Subchapter III. Procedure and Administration

TITLE 30

State Taxes

General Provisions; State Tax Agencies; Procedure and Enforcement

CHAPTER 5. PROCEDURE, ADMINISTRATION AND ENFORCEMENT

Subchapter III. Procedure and Administration

§ 521. Examination of return.

(a) Deficiency or overpayment. -- As soon as practicable after any return is filed, the Director shall examine it to determine
the correct amount of tax. If the Director finds that the amount of tax shown on the return is less than the correct amount,
the Director shall notify the taxpayer in writing of the amount of the deficiency proposed to be assessed. If the Director
finds that the tax that has been paid by the taxpayer is more than the correct amount, the Director shall credit the overpayment
against any taxes to which this chapter applies and which are due to this State by the taxpayer and shall refund the difference
to the taxpayer.

(b) No return filed. -- If the taxpayer fails to file any return of tax required to be filed, the Director shall estimate
from any available information the taxpayer's taxable amount, and the tax thereon, and shall notify the taxpayer in writing
of the amount proposed to be assessed against the taxpayer as a deficiency.

(1) Be in writing,

(2) State that tax, interest, penalty, additional amount, or addition to tax is proposed for assessment and is due, and

(3) Set forth the amount and the reason for the proposed assessment.

Such notice shall be mailed by the Director within the time limit provided by § 531 of this title (by certified or registered
mail if the amount of the proposed assessment exceeds $500) to the taxpayer at the taxpayer's last known address. In the case
of a joint return of personal income tax, a notice of proposed assessment shall be a single joint notice, except that if the
Director is notified by either spouse in writing that separate addresses have been established, the Director shall mail a
joint notice to each spouse at each such address. In the case of a combined separate return of personal income tax, a single
notice of proposed assessment shall be sent by the Director to the taxpayers' last known address except that, if the Director
is notified by either spouse in writing that separate addresses have been established, the Director shall mail separate notices
to each spouse, using reasonable means to allocate the proposed assessment between the spouses. If the taxpayer is deceased,
under a legal disability or is a corporation which has terminated its existence, a notice of proposed assessment shall be
mailed to such taxpayer's last known address, except that if the Director has received notice of the existence of a fiduciary
relationship with respect to such taxpayer, such notice shall be mailed to the last known address of such fiduciary. Except
where the Director determines that collection would be jeopardized by delay, no notice of proposed assessment of any tax shall
be mailed prior to the last date, including any date fixed by extension, prescribed for the payment of such tax.

(d) Supplemental notice of proposed assessment. -- The Director may, at any time within the period prescribed for issuance
of a notice of proposed assessment, issue a supplemental notice of proposed assessment, subject to the other provisions of
this section, whenever it is found that any notice is imperfect or incomplete in any material respect. Any reference in this
title to a notice of proposed assessment shall be deemed to include a reference to a supplemental notice of proposed assessment
issued under the authority of this subsection.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

§ 522. Assessment final if no protest.

Sixty days after the date on which it was mailed (30 days in the case of a proposed assessment of withholding taxes, or, in
the case of other taxes imposed by Chapter 11 of this title, 120 days if the taxpayer is outside the United States), a notice
of proposed assessment under § 521(c) of this title shall constitute a final assessment of the amount of tax, interest, penalties,
additional amounts and additions to the tax specified in such notice, excepting only those amounts as to which the taxpayer
has filed a timely protest with the Director under § 523 of this title.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

§ 523. Protest by taxpayer.

Within 60 days (30 days in the case of withholding taxes, or, in the case of other taxes imposed by Chapter 11 of this title,
120 days if the taxpayer is outside the United States) after the date of the mailing of a notice of proposed assessment under
§ 521(c) of this title or the date of the mailing of a notice of the disallowance of a claim for credit or refund under §
542 of this title, the taxpayer may file with the Director a written protest against the proposed assessment or disallowance
in which the taxpayer shall set forth the grounds upon which the protest is based. If such a protest is filed, the Director
shall reconsider the proposed assessment or disallowance of claim for credit or refund and, if the taxpayer has so requested,
shall grant the taxpayer or the taxpayer's authorized representative an oral hearing.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

§ 524. Notice of determination after protest.

Written notice of the Director's determination under § 523 of this title shall be mailed to the taxpayer by certified or registered
mail, and such notice shall set forth the Director's findings of fact and the basis of any determination which is adverse,
in whole or in part, to the taxpayer.

68 Del. Laws, c. 187, § 1.;

§ 525. Determination of Director final.

The determination of the Director under § 524 of this title on the taxpayer's protest shall be final (and such determination
shall constitute a final assessment of any amount determined by the Director to be due) upon the expiration of 60 days (30
days in the case of withholding taxes, or, in the case of other taxes imposed by Chapter 11 of this title, 120 days if the
taxpayer is outside the United States) from the date when the Director mails notice of the determination to the taxpayer,
unless within such period the taxpayer seeks review of the Director's determination pursuant to § 544 of this title.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

§ 526. Burden of proof.

(a) In any proceeding before the Director under this chapter, the burden of proof shall be on the taxpayer, except with respect
to the following issues, as to which the burden of proof shall be on the Director:

(1) Whether the taxpayer has been guilty of fraud;

(2) Whether the petitioner is liable as the transferee (within the meaning of § 560 of this title) of property of a taxpayer
(but not to show that the taxpayer was liable for the tax); and

(3) Whether the taxpayer is liable for any increase in a deficiency where such increase is asserted initially after the notice
of proposed assessment under § 521(c) of this title was mailed and a protest under § 523 of this title was filed, unless such
increase in deficiency is the result of a change or correction of federal tax liability required to be reported under § 514
of this title and of which change or correction the Director had no notice at the time the Director mailed the notice of proposed
assessment.

(b) In any proceeding before the Tax Appeal Board under this chapter, the burden of proof shall be upon the taxpayer, except
with respect to the issues described in paragraphs (a)(1) and (2) of this section, as to which the burden of proof shall be
on the Director.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

§ 527. Evidence of related federal determination.

A federal administrative determination of issues raised in a proceeding under § 523 or § 544 of this title shall be admissible
as presumptive evidence in such proceeding, but such determination shall not be conclusive.

68 Del. Laws, c. 187, § 1.;

§ 528. Mathematical error.

(a) If the amount of tax shown on the taxpayer's return is understated due to a mathematical or clerical error, the Director
shall notify the taxpayer in writing that an amount of tax in excess of that shown on the return is due and has been assessed.
Each notice under this subsection shall expressly state the error alleged. Such additional tax and any interest thereon shall,
subject to the right of protest under subsection (b) of this section, be deemed assessed on the date of filing or the due
date of the return, whichever is later.

(b) Notwithstanding the provision for immediate assessment under subsection (a) of this section, a taxpayer may file with
the Director, within 60 days after notice of the assessment is sent, a written protest of the assessment under the provisions
of § 523 of this title. In the taxpayer's protest, the taxpayer shall set forth the reasons the taxpayer believes there was
no mathematical or clerical error made in the preparation of the return or calculation of the tax due.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

§ 529. Time for performing certain acts postponed by reason of service in combat zone.

(a) In the case of an individual serving in the armed forces of the United States, or serving in support of such armed forces,
in an area designated by the President of the United States by Executive Order as a "combat zone" for purposes of § 112 of
the Internal Revenue Code (26 U.S.C. § 112), at any time during the period designated by the President by Executive Order
as the period of combatant activities in such zone for purposes of such section, or hospitalized as a result of injury received
while serving in such an area during such time, the period of service in such area, plus the period of continuous qualified
hospitalization attributable to such injury, and the next 195 days thereafter, shall be disregarded in determining under this
title (other than Chapters 30, 51 and 52), in respect of any tax liability (including any interest, penalty, additional amount,
or addition to the tax) of such individual:

(1) Whether any of the following acts was performed within the time prescribed therefor:

a. Filing any return of income or estate (except income tax withheld at source);

b. Payment of any income or estate (except income tax withheld at source) or any installment thereof or any other liability
to this State in respect thereof;

c. Filing a protest with the Director under § 523 of this title, filing a petition with the Tax Appeal Board under § 544 of
this title or filing an appeal of a decision rendered by the Tax Appeal Board under § 331 of this title;

d. Allowance of a credit or refund of any tax;

e. Filing a claim for credit or refund of any tax;

f. Assessment of any tax;

g. Giving or making any notice or demand for the payment of any tax, or with respect to any liability to this State in respect
of any tax;

h. Collection of the amount of any liability in respect of any tax;

i. Bringing suit or commencing any action, including the filing of any certificate or warrant, by this State or any officer
on its behalf, in respect of any liability in respect of any tax; and

j. Any other act required or permitted under this title (other than Chapters 30, 51 and 52) specified in regulations prescribed
under this section by the Director;

(2) The amount of any credit or refund (including interest).

(b)(1) Except to the extent provided in paragraph (a)(2) of this section shall not apply for purposes of determining the amount
of interest on any overpayment of tax.

(2) If an individual is entitled to the benefits of subsection (a) of this section with respect to any return and such return
is timely filed (determined after the application of subsection (a) of this section), interest shall be allowed on any overpayment
commencing with the forty-sixth day after the due date for the return (determined after the application of subsection (a)
of this section).

(c) The provisions of this section shall apply to the spouse of any individual entitled to the benefits of subsection (a)
of this section. Except in the case of the combat zone designated for purposes of the Vietnam conflict, the preceding sentence
shall not cause this section to apply to any spouse for any taxable year beginning more than 2 years after the date designated
under § 112 of the Internal Revenue Code (26 U.S.C. § 112) as the date of termination of combatant activities in a combat
zone.

(d) The period of service in the area referred to in subsection (a) of this section shall include the period during which
an individual entitled to benefits under said subsection (a) of this section is in a missing status, within the meaning of
§ 6013(f)(3) of the Internal Revenue Code (26 U.S.C. § 6013(f)(3)).

(e)(1) Notwithstanding the provisions of subsection (a) of this section, any action or proceeding authorized by § 560, § 561
or § 1221 [repealed] of this title (regardless of the taxable period for which the tax arose), as well as any other action
or proceeding authorized by law in connection therewith, may be taken, begun or prosecuted. In any other case in which the
Director determines that collection of the amount of any assessment would be jeopardized by delay, the provisions of subsection
(a) of this section shall not operate to stay collection of such amount as authorized by law. There shall be excluded from
any amount assessed or collected pursuant to this paragraph the amount of interest, penalty, additional amount and addition
to the tax, if any, in respect of the period disregarded under subsection (a) of this section. In any case to which this
paragraph relates, if the Director is required to give any notice to or make any demand upon any person, such requirement
shall be deemed to be satisfied if the notice or demand is prepared and signed, in any case in which the address of such person
last known to the Director is in any area for which United States post offices under instructions of the Postmaster General
of the United States are not, by reason of combatant activities, accepting mail for delivery at the time the notice or demand
is signed. In such case the notice or demand shall be deemed to have been given or made upon the date it is signed.

(2) The assessment or collection of any tax or of any liability to this State in respect of any tax, or any action or proceeding
by or on behalf of this State in connection therewith, may be made, taken, begun or prosecuted in accordance with law, without
regard to the provisions of subsection (a) of this section, unless prior to such assessment, collection, action or proceeding
it is ascertained that the person concerned is entitled to the benefits of subsection (a) of this section.

(f)(1) Any individual who performed Desert Shield services (and the spouse of such individual) shall be entitled to the benefits
of this section in the same manner as if such services were referred to in subsection (a) of this section.

(2) For purposes of this subsection, the term "Desert Shield services" means any services in the armed forces of the United
States or in support of such armed forces if:

a. Such services are performed in the area designated by the President pursuant to this subparagraph as the "Persian Gulf
Desert Shield Area"; and

b. Such services are performed during the period beginning on August 2, 1990, and ending on the date on which any portion
of the area referred to in subparagraph a is designated by the President as a combat zone pursuant to § 112 of the Internal
Revenue Code (26 U.S.C. § 112).

(g) For purposes of subsection (a) of this section, the term "qualified hospitalization" means:

(1) Any hospitalization outside the United States; and

(2) Any hospitalization inside the United States, except that not more than 5 years of hospitalization may be taken into account
under this paragraph.

Paragraph (2) of this subsection shall not apply for purposes of applying this section with respect to the spouse of any individual
entitled to the benefits of subsection (a) of this section.

68 Del. Laws, c. 187, § 1; 71 Del. Laws, c. 353, § 13; 71 Del. Laws, c. 385, § 6.;

§ 530. Assessment of tax.

(a) The amount of tax which is shown to be due on any return (including any additional amount subject to notice under § 528(a)
of this title as a result of a mathematical or clerical error) shall be deemed to be assessed on the date of filing such return,
and an increase in such tax which is shown on an amended return shall be deemed to be assessed on the date of filing such
amended return. In the case of a return filed without the computation of the tax, the tax computed by the Director shall
be deemed to be assessed on the date when payment of such tax is due. If a notice of proposed assessment has been mailed
pursuant to § 521(c) of this title, the amount of the proposed assessment shall be deemed to be assessed, if no protest under
§ 523 of this title is timely filed, on the date provided in § 522 of this title, or, if such a protest is timely filed, on
the date when the determination of the Director becomes final pursuant to § 525 of this title; provided, however, that, if
the taxpayer seeks review of the Director's determination pursuant to § 544 of this title, the amount of the proposed assessment
shall not be deemed to be assessed until the expiration of 60 days (30 days in the case of withholding taxes, or, in the case
of other taxes imposed by Chapter 11 of this title, 120 days if the taxpayer is outside the United States) from the first
date when (i) the determination of the Tax Appeal Board under § 544 of this title becomes final and not subject to judicial
review under § 331 of this title, or (ii) if the taxpayer appeals from the Tax Appeal Board determination pursuant to § 331
of this title, an order of the Superior Court of the State or the Supreme Court of the State entered upon the decision on
such appeal becomes final and not subject to appeal. If an amended return or report filed pursuant to § 514 of this title
concedes the accuracy of a federal change or correction, any deficiency in tax under this title resulting therefrom shall
be deemed to be assessed on the date of filing such amended return or report, and such assessment shall be deemed timely notwithstanding
any other provisions of this chapter. Any amount paid as a tax, or in respect of a tax, other than amounts withheld at the
source or paid as estimated income tax, shall be deemed to be assessed upon the date of the Director's receipt of payment,
notwithstanding any other provision of this title.

(b) If the mode or time for the assessment of any tax under this title or Title 4, including interest, penalties, additional
amounts and additions to the tax, is not otherwise provided for, the Director may establish the same by regulations.

(c) The Director may, at any time within the period prescribed for assessment, make a supplemental assessment, subject to
the provisions of § 521 of this title where applicable, whenever it is found that any assessment is imperfect or incomplete
in any material respect.

68 Del. Laws, c. 187, § 1.;

§ 531. Limitations on assessment.

(a) Except as otherwise provided in this section, a notice of proposed assessment under § 521(c) of this title shall be mailed
to the taxpayer within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed).
No deficiency shall be assessed or collected with respect to the taxable period for which a return was filed unless such notice
is mailed within such 3-year period, or within the period otherwise prescribed in this section.

(b) In the case of a deficiency in any license fee or tax under Part III of this title, a notice of proposed assessment under
§ 521(c) of this title shall be mailed to the taxpayer within 3 years after the expiration date of the license to which the
proposed assessment relates.

(c) If no return is filed, or if a false and fraudulent return is filed with intent to evade any tax imposed by this title
or Title 4, a notice of proposed assessment under § 521(c) of this title may be mailed to the taxpayer at any time.

(d) If the taxpayer fails to comply with the requirement of § 514 of this title by not reporting a change or correction to
the federal income or estate tax return, or by not filing an amended return under this title, a notice of proposed assessment
under § 521(c) of this title may be mailed to the taxpayer at any time.

(e) If the taxpayer shall, pursuant to § 514 of this title, report a change or correction or file an amended federal income
or estate tax return increasing the federal tax liability, a notice of proposed assessment under § 521(c) of this title with
respect to such change or correction (if not otherwise deemed to have been assessed under § 530(a) of this title upon the
filing of such report or amended return) may be mailed to the taxpayer at any time within 2 years after such report or amended
return was filed.

(f) Where, before the expiration of the time prescribed in this section for the mailing of a notice of proposed assessment
under § 521(c) of this title, both the Director and the taxpayer shall have consented in writing to such assessment after
such time, the proposed assessment may be assessed at any time prior to the expiration of the period agreed upon. The period
so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed
upon. An agreement between the taxpayer and the Internal Revenue Service providing for the extension of the period for assessment
of federal income taxes shall constitute an agreement with the Director to extend the period for assessment of income taxes
under this title. A copy of any such agreement between the taxpayer and the Internal Revenue Service shall be filed by the
taxpayer with the Director within 30 days after its execution.

(g) For purposes of this section, a return filed before the last day prescribed by law or by regulation promulgated pursuant
to law for the filing thereof shall be considered as filed on such last day.

(h) The running of the period of limitations provided for in this section on the making of assessments shall, in a case under
Title 11 of the United States Code, be suspended for the period during which the Director is prohibited by reason of such
case from making the assessment plus 60 days thereafter.

(i) If a taxpayer omits from a return any amount of income, gross receipts, gross gifts or gross estate properly includible
therein which exceeds 25 percent of the amount stated on the return, the tax may be assessed at any time within 6 years after
the return was filed.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 144, § 1; 71 Del. Laws, c. 385, §§ 7, 8; 72 Del. Laws, c. 112, § 3.;

§ 532. Recovery of erroneous refund.

(a) An erroneous refund shall be considered an underpayment of tax on the date such refund was made, and a notice of proposed
assessment under § 521(c) of this title with respect to such refund may be mailed to the taxpayer at any time within the later
of:

(1) Two years from the making of such refund; or

(2) The limitation period provided by § 531 of this title.

(b) As to any part of an erroneous refund that was induced by fraud or by the intentional misrepresentation of a material
fact, a notice of proposed assessment under § 521(c) of this title with respect to such refund may be mailed to the taxpayer
at any time.

68 Del. Laws, c. 187, § 1.;

§ 533. Interest on underpayment.

(a) If any amount of tax, including tax required to be withheld by an employer, and including penalties, additional amounts
and additions to the tax, imposed by this title or Title 4 is not paid on or before the last date prescribed for payment,
interest on such amount at the rate of 0.5% per month, or fraction thereof, shall be payable for the period from such last
date to the date such amount is paid, and from and after the date the assessment of such interest becomes final under § 522
or § 530 of this title to the date such amount is paid, such interest shall compound monthly. No interest shall be imposed
if the amount due is less than $1.00, nor shall this section apply to any failure to pay estimated income tax under § 1170
or § 1904 of this title.

(b) For purposes of this section, the last date prescribed for payment of any tax shall be determined without regard to any
extension of time.

(c) Interest prescribed under this section on any tax, including tax required to be withheld by an employer, and including
penalties, additional amounts and additions to the tax, shall be assessed, collected and paid in the same manner as taxes.
After an initial assessment of interest upon any amount of tax, penalty, additional amount or addition to the tax, interest
shall continue to accrue on the unpaid balance of such amount until such amount has been paid in full, except as otherwise
provided in subsection (e) of this section, and no further assessment of such interest shall be made.

(d) Interest shall be imposed under this section in respect of any penalty, additional amount or addition to the tax from
the date of the notice of proposed assessment under § 521(c) of this title of such penalty, additional amount or addition
to the tax to the date of payment thereof.

(e) If a proposed assessment is made with respect to any amount, and if such amount is paid within 10 days after the date
of the notice of proposed assessment thereof under § 521(c) of this title, interest under this section on the amount so paid
shall not be imposed for the period after the date of such notice.

(f) If any portion of a tax is satisfied by credit of an overpayment, then no interest shall be imposed under this section
on the portion of the tax so satisfied for any period during which, if the credit had not been made, interest would have been
allowable with respect to such overpayment.

(g) Any portion of any tax imposed, or any interest, penalty, additional amount or addition to the tax, which has been erroneously
refunded and which is recoverable by the Director, shall bear interest at the rate of 0.5% per month, or fraction thereof,
from the date of payment of such refund to the date of its recovery by the Director, and from and after the date the assessment
of such interest becomes final under § 522 or § 530 of this title to the date of such recovery, such interest shall compound
monthly.

(h) Interest prescribed under this section on any tax may be assessed and collected at any time during the period within which
the tax, penalty, additional amount or addition to the tax to which such interest relates may be collected.

(i) If the Secretary of the Treasury of the United States extends the time for filing income tax returns under § 6081 of the
Internal Revenue Code (26 U.S.C. § 6081) and the time for paying income tax with respect to such returns under § 6161 of the
Internal Revenue Code (26 U.S.C. § 6161) for any taxpayer located in a Presidentially-declared disaster area, the Director
shall abate for such period the assessment of any interest prescribed under this section and penalties for failure to file
a return under § 534(a) of this title or to pay the tax under § 534(b) of this title on such taxpayer's income and business
license tax. For purposes of this subsection, the term "Presidentially-declared disaster area" means, with respect to any
taxpayer, any area which the President of the United States has determined warrants assistance by the Federal Government under
the Disaster Relief and Emergency Assistance Act.

68 Del. Laws, c. 187, § 1; 72 Del. Laws, c. 112, § 2; 75 Del. Laws, c. 411, §§ 1, 2.;

§ 534. Failure to file tax return or to pay tax.

(a) In case of failure to file any return required under authority of this title or Title 4 on or before the date prescribed
therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable
cause and not due to wilful neglect, there shall be added to the amount required to be shown as tax on such return 5% of the
amount of such tax if the failure is for not more than 1 month, with an additional 5% for each additional month or fraction
thereof during which such failure continues. For purposes of this subsection, the amount of tax required to be shown on the
return shall be reduced by the amount of any part of the tax which is paid on or before the date prescribed for payment of
the tax and by the amount of any credit against the tax which may be claimed on the return.

(b)(1) In case of failure to pay the amount shown as tax on any return specified in subsection (a) of this section on or before
the date prescribed for payment of such tax (determined with regard to any extension of time for payment), unless it is shown
that such failure is due to reasonable cause and not due to wilful neglect, there shall be added to the amount shown as tax
on such return 1% of the amount of such tax if the failure is for not more than 1 month, with an additional 1% for each additional
month or fraction thereof during which such failure continues, not exceeding 25% in the aggregate. For purposes of computing
such addition for any month, the amount of tax shown on the return shall be reduced by the amount of any part of the tax which
is paid on or before the beginning of such month and by the amount of any credit against the tax which may be claimed on the
return. If the amount required to be shown as tax on the return is less than the amount shown as tax on the return, this paragraph
shall be applied by substituting such lower amount.

(2) In the case of failure to pay any amount in respect of any tax required to be shown on a return specified in subsection
(a) of this section which is not so shown (including an assessment made pursuant to § 528(a) of this title) within 10 days
after any assessment thereof becoming final, unless it is shown that such failure is due to reasonable cause and not due to
wilful neglect, there shall be added to the amount of tax stated in the notice of proposed assessment 1% of the amount of
such tax if the failure is for not more than 1 month, with an additional 1% for each additional month or fraction thereof
during which such failure continues, not exceeding 25% in the aggregate. For purposes of computing such addition for any month,
the amount of tax stated in the notice of proposed assessment shall be reduced by the amount of any part of the tax which
is paid before the beginning of such month.

(c)(1) If any partnership required to file a return under § 1174(a) of this title [repealed] for any taxable year fails to
file such return by the date prescribed therefor (determined with regard to any extension of time for filing) or files a return
which fails to show the information required under § 1174(a) of this title [repealed], such partnership shall be liable for
a penalty determined under paragraph (c)(2) of this section for each month, or fraction thereof, during which such failure
continues (but not to exceed 5 months), unless it is shown that such failure was due to reasonable cause.

(2) For purposes of paragraph (c)(1) of this section, the amount of penalty for any month is the product of $25, multiplied
by the number of persons who were partners in the partnership during any part of the taxable year; provided, however, that
the maximum penalty for any taxable year shall not exceed $10,000.

(3) The penalty prescribed by this subsection shall be assessed against and shall be payable by the partnership, and the deficiency
and appeal procedures provided in §§ 521-526 of this title shall not apply; provided, however, that the Director shall mail
written notice of such penalty to the partnership, which may, within 60 days from the date of the mailing of such notice,
institute a protest of such penalty to the Director, whose determination shall be final.

(d)(1) If any partnership required to file a return or 1 or more Schedules K-1 under § 1174(b) of this title [repealed] for
any taxable year fails to file such return or Schedules K-1 by the date prescribed therefor (determined with regard to any
extension of time for filing), such partnership shall be liable for a penalty determined under paragraph (d)(2) of this section
for each month, or fraction thereof, during which such failure continues (but not to exceed 5 months), unless it is shown
that such failure was due to reasonable cause.

(2) For purposes of paragraph (d)(1) of this section, the amount of penalty for any month is $25, multiplied by the number
of Schedules K-1 required to have been filed under § 1174(b) of this title [repealed]; provided, however, that the maximum
penalty for any taxable year shall not exceed $10,000.

(e) This section shall not apply to any failure to file a declaration of estimated tax or to pay any estimated tax.

(f)(1) In case of each failure to file a statement of payment to another person required under the authority of this title,
including the duplicate statement of tax withheld on wages, by the date prescribed therefor (determined with regard to any
extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to wilful neglect,
there shall be paid by the person so failing to file such statement, in the same manner as tax, a penalty of $2.00 for each
such failure, but the total amount imposed on the delinquent person for all such failures during any calendar year shall not
exceed $2,000.

(2) Any person required to file an information return pursuant to § 1154(h) of this title who fails to file such return on
or before the date prescribed for its filing or who fails to include all the information required to be shown on the return
or who includes incorrect information on the return or who fails to file in the required manner, shall unless it is shown
that such failure is due to reasonable cause and not due to wilful neglect, pay a penalty in an amount equal to one half the
amount specified in the Internal Revenue Code, as it may be amended from time to time, for such failure.

(g) The Director shall assess a penalty of $500 against any individual who files what purports to be a return of any tax imposed
by this title or Title 4 but which:

(1) Does not contain information on which the substantial correctness of the self-assessment may be judged or contains information
that on its face indicates that the self-assessment is substantially incorrect; and

(2) Evidences a position that is frivolous or a desire to delay or impede the administration of the revenue laws of this State.

(h) In the case of failure of an employer required to deposit taxes by electronic funds transfer under the provisions of §
1154(f) of this title to make transfer by such means, unless it is shown that such failure is due to reasonable cause and
not due to wilful neglect, there shall be added to the amount shown as tax required to have been electronically transferred
5% of the amount or $500 per required payment, whichever is less.

(i) With respect to any return, the amount of the addition to the tax under subsection (a) of this section shall be reduced
by the amount of the addition to the tax under subsection (b) of this section for any month (or fraction thereof) to which
an addition to the tax is applied under both subsections (a) and (b) of this section. In any case described in former subsection
(h) [now repealed] of this section, the amount of the addition to the tax under subsection (a) of this section shall not be
reduced under the preceding sentence below the amount provided in former subsection (h) [now repealed] of this section.

(j) If any failure to file any return is fraudulent, subsection (a) of this section shall be applied by substituting "15%"
for "5%" each place it appears.

(k) For purposes of subsection (a) of this section, reasonable cause shall be deemed established in the case of failure to
file a return in the time prescribed by Part III of this title, where the taxpayer filed within the time prescribed in a written
notification by the Director that the taxpayer is eligible to file returns on a basis less frequent than is actually the case.

(l) In the case of failure of any person to obtain or renew a business license required under the provisions of Part III of
this title, unless it is shown that such failure is due to reasonable cause and not due to wilful neglect, there shall be
added to the amount of the business license fee required to be paid a penalty in the amount of $200. Whenever a penalty has
been proposed for assessment under this subsection, the Director shall not be required to issue a business license to the
taxpayer to whom such assessment has been proposed unless and until the taxpayer has paid any license fee necessary for issuance
of such license and has either:

(1) Paid the assessment provided under this subsection (subject to any claim for refund); or

(2) Filed a written protest regarding such assessment of penalty pursuant to § 523 of this title.

The penalty described in this subsection shall not be assessed in the instance of self-disclosure by a taxpayer of delinquency
in meeting the licensing requirements of Part III. The penalty described in this subsection shall, only with respect to the
same failure to obtain or renew a license and not with respect to failure to pay taxes on gross receipts or any other acts
or omissions, be in lieu of the penalty described in subsection (a) of this section, except where such penalty determined
under subsection (a) of this section shall exceed the penalty determined under this subsection, in which event subsection
(a) of this section shall apply, and this subsection shall not apply.

68 Del. Laws, c. 187, § 1; 69 Del. Laws, c. 289, § 13; 70 Del. Laws, c. 117, § 3; 71 Del. Laws, c. 314, § 7; 72 Del. Laws, c. 220, § 1; 73 Del. Laws, c. 131, § 3; 75 Del. Laws, c. 411, § 3; 77 Del. Laws, c. 79, §§ 2, 3.;

§ 535. Fraud and other penalties.

(a) If any part of any underpayment of tax required to be shown on a return is due to fraud, there shall be added to the tax
an amount equal to 75% of the portion of the underpayment which is attributable to fraud. If the Director establishes that
any portion of an underpayment is attributable to fraud, the entire underpayment shall be treated as attributable to fraud,
except with respect to any portion of the underpayment which the taxpayer establishes (by a preponderance of the evidence)
is not attributable to fraud. In the case of a joint return, this section shall not apply with respect to a spouse unless
some part of the underpayment is due to the fraud of such spouse. For purposes of this subsection, "underpayment" shall have
the meaning ascribed to such term in § 6664(a) of the Internal Revenue Code (26 U.S.C. § 6664(a)), or successor provisions.
The penalty prescribed by this subsection shall apply only in cases where a return of tax is filed.

(b) If an individual subject to tax under Chapter 11 of this title fails to file a declaration of estimated tax, or fails
to pay all or any part of an installment of tax imposed under Chapter 11 of this title, such individual shall be deemed to
have made an underpayment of estimated tax, and there shall be added to the tax an amount equal to 11/2% per month, or fraction
thereof, of the amount of such underpayment for the period of the underpayment. The Director shall determine the amount of
an underpayment of estimated tax by an individual in a manner consistent with the internal revenue laws of the United States.

(c)(1) In the case of any underpayment of tentative tax or installment of estimated tax required by Chapter 19 of this title,
there shall be added to the tax for the taxable year an amount equal to 11/2% per month, or fraction thereof, of the amount
of such underpayment for the period of the underpayment.

(2) For purposes of paragraph (1) of this subsection, the amount of the underpayment shall be the excess of:

a. The amount of the tentative tax or installment payment which would be required to be made if the estimated tax were equal
to 80% of the tax shown on the final return for the taxable year, or, if no such return was filed, 80% of the tax for such
taxable year, over

b. The amount, if any, of the tentative tax or the installment paid on or before the last date prescribed for payment.

(3) For purposes of paragraph (c)(1) of this section, the period of the underpayment shall run from the date the tentative
tax or installment was required to be paid to the first day of the fourth month following the close of the taxable year, or
to the date on which paid, whichever is earlier.

(4) Notwithstanding the foregoing provisions of this subsection, no addition to tax shall be imposed under this subsection
if the total amount of all payments of estimated tax made on or before the last date prescribed for the payment thereof equals
or exceeds the amount which would have been required to be paid on or before such date if the estimated tax were the tax shown
on the final return of the taxpayer for the preceding taxable year.

(5) In the case of a large corporation, paragraph (c)(4) of this section shall not apply. For purposes of this paragraph,
the term "large corporation" means any corporation if such corporation (or any predecessor corporation) had Delaware taxable
income of $200,000 or more for any of the 3 taxable years immediately preceding the taxable year involved.

(d) If any employer fails to pay the amount shown as tax on any withholding return filed pursuant to § 1154 of this title,
there shall be added to the tax an amount equal to 1% of the tax required to be shown on such return for each month, or fraction
thereof, during which such failure continues, not exceeding 25% in the aggregate. Such employer shall be liable for the payment
of such additions to tax, and it shall not be collected from the employee.

(e) Any person required under this title to collect, account for and pay over any tax imposed by this title, other than §
3002 and Chapters 51 and 52 of this title, who wilfully fails to collect or truthfully account for and pay over such tax,
or wilfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties
provided by law, be liable for a penalty equal to the total amount of the tax evaded, or not collected or not accounted for
and paid over. No addition to tax under subsection (a) of this section shall be imposed for any action or failure to act to
which this subsection applies. The term "person" as used in this subsection, includes an officer or employee of a corporation,
or a member or employee of a partnership, who, as such officer, employee, or member is under a duty to perform the act in
respect of which the violation occurs.

(f) In addition to any criminal penalty provided by law, any person who wilfully fails to pay, or to deduct or withhold and
pay, any tax imposed under authority of this title or Title 4, or to make tender, sign or certify any return or declaration
of estimated tax, or to supply any information within the time required by or under this title or Title 4, shall be liable
for a penalty of not more than $3,000, in addition to any other amounts prescribed under this title, that shall be assessed
and collected by the Director.

(g)(1) In addition to any criminal penalty provided by law, the Director shall assess a penalty of $500 whenever:

a. Any individual makes a false statement under § 1151 of this title which results in a decrease in the amounts deducted and
withheld under subchapter VII of Chapter 11 of this title; and

b. As of the time such statement was made, there was no reasonable basis for such statement.

(2) The Director may waive in whole or in part the penalty imposed under paragraph (g)(1) of this section if the taxes imposed
with respect to the individual under subchapter VII of Chapter 11 of this title for the taxable year are equal to or less
than the sum of:

a. The credits against such taxes allowed by said subchapter; and

b. The payments of estimated tax on account of such taxes.

(h) Penalties prescribed under the provisions of this chapter shall be additions to tax and shall be assessed, collected and
paid in the same manner as taxes.

(i) For purposes of subsection (a) of this section (relating to underpayments due to fraud), the amount shown as the tax by
the taxpayer upon the return shall be taken into account in determining the amount of the underpayment only if such return
was filed on or before the due date of such return, determined with regard to any extension of time for such filing.

(j) If any check or money order in payment of any amount receivable under this title or Title 4 is not duly paid, in addition
to any other penalties provided by law, there shall be paid as a penalty by the person who tendered such check or money order
an amount equal to 2% of the amount of such check or money order, except that if the amount of such check or money order is
less than $750, the penalty under this subsection shall be $15 or the amount of such check or money order, whichever is the
lesser. This subsection shall not apply if the person tendered such check or money order in good faith and with reasonable
cause to believe it would be duly paid. For purposes of this subsection, any other method of payment, including but not limited
to payment by electronic funds transfer, payment by means of the automated clearing house, or payment by credit card, debit
card or charge card shall be considered a payment by check or money order.

(k)(1) If:

a. Any part of any understatement of liability with respect to any return or claim for refund is due to a position for which
there was not a realistic possibility of being sustained on its merits;

b. Any person who is an income tax return preparer with respect to such return or claim knew (or reasonably should have known)
of such position; and

c. The relevant facts affecting the tax treatment of the item affected by such position were not adequately disclosed in such
return or claim or in a statement attached to such return or claim (or in a federal return or a statement attached thereto,
a copy of which was filed with such return or claim) or indicate such position was frivolous;

such person shall pay a penalty of $250 with respect to such return or claim unless it is shown that there is reasonable cause
for the understatement and such person acted in good faith.

(2) If any part of any understatement of liability with respect to any return or claim for refund is due:

a. To a wilful attempt in any manner to understate the liability for tax by a person who is an income tax return preparer
with respect to such return or claim; or

b. To any reckless or intentional disregard of rules or regulations by any such person;

such person shall pay a penalty of $1,000 with respect to such return or claim. With respect to any return or claim, the
amount of the penalty payable by any person by reason of this paragraph shall be reduced by the amount of any penalty paid
by such person by reason of paragraph (k)(1) of this section.

(3)a. If at any time there is a final administrative determination or a final judicial decision that there was no understatement
of liability in the case of any return or claim for refund with respect to which a penalty under paragraph (k)(1) or (2) of
this section has been assessed, such assessment shall be abated, and if any portion of such penalty has been paid the amount
so paid shall be refunded to the person who made such payment as an overpayment of tax without regard to any period of limitations
which, but for this subparagraph, would apply to the making of such refund.

b. For purposes of this subsection, the term "understatement of liability" means any understatement of the net amount payable
with respect to the tax imposed under Chapter 11 or Chapter 19 of this title or any overpayment of the net amount creditable
or refundable with respect to any such tax. Except as otherwise provided in paragraph (k)(3)a. of this section, the determination
of whether or not there is an understatement of liability shall be made without regard to any administrative or judicial action
involving the taxpayer.

(l) Any person who:

(1) Aids or assists in, procures, or advises with respect to, the preparation or presentation of any portion of a return,
affidavit, claim or other document;

(2) Knows or has reason to believe that such portion will be used in connection with any material matter arising under this
title or Title 4; and

(3) Knows that such portion (if so used) would result in an understatement of the liability for tax of another person;

shall pay a penalty with respect to each such document in the amount determined in accordance with, and subject to the limitations
contained in, § 6701 of the Internal Revenue Code (26 U.S.C. § 6701), or successor provisions. Except as provided in subsection
(m) of this section, the penalty imposed by this subsection shall be in addition to any other penalty provided by law.

(m) No penalty shall be assessed under subsection (k) of this section on any person with respect to any document for which
a penalty is assessed on such person under subsection (l) of this section.

68 Del. Laws, c. 187, § 1; 69 Del. Laws, c. 188, § 1; 70 Del. Laws, c. 142, § 10; 70 Del. Laws, c. 186, § 1; 73 Del. Laws, c. 131, § 4; 75 Del. Laws, c. 411, § 5.;

§ 536. Accuracy-related penalty.

(a) If this section applies to any portion of an underpayment of any tax imposed by this title or Title 4 required to be shown
on a return, there shall be added to the tax an amount equal to 20% (40% in the case of gross valuation misstatements) of
the portion of the underpayment to which this section applies.

(b) This section shall apply to the portion of any underpayment which is attributable to 1 or more of the following:

(1) Negligence or disregard of rules and regulations.

(2) Any substantial understatement of tax.

(3) Any substantial valuation misstatement with regard to any tax imposed by Chapter 11 or Chapter 19 of this title.

(4) Any substantial estate or gift tax valuation understatement with respect to any tax imposed by Chapter 15 of this title.

(c) For purposes of subsection (b) of this section, the following terms shall have the meanings ascribed to such terms in
§ 6662 of the Internal Revenue Code (26 U.S.C. § 6662), or successor provisions, except that "$1,500" shall be substituted
for "$5,000" and "$3,000" shall be substituted for "$10,000" each place such dollar amounts appear in the said § 6662:

(1) "Negligence";

(2) "Disregard";

(3) "Substantial understatement of income tax";

(4) "Substantial valuation misstatement";

(5) "Substantial estate or gift tax valuation understatement"; and

(6) "Gross valuation misstatement."

(d) For purposes of determining under subsection (b) of this section whether a portion of any underpayment is attributable
to 1 or more of the items specified in paragraphs (b)(1)-(4) of this section, the provisions of § 6662 of the Internal Revenue
Code (26 U.S.C. § 6662), or successor provisions, shall be applied in the same manner as if such provisions were applicable
to the taxes imposed by this title or Title 4.

(e) For purposes of this section, "underpayment" shall have the meaning ascribed to such term in § 6664(a) of the Internal
Revenue Code (26 U.S.C. § 6664(a)), or successor provisions. The penalty prescribed by this section shall apply only in cases
where a return of tax is filed.

68 Del. Laws, c. 187, § 1; 71 Del. Laws, c. 353, § 15; 71 Del. Laws, c. 385, § 9.;

§ 537. Authority to make credits or refunds.

(a) In the case of any overpayment, the Director, within the applicable period of limitations, may credit the amount of such
overpayment, including any interest allowed thereon, against any liability in respect of any tax imposed by the tax laws of
this State on the person who made the overpayment, and the balance shall be refunded by the Director to such person.

(b) If the amount allowable as a credit for tax withheld from the taxpayer exceeds the tax to which the credit relates, the
excess shall be considered an overpayment by the taxpayer for purposes of subsection (a) of this section.

(c)(1) If more than the correct amount of tax required to be paid under the provisions of § 1154 of this title is paid with
respect to any payment of remuneration, proper adjustments, with respect to both the tax and the amount to be deducted, shall
be made, without interest, in such manner and at such times as the Director may by regulations prescribe.

(2) If more than the correct amount of tax required to be paid under the provisions of § 1154 of this title is paid or deducted
with respect to any payment of remuneration and the overpayment cannot be adjusted under paragraph (c)(1) of this section,
the amount of the overpayment shall be refunded to the employer, subject to the limitations of paragraph (c)(3) of this section,
with interest calculated from the forty-sixth day following the date of the claim for the refund, and in such manner and at
such times (subject to the statute of limitations properly applicable thereto) as the Director may by regulations prescribe.

(3) In the case of an overpayment of tax required to be deducted and withheld under § 1151 of this title, refund or credit
shall be made to the employer only to the extent that the amount of such overpayment was not deducted and withheld by the
employer.

(d) If any amount of tax is assessed or collected after the expiration of the period of limitations properly applicable thereto,
such amount shall be considered an overpayment for purposes of subsection (a) of this section.

68 Del. Laws, c. 187, § 1; 69 Del. Laws, c. 188, § 2.;

§ 538. Abatements.

(a) The Director is authorized to abate the unpaid portion of the assessment of any tax, interest, penalty, additional amount
or addition to the tax, or any liability in respect thereof, which is:

(1) Excessive in amount;

(2) Assessed after the expiration of the period of limitations properly applicable thereto; or

(3) Erroneously or illegally assessed.

(b) The Director is authorized to abate any portion (whether or not theretofore paid) of the assessment of any tax, interest,
penalty, additional amount or additions to the tax, or any liability in respect thereof, if the Director determines under
uniform rules prescribed by the Director that the administration and collection costs involved would not warrant collection
of the amount due.

68 Del. Laws, c. 187, § 1; 70 Del. Laws, c. 186, § 1.;

§ 539. Limitations on credit or refund.

(a) Claim for credit or refund of an overpayment of any tax imposed by this title or Title 4 shall be filed by the taxpayer
within 3 years from the last date prescribed for filing the return (or in the case of license fees or taxes under Part III
of this title, 3 years from the expiration date of the license to which such overpayment relates) or within 2 years from the
time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years
from the time the tax was paid. No credit or refund shall be allowed or made after the expiration of the period of limitation
prescribed in the preceding sentence for the filing of a claim for credit or refund, unless a claim for credit or refund is
filed with the Director by the taxpayer within such period.

(b)(1) If the claim for credit or refund was filed by the taxpayer during the 3-year period prescribed in subsection (a) of
this section, the amount of the credit or refund shall not exceed the portion of the tax paid within the period immediately
preceding the filing of the claim, equal to 3 years plus the period of any extension of time for filing the return.

(2) If the claim was not filed within such 3-year period, the amount of the credit or refund shall not exceed the portion
of the tax paid during the 2 years immediately preceding the filing of the claim.

(3) If no claim was filed, the credit or refund shall not exceed the amount which would be allowable under either paragraph
(b)(1) or (2) of this section, as the case may be, if claim was filed on the date the credit or refund is allowed.

(c) If an agreement under the provisions of § 531(f) of this title extending the period for assessment of a tax imposed by
this title or Title 4 is made within the period prescribed in subsection (a) of this section for the filing of a claim for
credit or refund:

(1) The period for filing claim for credit or refund or for making credit or refund if no claim is filed, provided in subsection
(a) of this section, shall not expire prior to 6 months after the expiration of the period within which an assessment may
be made pursuant to the agreement or any extension thereof under § 531(f) of this title; and

(2) If a claim is filed, or a credit or refund is allowed when no claim was filed, after the execution of the agreement and
within 6 months after the expiration of the period within which an assessment may be made pursuant to the agreement or any
extension thereof, the amount of the credit or refund shall not exceed the portion of the tax paid after the execution of
the agreement and before the filing of the claim or the making of the credit or refund, as the case may be, plus the portion
of the tax paid within the period which would be applicable under subsection (b) of this section if a claim had been filed
on the date the agreement was executed.

(d) If the taxpayer is required by § 514 of this title to report a change or correction in federal income or estate liability
reported on the federal tax return for any taxable period, or to file an amended tax return under this title with the Director,
a claim for credit or refund of any resulting overpayment of tax under this title shall be filed by the taxpayer within 2
years from the time such report or amended return was required to be filed with the Director. If such a report or amended
return required by § 514 of this title is not filed within the 90-day period specified in that section, interest on any resulting
credit or refund shall not accrue for the period after such ninetieth day and prior to the forty-fifth day after the date
of filing the claim for credit or refund. The amount of any such credit or refund shall not exceed the amount of the reduction
in tax attributable to such federal change or correction or attributable to the items amended on the taxpayer's amended federal
tax return. This subsection shall not affect the time within which a claim for credit or refund may be filed, or the amount
for which a credit or refund may be made, without regard to this subsection.

(e) If the claim for credit or refund relates to an overpayment attributable to a net operating loss carry back or a capital
l