It’s that time of year when a few select Delaware alternative entities can expect to receive a friendly reminder from the Delaware Division of Corporations indicating that the Secretary of State’s office hasn’t received their annual franchise tax payment. In other words- they are delinquent on the renewal of their annual charter, and have stopped good standing.
If you are like most companies who receive Delaware LLC Delinquent Franchise Tax Notice, you have questions.
Here are a few of the typical questions that we at Agents of Delaware, Inc. receive on this subject:
How did this happen?
There is no “one size fits all” answer to this question. We find that many times clients report that someone simply misplace the original notice sent to them in April or May, or that they simply forget to file for one reason or another. This is a common case the first year a company receives their franchise tax notice, so trust me when I say that you are not the only one this happened to. We are all human, and most of us running a business focus on what we got into business for first, not on mundane compliance matters. The good news is that there’s no need to panic! Simply send the franchise tax payment, penalty and interest to the State of Delaware to get back on track. The sooner you address this, the sooner your company can return to Good Standing and the sooner you can get back to business. Let us know if you need our help, and we will be happy to help you.
Why do I have to pay a franchise tax when I am not a franchise?
This is a typical response from companies the first time they receive Delaware Franchise Tax Notice, and it is a common misconception. The term “Franchise tax” can be confusing, and I it has to do with the word “franchise”. Most people tell us that they associate the word “franchise” with a specific business model. While that may be true, that is not what the term “Franchise Tax” is referring to here, as it relates to your Delaware LLC. For the notice you received from the State of Delaware, these are the exact words taken from the Delaware Code to essentially describe the process of renewing your corporate charter yearly with the Delaware Division of Corporations. That act is required if you intend for your Delaware LLC to remain in Good Standing, and to avoid being declared Void by the State. Simply put- you need to renew your Delaware LLC each year.
What is this State of Delaware Delinquent Franchise Tax Notice all about?
The State of Delaware Division of Corporations, has no record of receiving your Franchise Tax Payment that was originally due by June 1st. This is a late notice. The State of Delaware sends all communications to the address of your Delaware Registered Agent. You are required to keep current contact information with your Delaware Registered Agent, and your Delaware Registered Agent will use the information of record to deliver any State communications to you. As a reminder, all Limited Liability Companies registered in Delaware are required to pay an annual fee to the State of Delaware called the franchise tax. Annual taxes are assessed if the entity is active in the records of the Division of Corporations anytime during January 1st through December 31st of the current tax year. The Delaware LLC franchise tax for year 2017 is $300.00. There is no peroration on Delaware LLC franchise taxes and there is no need to file an Annual Report. The annual taxes for the prior year are due by June 1st. Failure to pay the needed annual taxes will result in a penalty of $200.00 plus 1.5% interest a month on tax and penalty. Additionally, it will prevent the company from holding a certificate of good standing and may eventually lead to your entity declared VOID by the State.
What do I do to get this corrected? I’ve already paid!
Not sure? Let us know and we can help you figure out exactly where things stand for your company. I’m happy to do that for you as a valued client and subscriber to our Delaware Registered Agent Service at no added cost.
How do I pay the State of Delaware Franchise Tax?
If you haven’t been able to take care of your payment yet, here is a reminder of the choices available to you for payment of the Delaware LLC franchise Tax Notice:
Pay and file by mail.
Follow the instructions on The State payment coupon. Make certain that you send your payment directly to the Delaware Division of Corporations processing center address ASAP, as the State will assess more interest every month! The State will accept, but discourages paying franchise taxes by mail, as they are considering removing that choice in the future. I always recommend that you use a courier services if you decide to send your payments in directly by mail.
Pay and file electronically online at the Division of Corporations Payment Gateway.
Use the Delaware Division of Corporations’ eCorp website, and navigate to the section for your payment. The website will accept payment using a credit card or ACH payment directly from your bank account. Here is the eCorp website address: https://icis.corp.delaware.gov/ecorp/logintax.aspx?FilingType=FranchiseTax
Have Agents of Delaware, Inc. handle it for you.
You may hire us to help you with your franchise tax payments. To handle the funds and pay the tax on your behalf, we charge a onetime processing fee of $35 each filing. When we receive your payment and on your payment clearing our bank account, we will pay the franchise taxes directly from our Depository Account at the Delaware Division of Corporations. The tax payment is done instantly, securely, and using our credentials. We will send you a confirmation or acknowledgment produced by the State eCorp system for your company records. We take care of all of it for you, so you don’t have to. Better, faster, cheaper. Period.
How are you going to fix this?
We do have business owners contact us to say that they never received any notice from us, that this is all our fault, and we have to resolve it for them. I’ll be the first to admit that sometimes mistakes can happen. That said, you can rest assured that if we make a mistake, then we will fix it! Even if that means we pay the penalty and interest for you. That’s our guarantee. We have spent almost 20 years perfecting the ways in which to help you preserve the good standing for your Delaware Corporation, including providing multiple notices of this important compliance matter. If you slipped through the cracks, let’s figure out what happened and fix it.