Delaware Franchise Tax
Delaware’s Annual Report and Franchise Tax are due June 1 each year without a statutory extension. If you miss this deadline, you face penalties, interest, and potential loss of good standing. This guide explains the definitive deadline, late‐filing fees, and the (nonexistent) extension process so you can plan accordingly.
Introduction
Unlike federal returns, Delaware does not offer an automatic or requested extension for its Franchise Tax or Annual Report. Your company must file and pay by June 1, 2025. Understanding this firm deadline and the consequences of missing it is essential to maintaining your corporate privileges in Delaware.
Relevant Code Sections & Definitions
- Del. Code Tit. 8 § 503 Sets the June 1 Franchise Tax and Annual Report due date.
- Del. Code Tit. 8 § 503(b) Imposes a $125 late‐filing penalty if not filed within 30 days of June 1.
- Del. Code Tit. 8 § 503(c) Adds 1.5 % monthly interest on unpaid tax after June 1.
- IRC §162 Allows Franchise Tax and penalties to be deductible as ordinary business expenses on your federal return.
IRS & State Form References
- Delaware Annual Report & Franchise Tax – Filed online; no extension form exists.
- IRS Form 7004 – Extends only federal corporate income tax (Form 1120), not Delaware Franchise Tax.
- EFTPS or check – Used to pay any estimated federal tax by March 15; unrelated to Delaware’s June 1 deadline.
Real-World Example
Case Study: BrightEdge Inc., a Delaware C-Corp, assumed its federal Form 1120 extension (Form 7004) covered all deadlines. They paid corporate income tax late in September but missed the June 1 Franchise Tax deadline. Outcome:
- $125 late-filing penalty
- 1.5 % monthly interest on $3,000 outstanding tax (≈$45/month)
- “Not in Good Standing” status
- Investor term-sheet delays until status is restored
Step-by-Step Guide
- Mark Your Calendar: June 1 is the final no extension.
- Calculate Your Tax: Use the Authorized Shares or Assumed Par Value method.
- File Your Annual Report: Enter officer info and share data.
- Pay Franchise Tax: Submit payment by June 1.
- Save Confirmation: Retain proof of filing and payment.
- If You Miss June 1: Pay the $125 penalty and accrued 1.5 % interest ASAP.
- Restore Good Standing: Once paid, request a Certificate of Good Standing.
Conclusion
Delaware’s Franchise Tax deadline is non-negotiable. There is no extension or grace period beyond the 30-day late window (with penalty). To protect your entity and investor relationships, file and pay by June 1 every year no exceptions.
Call to Action
Worried about missing June 1 or need help restoring your status?
Schedule a compliance review with Anshul Goyal, CPA. We’ll ensure your 2025 Franchise Tax and Annual Report are filed on time or cure any late filings quickly.
Disclaimer
This article is for educational purposes only and does not constitute legal, tax, or financial advice. Delaware’s Franchise Tax rules may change; always verify with the state. Anshul Goyal, CPA EA FCA is licensed in the U.S. as a CPA, admitted before the IRS as an Enrolled Agent, and a Chartered Accountant in India. Consult a qualified professional before making filing or payment decisions.
FAQs (Top 5 High-Searched Questions)
Q1. Can I use Form 7004 to extend Delaware Franchise Tax?
A1. No. Form 7004 only extends federal corporate income tax, not Delaware Franchise Tax.
Q2. What is the late-filing penalty for missing June 1?
A2. $125 if filed within 30 days of June 1, plus 1.5 % monthly interest on unpaid tax.
Q3. Is there any grace period? A3. Only the 30-day window to pay penalty and interest no extension beyond that.
Q4. Can I pay Delaware Franchise Tax after June 1 by mistake?
A4. Yes but you’ll incur the $125 penalty and monthly interest until paid.
Q5. How do I confirm my entity’s good standing?
A5. After payment, request and download a Certificate of Good Standing from the Delaware portal.