If you are experiencing a hardship and cannot pay your tax liability in full, the Division of Revenue has several programs for you to consider. Among those are options to pay on an installment basis, offer a compromise settlement, or request your account be placed in temporarily uncollectible status until such time you are able to once again make payments. The Division of Revenue is available to work with you to resolve your tax liability and to eliminate the need for you to consider bankruptcy as an alternative.
However, if you are involved in an on-going bankruptcy proceeding, contact your local Division of Revenue office. Provide them with the district (i.e., Delaware) in which the bankruptcy was filed, when it was filed, what chapter of the bankruptcy code was filed, the bankruptcy case number, and who is representing you in the bankruptcy. If you have not filed all of your State tax returns, you should do so as soon as possible.
PLEASE BE ADVISED THAT FAILURE TO FILE ALL OF YOUR REQUIRED TAX RETURNS MAY RESULT IN YOUR BANKRUPTCY PLAN CONFIRMATION BEING DELAYED, YOUR BANKRUPTCY MAY ALSO BE DISMISSED OR CONVERTED TO A LIQUIDATION BANKRUPTCY. ALTERNATELY, THE DIVISION OF REVENUE MAY HAVE TO ESTIMATE IT'S LIABILITY WHICH MAY REQUIRE YOU TO PAY MORE THAN WOULD BE NECESSARY IF YOU FILED THE REQUIRED RETURNS.
You will also need to keep your attorney advised as to the tax periods, type of tax, amounts, and the recent breakdown of tax, penalty, and interest of any liabilities you have incurred.
Your bankruptcy filing will temporarily stop Division of Revenue enforcement action to collect taxes incurred before the bankruptcy petition was filed. You must continue to file returns and pay taxes due after your petition is filed. Please consult with your attorney.
Dischargeability of your tax liability should be discussed with your attorney. In many instances, your liability, or a portion of it, may not be discharged. If any of your taxes were not discharged by your bankruptcy, please contact your local Division of Revenue office to make arrangements to satisfy the remaining tax obligation. If you believe that your bankruptcy discharged your tax debt, or a portion thereof, for which the Division of Revenue is continuing it's efforts to collect, please send a letter with a copy of your bankruptcy discharge explaining what portion of your liability is believed to be discharged. The letter should be addressed to the Bankruptcy Administrator, Delaware Division of Revenue - 8th Floor, 820 N. French Street, Wilmington, Delaware 19801.