Delaware Annual Report & Franchise Tax – Help! Part Six
Posted by Incserv
December 20, 2017
Today we close out our six-part Delaware Annual Report & Franchise Tax Series. If this happens to be the first blog you’re seeing in the series, click here to start from the beginning. We’ve covered the basics pertaining to filing a Delaware corporation annual report and paying Delaware franchise taxes. Now for a few of the “special case” scenarios…
I understand the assumed par value method of Delaware franchise tax calculation, but what happens if a stock amendment was filed during the year? If an amendment changing your stock or par value was filed with the Delaware Division of Corporations during the year, issued shares and total gross assets within 30 days of the amendment must be given for each portion of the year during which each distinct authorized amount of capital stock or par value was in effect. The tax is then prorated for each portion of the year dividing the number of days the stock/par value was in effect by 365 days (366 leap year), then multiplying this result by the tax calculated for that portion of the year. The total tax for the year is the sum of all the prorated taxes for each portion of the year.
Is a Delaware corporation that is ending its existence or reinstating required to file an annual report or pay franchise taxes? Yes, when a Delaware corporation is ending their existence or reinstating to return the entity to good standing, the corporation is required by law to file an annual report and pay any and all franchise tax due. If you’re handling the process on your own, you will need to reach out to the Franchise Tax Section of the Delaware Division of Corporations prior to submitting your Renewal, Merger, Dissolution, Conversion or any other document filing that will end the existence or renew the status of your Delaware corporation in order to determine the final franchise tax fees and annual report filing requirements. If you’re working with a service provider, such as us, we can handle this part for you.
What happens if I miss the deadline for filing my corporation’s Delaware annual report and paying my Delaware franchise tax? A penalty fee will be added if the annual report is not filed by the due date. In addition, 1.5% interest is assessed and added to the total amount due. The 1.5% interest is calculated based only on the total franchise tax due and does not include the annual report fee and penalty. Interest is continually accrued on the 6th of each month until the franchise tax is paid or the entity goes into an inactive status.
What do I do if I made a mistake on my Delaware annual report filing? An amendment may be filed, but it must be filed before a subsequent report is filed. For example if you made a mistake on the 2016 report, the 2016 report must be amended before the 2017 report is filed. Otherwise the 2016 record will stand as is.
This wraps up our Delaware Annual Report & Franchise Tax Series. However, if you have any questions about or need assistance with filing a Delaware annual report or paying Delaware franchise tax, feel free to reach out to us. We’re here to help!