TAX NEWS - August 2009

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Delaware tax: What Happens When You Take No Action to Pay Taxes

You will not need to read this section if you have already paid your tax or if you have made arrangements. Please note that before we take any of the actions explained in this section, we try to contact you and give you the opportunity to pay voluntarily.

If you do not take some action to pay your tax bill, we may take any of the following actions:

(1) File a Notice of Judgement;(2) Serve a Notice of Warrant; (3) Seize and sell your property (personal, real estate, and business property);(4) Notify payers of your interest and dividend income to begin backup withholding; or (5) Assess 100 percent penalty if you owe withholding taxes.

These actions are referred to as Enforced collection Actions; because they are the means by which the DE DOR can enforce the notice and demand for tax.


NOTICE OF JUDGEMENT

This section gives information to help you understand what a judgement is, how it affects your credit rating and how it is released.

Before the DE DOR files a Notice of Judgement, three requirements must be met: The De DOR must assess the tax, or be self-assessed by the taxpayer (i.e., filing a timely return without paying or partially paying);The DE DOR must send you a notice and Demand for payment; and You must neglect or refuse to pay the tax or Otherwise resolve your tax due problems.

Once these requirements are met, a judgement is created for the amount of your tax debt. This judgement attaches to all your property (such as your house or car) and to all your rights to property (such as your accounts receivable).

A judgement is not valid against the claims of other creditors until the DE DOR files a Notice of Judgement with an appropriate official to establish priority status among these creditors. An example of this is filing a judgement in the county where you own property or in the state where you conduct business.

By filing a Notice of Judgement, the DE DOR is providing a public notice to your creditors that the Government has a claim against all your property, including property that you acquire after the lien was filed.

Caution: Once filed, a Judgement will harm your credit rating.
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