Delaware franchise tax penalty avoidance

Research summary and findings for 'Delaware franchise tax penalty avoidance' (completed): I searched official Delaware Division of Corporations pages and authoritative guidance to gather state-specific deadlines, penalty amounts, interest, calculation methods, reinstatement procedures and fees, online payment options, and practical avoidance steps for Delaware entities (corporations and alternative entities such as LLCs/LPs/GPs). Key conclusions: 1) Deadlines and who must pay - Domestic corporations: Annual Report and franchise tax due on or before March 1 each year; filing is required online. (See Delaware Division of Corporations guidance.) - Domestic and foreign LLCs, LPs, and GPs: Annual franchise tax (flat) of $300 due on or before June 1 each year; these entities do not file an Annual Report but must pay the $300 tax. (See LLC/LP/GP instructions.) 2) Penalties and interest for late filing/payment (consistent across entity types) - Late penalty: $200 flat penalty for missing the due date (corporations and LLC/LP/GPs). (Division of Corporations notices state a $200 penalty for late filing/payment.) - Interest: 1.5% per month applied to any unpaid tax balance (applies to tax and to penalty). Interest accrues monthly until paid. (Division guidance states interest at 1.5% per month on tax and penalty.) 3) Franchise tax amounts and calculations (corporations) - Corporations may calculate franchise tax using either the Authorized Shares Method or the Assumed Par Value Capital Method — taxpayers should choose the method that results in the lower tax. (Franchise tax calculation guidance.) - Minimum and maximums: minimum tax $175 using Authorized Shares Method; minimum $400 using Assumed Par Value Capital Method; maximum $200,000 for standard filers (higher cap applies to identified Large Corporate Filers). (Official tax calculator page.) - Estimated payment requirement: corporations owing $5,000 or more must make estimated payments (40% due June 1, 20% due Sept 1, 20% due Dec 1, remainder due March 1). (Franchise tax instructions.) 4) Consequences of nonpayment or extended delinquency - The Division will not issue Certificates of Good Standing while annual reports/taxes are delinquent. Loss of good standing can impede banking, financing, contracting, and investor activity. (Division guidance.) - Continued nonpayment can lead to the entity’s status becoming void/forfeited and ultimately administratively dissolved/cancelled if not remedied. (Division guidance and renewal/revival instructions.) 5) Reinstatement / revival procedures and fees - Reviving a voided or forfeited corporation requires filing a Certificate of Revival (specific form), payment of a filing fee and all back taxes, penalties, interest, and filing of any missing Annual Reports. The Division’s form states the fee to file the Certificate is $189.00 (plus $9.00 per additional page if document >1 page) and a certified copy may be requested for an additional $50. Expedited services are available. (Revival for void/forfeited corporation form.) - Reviving a cancelled LLC uses the Certificate of Revival for an LLC. The LLC guidance lists a filing fee of $220.00 to file the Certificate. Before filing, all taxes due to the State at the time the LLC became cancelled must be paid. (LLC Certificate of Revival form/renewal instructions.) - The Division recommends contacting the Franchise Tax Section before submitting revival/reinstatement documents to determine the amount owed and proper process (phone and email contact info provided). (Division instructions.) 6) Online payment and filing options - Delaware Division of Corporations accepts online filing and payment via their online portal. Payments can be made by ACH debit (required for transactions over $5,000) or credit card (Visa, MasterCard, American Express, Discover). The portal is generally available daily between 8:00am and 11:45pm ET. (Pay taxes/online services pages.) 7) Practical steps to avoid penalties (recommended, supported by Division guidance and best practices) - Mark and calendar the deadlines: March 1 for corporations; June 1 for LLCs/LPs/GPs (and June 30 for foreign corporations’ annual report). Use recurring reminders and calendar alerts well before due dates. - Maintain an active registered agent and ensure the agent has current contact info — Division sends notices to registered agents in December each year. - For corporations, run both franchise tax calculation methods (Authorized Shares and Assumed Par Value) each year and choose the lower tax; use the Division’s Franchise Tax Calculator to estimate tax liability before March 1. - If projected tax will be $5,000 or more, plan and make the required estimated payments on the June/Sept/Dec/March schedule to avoid underpayment. - Pay online early to ensure processing before the deadline; ACH is required for large payments. Avoid third-party solicitations — the Division warns of scams and sends official notices via registered agents. - If you plan to cease operations, properly dissolve/cancel the entity with Delaware to avoid recurring franchise tax obligations. 8) If you miss a deadline — immediate remedial actions - Don’t wait: calculate and pay outstanding franchise taxes online immediately (tax + $200 late penalty + interest at 1.5% per month). File any missing Annual Report(s) for corporations. - Contact the Franchise Tax Section at (302) 739-3073 (follow Div. instructions/options) or email dosdoc_ftax@delaware.gov to confirm amounts due and any additional requirements prior to filing revival/reinstatement documents. - If the entity has been voided/forfeited/cancelled, prepare and file the appropriate Certificate of Revival along with payment of the revival filing fee ($189 for corporations; $220 for LLCs per Division forms), and pay all back taxes, penalties, interest, and file missing reports as required. Expedited options are available for a fee. Sources and supporting verbatim excerpts are provided below.