filed on such last day. If a return or withholding tax for any period ending with or within a calendar year is filed before April 15 of the succeeding calendar year, such return shall be deemed to be filed on April 15 of such succeeding calendar year.
§ 1192. Recovery of erroneous refund
An erroneous refund shall be considered an underpayment of tax on the date made, and an assessment of a deficiency arising out of an erroneous refund may be made at any time within two years from the making of the refund, except that the assessment may be made within five years from the making of the refund if it appears that any part of the refund was induced by fraud or the misrepresentation of a material fact.
§ 1193. Interest on underpayments
(a) General. If any amount of tax imposed by this chapter, including tax withheld by an employer, is not paid on or before the last date prescribed for payment, interest on such amount at the rate of one percent per month or fraction thereof shall be paid for the period from such last date to date paid. No interest shall be imposed if the amount due is less than one dollar nor shall this section apply to any failure to pay estimated income tax under section 1170 of this title.
(b) Last date prescribed for payment. For purposes of this section, the last date prescribed for the payment of tax shall be determined without regard to any extension of time.
(c) Suspension of waiver of restrictions. If the taxpayer has filed a waiver of restrictions on the assessment of a deficiency and if notice and demand by the State Tax Commissioner for payment of such deficiency is not made within 30 days after the filing of such waiver, interest shall not be imposed on such deficiency for the period beginning immediately after such 30th day and ending with the date of notice and demand.
(d) Interest treated as tax. Interest prescribed under this section on any tax including tax withheld by an employer shall be paid on notice and demand and shall be assessed, collected and paid in the same manner as taxes. Any reference in this chapter to the tax imposed by this chapter shall be deemed also to refer to interest imposed by this section on such tax.
(e) Interest on penalties, or additions to tax. Interest shall be imposed under this section in respect to any penalty, or addition to tax only if such penalty or addition to tax is not paid within 10 days of the notice and demand therefor, and in such case interest shall be imposed only for the period from the date of the notice and demand to the date or payment.
(f) Payments made within 10 days after notice and demand. If notice and demand is made for the payment of any amount due under this chapter and if such amount is paid within 10 days after the date of such notice and demand, interest under this section on the amount so paid shall not be imposed for the period after the date of such notice and demand.
(g) Satisfaction by credits. 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.
(h) Interest on erroneous refund. Any portion of the tax imposed by this chapter or any interest, penalty, or addition to tax which has been erroneously refunded and which is recoverable by the State Tax Commissioner shall bear interest at the rate of one percent per month or fraction thereof from the date of payment of the refund.
() Limitation on assessment and collection. Interest prescribed under this section may be assessed and collected at any time during the period within which the tax, penalty, or addition to tax to which such interest relates may be assessed and collected respectively.
§ 1194. Failure to file tax returns
(a) Failure to file tax return. In case of failure to file any return required under this chapter on 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 willful neglect, there shall be added to the amount required to be shown as tax on such return 5 percent of the amount of such tax if the failure is not for more than one month, with an additional 5 percent for each additional month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate. For purposes of this section, 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 upon the return.
(b) Failure to file certain information returns. In case of each failure to file a statement of payment to another person required under the authority of this chapter including the duplicate statement of tax withheld on wages on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to a reasonable cause and not to willful neglect, there shall be paid upon notice and demand by the State Tax Commissioner and in the same manner as by the person so failing to file the statement, a penalty of $2.00 for each statement not so filed, but the total amount imposed on the delinquent person for all such failures during any calendar year shall not exceed $2,000.
§ 1195. Failure to pay tax
(a) Deficiency due to negligence. If any part of a deficiency is due to negligence or intentional disregard of rules and regulations (but without intent to defraud) there shall be added to the tax an amount equal to 5 percent of the deficiency.
(b) Fraud. If any part of a deficiency is due to fraud, there shall be added to the tax an amount equal to 50 percent of the deficiency. This amount shall be in lieu of any amount determined under subsection (a).
(c) Failure by individual to file declaration or underpayment of estimated tax. If any taxpayer fails to file a declaration of estimated tax or fails to pay all or any part of an installment of any tax, he shall be deemed to have made an underpayment of estimated tax. The State Tax Commissioner shall assess and collect in the same manner as the estimated tax a penalty computed at the rate of one percent per month or fraction thereof on the amount of the underpayment during the period of the underpayment. The State Tax Commissioner shall determine the amount of underpayment of estimated tax in accordance with the laws of the United States.
(d) Nonwillful failure to pay withholding tax. If any employer, without intent to evade or defeat any tax imposed by this chapter or the payment thereof, shall fail to make a return and pay a tax withheld by him at the time required by or under the provisions of this chapter, such employer shall be liable for such taxes and shall pay the same together with interest thereon and the addition to tax provided in subsection (a), and such interest and addition to tax shall not be charged to or collected from the employee by the employer. The State Tax Commissioner shall have the same rights and powers for the collection of such tax, interest, and addition to tax against such employer as are now prescribed by this chapter for the collection of tax against an individual taxpayer.
(e) Willful failure to collect and pay over tax. Any person required to collect, truthfully account for, and pay over the tax imposed by this chapter who willfully fails to collect such tax or truthfully account for and pay over such tax or willfully attempts in any manner to evade or defeat the tax or the payment thereof, shall, in addition to other penalties provided by law be liable to 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 subsections (a) or (b) of this section shall be imposed for any offense to which this subsection applies.
() Additional penalty. Any person who with fraudulent intent shall fail to pay, or to deduct or withhold and pay, any tax, or to make, vender, sign, or certify any return or declaration of estimated tax, or to supply any information within the time required by or under this act, shall be liable to a penalty of not more than $1,000, in addition to any other amounts required under this chapter, to be imposed, assessed and collected by the State Tax Commissioner.
(g) Additions treated as tax. The additions to tax and penalties provided by this chapter shall be paid upon notice and demand and shall be assessed, collected, and paid in the same manner as taxes and any reference in this chapter to income tax or the tax imposed by this chapter shall be deemed also to refer to additions to the tax, and penalties provided by this section. For purposes of the deficiency procedures provided in section 1181 of this title, this subsection shall not apply to:
(1) Any addition to tax under subsection (a) of section 1194 of this title except as to that portion attributable to a deficiency;
(2) any addition to tax for failure to file a declaration or underpayment of estimated tax as provided in subsection (c) of this section;
(3) any additional penalty under subsection (f) of this section.
(h) Determination of deficiency. For purposes of subsections (a) and (b) (relating to deficiencies due to negligence or fraud) the amount shown as the tax by the taxpayer upon his return shall be taken into account in determining the amount of the deficiency only if such return was filed on or before the last day prescribed for the filing of such return, determined with regard to any extension of time for such filing.
() Person defined. For purposes of subsections (e) and (f), the term "person" includes an individual, corporation or partnership, or an officer or employee of any corporation (including a dissolved corporation), or a member or employee of any partnership, who as such officer, employee or member is under a duty to perform the act in respect of which the violation occurs.
§ 1196. Authority to make credits or refunds
(a) General. The State Tax Commissioner, within the applicable period of limitations, may credit an overpayment of income tax and apply such overpayment 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 State Treasurer out of the proceeds of the tax retained by him for such general purposes,
(b) Excessive withholding. If the amount allowable as a credit for tax withheld from the taxpayer exceeds his tax to which the credit relates, the excess shall be considered an overpayment.
(c) Overpayment by employer. If there has been an overpayment of tax required to be deducted and withheld under section 1151 of this title, refund shall be made to the employer only to the extent that the amount of the overpayment was not deducted and withheld by the employer.
(d) Assessment and collection after limitation period. If any amount of income tax is assessed or collected after the expiration of the period of limitations properly applicable thereto, such amount shall be considered an overpayment.
§ 1197. Abatements
(a) General. The State Tax Commissioner is authorized to abate the unpaid portion of the assessment of any tax or any liability in respect thereof, which (1) is excessive in amount, or (2) is assessed after the expiration of the period of limitations properly applicable thereto, or (3) is erroneously or illegally assessed.
() Small tax balances. The State Tax Commissioner is authorized to abate the unpaid portion of the assessment of any tax, or any liability in respect thereof, if he determines under uniform rules prescribed by him, that the administration and collection costs involved would not warrant collection of the amount due.
§ 1198. Limitations on credit or refund
(a) General. A claim for credit or refund of an overpayment of any tax imposed by this chapter shall be filed by the taxpayer within three years from the time the return was filed or two 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 two years from the time the tax was paid. No credit or refund shall be allowed or made after the expiration of the period of limitations prescribed in this subsection for the filing of a claim for credit or refund, unless a claim for credit or refund is filed by the taxpayer within such period.
(b) Limit on amount of claim or refund. If the claim is filed by the taxpayer during the three-year period prescribed in subsection (a), the amount of the credit or refund shall not exceed the portion of the tax paid within the three years immediately preceding the filing of the claim plus the period of any extension of time for filing the return. If the claim is not filed within such three-year period, but is filed within the two-year period, the amount of the credit or refund shall not exceed the portion of the tax paid during the two years immediately preceding the filing of the claim. If no claim is filed, the credit or refund shall not exceed the amount which would be allowable under either of the preceding sentences, as the case may be, if a claim was filed on the date the credit or refund is allowed.
(c) Extension of time by agreement. If an agreement for an extension of the period for assessment of income taxes is made within the period prescribed in subsection (a) for the filing of a claim for credit or refund, the period for filing claim for credit or for making credit or refund if no claim is filed, shall not expire prior to six 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 such 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 (a) if a claim had been filed on the date the agreement was executed.
(d) Notice of change or correction of federal income. If a taxpayer is required by section 1176 of this title to report a change or correction in federal taxable income reported on his federal income tax return, or to report a change or correction which is treated in the same manner as if it were an overpayment for federal income tax purposes, or to file an amended return with the State Tax Commissioner, claim for credit or refund of any resulting over-payment of tax shall be filed by the taxpayer within two years from the time the notice was required to be filed with the State Tax Commissioner. If the report or amended return required by section 1176 of this title is not filed within the 90-day period therein specified, interest on any resulting refund or credit shall cease to accrue after such 90th day. The amount of such credit or refund shall not exceed the amount of the reduction in tax attributable to such federal change, correction, or items amended on the taxpayer's amended federal income tax return. This subsection shall not affect the time within which or the amount for which a claim for credit or refund may be filed apart from this subsection.
(e) Special rule for net operating loss carryback. If the claim for credit or refund relates to an overpayment attributable to a net operating loss carryback, the claim may he made within the period which ends with the expiration of the 15th day of the 40th month following the end of the taxable year of the net operating loss which resulted in such carryback or the period prescribed in subsection (c) in respect of such taxable year, whichever expires later.
§ 1199. Interest on overpayment
(a) General. Interest shall be allowed and paid at the rate of one percent per month or fraction thereof upon any overpayment in respect of the tax imposed by this chapter. No interest shall be allowed or paid if the amount thereof is less than $1.00.
(b) Date of return or payment. For purposes of this section and section 1198:
(1) Any return filed before the last day prescribed for the filing thereof shall be considered as filed on such last day determined without regard to any extension of time granted the taxpayer;
(2) Any tax paid by the taxpayer before the last day prescribed for its payment, any income tax withheld from the taxpayer during any calendar year and any amount paid by the taxpayer as estimated income tax for a taxable year shall be deemed to have been paid by him on the fifteenth day of the fourth month following the close of his taxable year to which such amount constitutes a credit or payment.
(c) Refund within three months. If any overpayment of tax imposed by this chapter is refunded within three months after the last date prescribed (or permitted by extension of time) for filing the return of such tax or within three months after the return was filed, whichever is later, no interest shall be allowed under this section on overpayment.
(d) No interest shall be allowed during the period of delay on a refund delayed by the action or by the inaction of the taxpayer.
§ 1200. Refund claim
Every claim for refund shall be filed with the State Tax Commissioner in writing and shall state the specific grounds upon which it is founded. The State Tax Commissioner may grant the taxpayer or his authorized representatives an opportunity for an oral hearing if the taxpayer so requests.
§ 1201. Notice of denial
If the State Tax Commissioner disallows a claim for refund, he shall notify the taxpayer accordingly. The action of the State Tax Commissioner denying a claim for refund is final upon the expiration of 90 days from the date when he mails notice of his action to the taxpayer unless within this period the taxpayer seeks review of the State Tax Commissioner's determination.
§ 1202. Refund claim deemed disallowed
If the State Tax Commissioner fails to mail a notice of action on any refund claim within six months after the claim is filed, the taxpayer may, prior to notice of action on the refund claim, consider the claim disallowed.
§ 1203. Review of determinations of State Tax Commissioner
A determination by the State Tax Commissioner on a taxpayer's protest against the proposed assessment of a deficiency or on a taxpayer's claim for refund shall be subject to review at the instance of the taxpayer by filing a petition with the State Tax Board, in such form as the State Tax Board may prescribe, within the times specified in section 1185 or section 1201 of this title, as the case may be. The determination of the State Tax Board shall be subject to judicial review as provided in section 328 of this title.
SUBCHAPTER X. ENFORCEMENT
§ 1211. Timely mailing
If any claim, statement, notice, petition, or other document including, to the extent authorized by the State Tax Commissioner a return or declaration of estimated tax, required to be filed within a prescribed period or on or before a prescribed date under the authority of any provision of this chapter is, after such period or such date, delivered by United States mail to the State Tax Commissioner, or the officer or person therein with which or with whom such document is required to be filed, the date of the United States postmark stamped on the envelope shall be deemed to be the date of delivery. This section shall apply only if the postmark date falls within the prescribed period or on or before the prescribed date for the filing of such document, determined with regard to any extension granted for such filing, and only if such document was deposited in the mail, postage prepaid, properly addressed to the State Tax Commissioner, office, officer or person therein with which or with whom the document is required to be filed. If any document is sent by United States registered mail, such registration shall be prima facie evidence that such document was delivered to the State Tax Commissioner, or the office, officer or person to which or to whom it is addressed. To the extent that the State Tax Commissioner shall prescribe, certified mail may be used in lieu of registered mail under this section. When the last day prescribed under the authority of this chapter including any extension of time, for performing any act falls on Saturday, Sunday, or a legal holiday in this State, the performance of such act shall be considered timely if it is performed on the next succeeding day which is not a Saturday, Sunday or a legal holiday.
§ 1212. Collection procedures
(a) General. The tax imposed by this chapter shall be collected by the State Tax Commissioner, and he may establish the mode or time for the collection of any amount due under this chapter if not otherwise specified. The State Tax Commissioner shall, on request, give a receipt for any amount collected under this chapter. The State Tax Commissioner may authorize incorporated banks or trust companies which are depositaries or fiscal agents of this State to receive and give a receipt for any tax imposed under this chapter, in such manner, at such times, and under such conditions as he may prescribe; and the State Tax Commissioner shall prescribe the manner, times and conditions under which the receipt of tax by such banks and trust companies is to be treated as payment of tax to the State Tax Commissioner.
(b) Notice and demand. The State Tax Commissioner shall as soon as practicable give notice to each person liable for any amount of tax, addition to tax, additional amount, penalty or interest, which has been assessed but remains unpaid, stating the amount and demanding within 10 days of the date of the notice and demand payment thereof. Such notice shall be left at the dwelling place or usual place of business of such person or shall be sent by mail to such person's last known address. Except where the State Tax Commissioner determines that collection would be jeopardized by delay, if any tax is assessed prior to the last date, including any date fixed by extension, prescribed for payment of such tax, payment of such tax shall not be demanded until after such date.
Cross-reference. For requirements of payment without assessment, notice or demand of amount shown to be due on return, see section 1168 of this title.
§ 1213. Issuance of warrant
If any person liable to pay any tax, addition to tax, penalty, or interest imposed under this chapter neglects or refuses to pay the same within ten days after notice and demand, the State Tax Commissioner after obtaining a judgment pursuant to section 1214 of this chapter or otherwise, may issue a warrant directed to the sheriff of any County of this State or to his own representative commanding him to levy upon and sell such person's real and personal property for the payment of the amount assessed, with the cost of executing the warrant, and to return such warrant to the State Tax Commissioner and to pay him the money collected by virtue thereof within 60 days after receipt of the warrant. A copy of the warrant shall be filed with the Prothonotary and noticed on the regular judgment docket. If the State Tax Commissioner finds that the collection of the tax is in jeopardy, the State Tax Commissioner may issue a warrant without regard to the ten days waiting period provided in the foregoing provisions of this Section. All sales of real and personal property shall be made pursuant to Title 10 of the Delaware Code.
§ 1214. Lien of tax
If any tax imposed by this chapter is not paid when due, the State Tax Commissioner may file in the office of the Prothonotary as Clerk of the Superior Court of the County in which the taxpayer resides or owns real or personal property a certificate specifying the amount of the tax, addition to tax, penalty and interest due, the name and last-known address of the taxpayer liable for the amount and the fact that the State Tax Commissioner has complied with all the provisions of this chapter in the assessment of the tax. From the time of the filing, the amount set forth in the certificate shall thereupon be and constitute a judgment of record in such court with like force and effect as any other judgment in the court. The Prothonotary shall enter the certificates in the regular judgment docket and index them as soon as they are filed. It is expressly provided that no property, legal or equitable, wages, salaries, deposits, or monies in banks, savings institutions, or loan associations, or other property or income of any taxpayer shall be exempt from execution or attachment process issued upon or for collection of any judgment.
§ 1215. Extension; release of lien
The State Tax Commissioner may, at any time release all or any portion of the property subject to any lien arising under this chapter or subordinate the lien to other judgments, liens or security interests if he determines that the taxes are sufficiently secured by a lien on other property of the taxpayer or that the release or subordination of the lien will not endanger or jeopardize the collection of the taxes.
§ 1216. Taxpayer not a resident
When notice and demand for the payment of a tax is given to a nonresident and it appears to the State Tax Commissioner that it is not practicable to locate property of the taxpayer sufficient in amount to cover the amount of tax due, he shall send a copy of the certificate provided for in section 1214 to the taxpayer at his last-known address together with a notice that such certificate has been filed with the Prothonotary, as Clerk of the Superior Court of New Castle County. Thereafter, the State Tax Commissioner may authorize the institution of any action or proceeding to collect or enforce such judgment in any place and by any procedure that a civil judgment of a court of record of this State could be collected or enforced. The State Tax Commissioner may also in his discretion, designate agents or retain counsel outside this State for the purpose of collecting outside this State any taxes due under this chapter from taxpayers who are not residents of this State; and he may fix the compensation of such agents and counsel to be paid out of money appropriated or otherwise lawfully available for payment thereof and he may require of them bonds or other security for the faithful performance of their duties. The State Tax Commissioner is authorized to enter into agreements with the tax departments of other states and the District of Columbia for the collection of taxes from persons found in this State who are delinquent in the payment of income taxes imposed by those states or the District of Columbia on condition that the agreeing states and the District of Columbia afford similar assistance in the collection of taxes from persons found in this jurisdictions who are delinquent in the payment of taxes imposed under this chapter.
§ 1217. Action for recovery of taxes
The State Tax Commissioner within six years after the assessment of any tax may bring an action in any court of competent jurisdiction within or without this State in the name of the people of this State to recover the amount of any taxes, additions to tax, penalties and interest due and unpaid under this chapter. In such action, the certificate of the State Tax Commissioner showing the amount of the delinquency shall be prima facie evidence of the levy of the tax, of the delinquency, and of the compliance by the State Tax Commissioner with all the provisions of this chapter in relation to the assessment of the tax.
§ 1218. Income tax claims of other states
The courts of this State shall recognize and enforce liabilities for personal income taxes lawfully imposed by any other state which extends a like comity to this State, and the duly authorized officer of any such state may sue for the collection of such a tax in the courts of this State. A certificate by the secretary of state of such other state that an officer suing for the collection of such a tax is duly authorized to collect the tax shall be conclusive proof of such authority. For the purposes of this section, the word "taxes" shall include additions to tax, interest and penalties, and liability for such taxes, additions to tax, interest and penalties shall be recognized and enforced by the courts of this State to the same extent that the laws of such other state permit the enforcement in its courts of liability for such taxes, additions to tax, interest and penalties due this State under this Chapter. Nothing in this section shall be construed as giving the courts of this State jurisdiction to enforce taxes of any other State except by an action against an individual who is a resident of this State or by an action against a corporation which is maintaining its principal office in this State at the time of the commencement of the action.
§ 1219. Order to compel compliance
(a) Failure to file tax return. If any person willfully refuses to file an income tax return required by this chapter, the State Tax Commissioner may apply to a judge of the Superior Court for the county in which the taxpayer (or other person required to file an income tax return) resides, for an order directing such person to file the required return. If a person fails or refuses to obey such order, he shall be guilty of contempt of court.
(b) Failure to furnish records or testimony. If any person willfully refuses to make available any books, papers, records or memoranda for examination by the State Tax Commissioner or his representative or willfully refuses to attend and testify, pursuant to the powers conferred on the State Tax Commissioner by section 1223 (c) of this chapter, the State Tax Commissioner may apply to a judge of the Superior Court for the County where such person resides, for an order directing that person to comply with the State Tax Commissioner's request for books, papers, records or memoranda or for his attendance and testimony. If the books, papers, records or memoranda required by the State Tax Commissioner are in the custody of a corporation, the order of the Court may be directed to any principal officer of such corporation. If a person fails or refuses to obey such order, he shall be guilty of contempt of court.
§ 1220. Transferees
(a) General. The liability, at law or in equity, of a transferee of property of a taxpayer for any tax, addition to tax, penalty or interest due the State Tax Commissioner under this chapter, shall be assessed, paid and collected in the same manner and subject to the same provisions and limitations as in the case of the tax to which the liability relates except as hereinafter provided in this section. The term transferee includes, donee, heir, legatee, devisee, and distributee.
(b) Period of limitation. In the case of the liability of an initial transferee, the period of limitation for assessment of any liability is within one year after the expiration of period of limitation against the transferor; in the case of the liability of a transferee of a transferee, within one year after the expiration of the period of limitation against the preceding transferee, but not more than three years after the expiration of the period of limitation for assessment against the original transferor; except that if before the expiration of the period of limitation for the assessment of the liability of the transferee, a proceeding for the collection of the liability has been begun against the initial transferor or the last preceding transferee, respectively, then the period of limitation for assessment of the liability of the transferee shall expire one year after the proceeding is terminated.
(c) Extension by agreement. If, before the expiration of the time provided in this section for the assessment of the liability the State Tax Commissioner and the transferee have both consented in writing to its assessment after such time, the liability may be assessed at any time prior to the expiration of the period agreed upon or an extension thereof. For the purpose of determining the period of limitation on credit or refund to the transferee of overpayments of tax made by such transferee or of overpayments of tax made by the transferor of which the transferee is legally entitled to credit or refund, such agreement and any extension thereof shall be deemed an agreement or extension referred to in subsection (c) of section 1198. If the agreement is executed after the expiration of the period of limitation for assessment against the taxpayer with reference to whom the liability of such transferee arises, then in applying the limitations under subsection (b) of section 1198 on the amount of the credit or refund, the periods specified in subsection (a) of section 1198 shall be increased by the period from the date of such expiration to the date of the agreement.
(d) Transferor deceased. If any person is deceased, the period of limitation for assessment against such person shall be the period that would be in effect had death not occurred.
§ 1221. Jeopardy assessments
(a) Filing and notice. If the State Tax Commissioner finds that the assessment or the collection of a tax or a deficiency for any year, current or past, will be jeopardized in whole or in part by delay, he may mail or issue notice of his finding to the taxpayer, together with a demand for immediate payment of the tax or the deficiency declared to be in jeopardy, including additions to tax, interest and penalties.
(b) Termination of taxable year. In the case of a tax for a current period, the State Tax Commissioner shall declare the taxable period of the taxpayer immediately terminated and his notice and demand for a return and immediate payment of the tax shall relate to the period declared terminated, including therein income accrued and deductions incurred up to the date of termination if not otherwise properly includable or deductible in respect of the period.
(c) Collection. A jeopardy assessment is immediately due and payable, and proceedings for collection may be commenced at once, subject to the provisions of section 1213 of this chapter. The taxpayer, however, may stay collection and prevent the jeopardy assessment from becoming final by filing, within ten days after the date of mailing or issuing the notice of jeopardy assessment, a request for reassessment, accompanied by a bond or other security in the amount of the assessment including additions to tax, penalties, and interest as to which the stay of collection is sought. If a request for reassessment, accompanied by a bond or other security on the appropriate amount, is not filed within the ten-day period, the assessment becomes final.
(d) Proceeding on reassessment. If a request for reassessment accompanied by a bond or other security is filed within the ten-day period, the State Tax Commissioner shall reconsider the assessment and, if the taxpayer has so requested in his petition, the State Tax Commissioner shall grant him or his authorized representatives an oral hearing. The State Tax Commissioner's action on the request for reassessment becomes final upon the expiration of thirty days from the date when he mails notice of his action to the taxpayer, unless within that thirty-day period, the taxpayer files an application to seek review of the State Tax Commissioner's determination by the State Tax Board.
(e) Presumptive evidence of jeopardy. In any proceeding brought to enforce payment of taxes made due and payable by this section, the finding of the State Tax Commissioner under subsection (a) of this section is for all purposes presumptive evidence that the assessment or collection of the tax or deficiency was in jeopardy.
(f) Abatement if jeopardy does not exist. The State Tax Commissioner may abate the jeopardy assessment if he finds that jeopardy does not exist.
§ 1222. Bankruptcy or receivership
(a) Immediate assessment. Upon the adjudication of bankruptcy of any taxpayer in any bankruptcy proceeding or the appointment of a receiver for any taxpayer in any receivership proceeding before any court of the United States or any state or territory or of the District of Columbia, any deficiency (together with additions to tax and interest provided by law) determined by the State Tax Commissioner may be immediately assessed.
(b) Adjudication of claims. Claims for the deficiency and such additions to tax and interest may be presented, for adjudication in accordance with law, to the court before which the bankruptcy or receivership proceeding is pending, despite the pendency of a protest before the State Tax Commissioner under section 1183. No protest against a proposed assessment shall be filed with the State Tax Commissioner after the adjudication of bankruptcy or appointment of the receiver.
(c) Cross reference. For the requirement of notice to the State Tax Commissioner of the qualification of a trustee in bankruptcy, receiver, assignee for the benefit of creditors, or other like judiciary, see section 1164 of this title.
§ 1223. General powers of State Tax Commissioner
(a) General. The State Tax Commissioner shall administer and enforce the tax imposed by this chapter and he is authorized to make such rules and regulations and to require such facts and information to be reported, as he may deem necessary to enforce the provisions of this chapter.
() Returns and forms. The State Tax Commissioner may prescribe the form and contents of any return or other document required to be filed under the provisions of this chapter.
(a) Examination of books and witnesses. The State Tax Commissioner for the purpose of ascertaining the correctness of any return, or for the purpose of making an estimate of taxable income of any person, shall have power to examine or to cause to have examined, by any agent or representative designated by him for that purpose, any books, papers, records or memoranda bearing upon the matters required to be included in the return, and may require the attendance of the person rendering the return or any officer or employee of such person, or the attendance of any other person having knowledge in the premises, and may take testimony and require proof material for his information, with power to administer oaths to such person or persons.
§ 1224. Closing agreements
The State Tax Commissioner, or any person authorized in writing by him, is authorized to enter into an agreement with any person relating to the liability of such person (or of the person or estate for whom he acts) in respect to the tax imposed by this chapter for any taxable period. Such agreement shall be final and conclusive and, except upon a showing of fraud or malfeasance, or misrepresentation of a material fact:
(a) the case shall not be reopened as to matters agreed upon or the agreement modified by any officer, employee or agent of this State, and
(b) in any suit, action or proceeding under such agreement, or any determination, assessment, collection, payment, abatement, refund, or credit made in accordance therewith, shall not be annulled, modified, set aside or disregarded.
SUBCHAPTER XI. CRIMINAL OFFENSES
§ 1231. Attempt to evade or defeat tax
Any person who willfully attempts in any manner to evade or defeat any tax imposed by this chapter or the payment thereof shall, in addition to other penalties provided by law, be fined not more than $500, or imprisoned not more than 6 months, or both.
§ 1232. Failure to collect or pay over
Any person required under this chapter to collect, truthfully account for, and pay over any tax imposed by this chapter who willfully fails to collect or truthfully account for and pay over such tax shall, in addition to other penalties provided by law, be fined not more than $500, or imprisoned not more than 6 months, or both.
§ 1233. Failure to file return; supply information; pay tax
Any person required under this chapter to pay any tax or estimated tax, or required by this chapter to make a return (other than a return of estimated tax), keep any records, or supply any information, who willfully fails to pay such tax or estimated tax, make such return, keep such records, or supply such information, at the time or times required by law, shall, in addition to other penalties provided by law, be fined not more than $500, or imprisoned not more than 6 months, or both.
§ 1234. False statements
Any person who willfully makes and subscribes any return, statement or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter; or willfully aids or procures the preparation or presentation in a matter arising under the provisions of this chapter of a return, affidavit, claim or other document which is fraudulent or is false as to any material matter shall be fined not more than $500, or imprisoned not more than 6 months, or both.
§ 1235. Limitations
Any prosecution under this chapter shall be instituted within three years after the commission of the offense, provided that if such offense is the failure to do an act required by or under the provisions of this chapter to be done before a certain date, a prosecution for such offense may be commenced not later than 3 years after such date. The failure to do any act required by or under the provisions of this chapter shall be deemed an act committed in part at the principal office of the State Tax Commissioner. Any prosecution under this chapter may be conducted in any county where the person or corporation to whose liability the proceeding relates resides, or has a place of business or in any county in which such crime is committed.
SUBCHAPTER XII. MISCELLANEOUS
§ 1241. Secrecy of returns and information
Except in accordance with proper judicial order or as otherwise provided by law, it shall be unlawful for the State Tax Commissioner or any officer or employee of the State Tax Department, any officer or employee of the State Data Processing Division, or any person engaged or retained by the State Tax Department on an independent contract basis to divulge or make known in any manner the amount of income or any particulars set forth or disclosed in any report or return required under this chapter to any person other than the taxpayer or his authorized agent. Any person who violates the provisions of this section shall be fined not more than $500 or imprisoned not more than 6 months, or both.
§ 1242. Inspection of returns by Commissioner of Internal Revenue, officials of other states, and municipalities of this State
Notwithstanding the provisions of Section 1241 of this Title, the Tax Commissioner may permit the Commissioner of Internal Revenue of the United States or the proper officer of any state imposing an income tax upon the incomes of individuals, or a financial officer designated by any municipality of this State which imposes an income tax or wage tax, or the authorized representative of any of such officers, to inspect the income tax return of any individual, or may furnish to such officer or his authorized representative an abstract of the return of income of any individual or supply him with information contained in any return; or disclosed by the report of any investigation of the income or return of any individual; but such permission shall be granted or such information furnished to such officer or his representative only if the statutes of the United States or of such other states, as the case may be, grant substantially similar privileges to the proper officer of this State charged with the administration of the income tax law thereof. Provided, however, that the financial officer designated by any such municipality shall be permitted to inspect only those portions of the income tax return showing the taxable's wages and number of employees. Provided further, that no municipal officer shall be permitted to examine a taxable's return unless the taxable shall have contact with such municipality by way of place of residence or employment, and provided further, that no municipal officer shall be permitted to review any portion of a State tax return until the governing body of such municipality shall have adopted an ordinance requiring:
(a) That any information obtained from the State Tax return be confidential and usable only for collection purposes.
(b) That such ordinance have the prior approval of the State Tax Commissioner as to form and substance.
(c) That the municipality pay to the State Tax Department the true cost of acquiring such information.
§ 1243. Constitutionality
If any provision or provisions of this chapter are held invalid, such invalidity shall not affect the validity of the remaining provisions of this chapter.
§ 1244. Short title
This chapter shall be entitled "Delaware Personal Income Tax Law of 1970".
§ 1245. Effective date
The provisions of this chapter shall take effect with respect to taxable years beginning on and after January 1, 1971.
Section 2. Chapter 19, Title 30, Delaware Code, is amended by adding the following new paragraph to section 1902 (b):
9. A small business corporation having a valid election under subchapter S of the Internal Revenue Code of 1954 in effect for any entire income year beginning on or after January 1, 1971; provided that if on the last day of such income year any of the stockholders of such corporation are nonresident individuals (as defined in section 1103 (b) of this title), such corporation shall be subject to the tax imposed by this chapter on that percentage of its taxable income equal to the percentage of its stock owned by nonresident individuals on such day.
Section 3. The provisions of Chapter 11, Title 30, Delaware Code, in effect as of the date of enactment of this Act shall remain in effect until the amendments provided by Section 1 of this Act take effect, and such provisions shall thereupon be repealed. The repeal of any provision of Chapter 11, Title 30, Delaware Code, in effect as of the date of enactment of this Act shall not affect any act done or any right accruing or accrued before such repeal. If any provision or provisions of this Act, or the application thereof to any person or circumstances, is held invalid, then to such extent the provisions of Chapter 11, Title 30, Delaware Code, in effect as of the date of enactment of this Act shall remain in effect.
Approved July 22, 1970.