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Midnight October 30: Delaware Amnesty Program Deadline Quickly Approaching

How this tax amnesty program offers significant cost savings to your clients, especially if they ship products into Delaware, based on recent enforcement of wholesalers’ tax.

October 26, 2009
Sponsored by General Revenue Corporation

Paying just the tax liability — no penalties and interest — could be affordable insurance against a potential hefty assessment for many companies. The Delaware Supreme Court recently upheld the application of the Delaware Wholesalers Gross Receipts tax to The Dial Corporation and Ford Motor Company. The State's position is that companies that ship products into Delaware are not protected from the wholesalers’ tax when title to the goods passes outside the State of Delaware. Even companies with a small annual exposure face a material lifetime exposure if they have never filed returns. Delaware will assess tax on nonfilers back to the year in which the tax was enacted, if the nonfilers are detected as a result of audit enforcement. The initiative waives interest and penalties for unpaid "eligible" taxes, including gross receipts taxes and in addition cuts off tax liability for non filed tax periods before 2004.

Voluntary Tax Compliance Initiative (VTCI) is Delaware's tax amnesty program for individuals and businesses. For a limited time, those with outstanding tax liabilities administered by the Delaware Division of Revenue are given the opportunity to pay their past-due taxes or file past-due tax returns free of penalty, interest and collection fees and without fear of litigation.

These are substantial savings that can be taken advantage of. Penalties can accrue up to 75 percent of the tax, interest can accrue up to one percent per month without limitation and collection fees can include court costs.

Substantial Savings:

For a non-filer company that has been making Delaware sales since 1985 — $40,000 annual tax liability = yields $7 million (in tax, interest and penalty going back to July 1985.)

Under the VTCI, the same company would only be required to pay tax of $230,000 a savings of $6,770,000

(www.mondaq.com “United States: Consumer Product Companies: Delaware Gross Receipts Tax Risks Have Increased; Voluntary Compliance Initiative Worth” Considering” August 18, 2009 by Kyle O. Sollie, Sara A. Lima and Daniel M. Dixon)

In addition to having penalty, interest and collection fees waived for tax periods ending before January 1, 2009, if nonfilers and under-reporters come forward voluntarily and file their past-due Delaware returns or amend previously filed Delaware returns, the Delaware Division of Revenue will not assess taxes that are reported in past-due or amended Delaware returns for tax periods before January 1, 2004. Failure to disclose any tax liabilities existing prior to January 1, 2009, will automatically disqualify the individual or business from the program when discovered, regardless of the year. Any abated penalties, interest and/or judgments will be reapplied.

Nonfilers and under-reporters must file and pay their outstanding tax liabilities in full or enter into an agreed-upon payment plan in order to take advantage of the VTCI benefits. To enter into a payment plan, a down payment has to be made by October 30, 2009 and an approved payment schedule must be established. Payment plans must be satisfied by June 30, 2010 to receive the benefits of the VTCI. There will be no extensions.

Do not delay! The VTCI period ends October 30. Representatives will be available until midnight on October 30, 2009 at 1-877-714-5240 to answer questions, to assist taxpayers in qualifying for the tremendous savings offered through this program and to accept payments. Additional information can be obtained at http://revenue.delaware.gov/amnesty.shtml

BALANCE DUE PAYMENT OPTIONS — A registration form must be completed and returned with the payment to earn the benefits of the program. This form can be completed via phone or online:

     By Phone — 1-877-714-5240        
     Online at https://www.generalrevenue.com/delawarevtci