SALES TAX 101 for DELAWARE

By December 3, 2018 Delaware

The Sales Tax Basics Every Delaware Business Should Know

What is Sales Tax in Delaware?

Delaware does not impose a state or local sales tax, but does impose a gross receipts tax on the seller of goods (tangible or otherwise) or provider of services in the state.

Are All Goods and Services Taxable?

Yes

How Do I Know What’s Taxable and What’s Not?

There are no deductions for the cost of goods or property sold, labor costs, interest expense, discount paid, delivery costs, state or federal taxes, or any other expenses allowed.

Who Pays The Tax?

Merchants pay the gross receipts tax.  Consumers do not pay sales tax out of their own pockets.  

What Am I Responsible For?

You are required to calculate your gross receipts tax liability tax, hold it secure and send it to the State on-time and in-full.

When Is My Sales Tax Payment Due in Delaware?

Delaware Tax is due for monthly filers on the 20th day of the month following the reporting period and for quarterly filers on or before the last day of the month following the reporting period. Filing frequency is determined by your type of business. Click here for more information.

How Do I Know How Much Sales Tax to Charge? 

Business and occupational gross receipts tax rates range from 0.1006% to 0.7543%, depending on the business activity. In instances where a taxpayer derives income from more than one type of activity, separate gross receipts tax reporting is required. Find more information here.  The final and definitive answer is always the sales tax rate posted on the State Division of Revenue website.  Rates posted on the web are often not up-to-date and incorrect. It’s always the merchant’s responsibility to charge the correct sales tax rate.

Who Gets the Sales Tax Money?

In Delaware the gross receipts tax is paid directly to the State.

How Do I Manage Tax Exempt Sales?

There are no state or local sales taxes in Delaware and as such, sales tax exemption certificates and reseller certificates are not applicable to Delaware.

What if I Forget to Pay or Spend the Money and Can’t Pay?

Delaware has severe penalties for missing tax payments. You can find the penalties for late payments here. If sales tax goes unpaid, states will seize the assets of the business or owner and auction them off to pay the debt.  In extreme cases owners will be prosecuted and sent to jail. Even if the business closes, sales tax is a personal liability that will follow the owner until paid.

Delaware Division of Revenue

TAX RATE: There is no state sales tax in Delaware. However, there is a gross receipts tax that ranges from 0.1006% to 0.7543%, depending on the business activity.

Delaware Sales and Use TAX HELP: (302) 577-8205

This resource page is for informational purposes only.  If you have further questions regarding sales tax please contact DAVO support at 888-659-8432 or consult your tax adviser.

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