Sec. 44-106. - Definitions.

The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Article means City of Wilmington Code, Part II, Chapter 44, Article V, Section 44-106, et seq., as amended.

Business means an enterprise, activity, profession or undertaking of any nature conducted for profit or ordinarily conducted for profit whether by an individual, copartnership, association, governmental body or unit or agency or any other entity.

City means the City of Wilmington [situated] in New Castle County in the State of Delaware.

Code means City of Wilmington Code, Part II, Chapter 44, Article V, Section 44-106, et seq., as amended.

Department means the department of finance of the City of Wilmington, unless the context clearly indicates to the contrary.

Director means the director of the department of finance of the City of Wilmington, unless the context clearly indicates to the contrary.

Employee means any person who renders or has rendered any services to another for a consideration or its equivalent, under an express or implied contract, and who is or was under the control and direction of the latter when rendering the services including temporary, provisional, casual or parttime employment.

Employer means an individual, copartnership, association, corporation, governmental body or unit or agency or any other entity, for whom or for which one or more persons render or have rendered any services on a salary, commission or other compensation basis.

Entity means a trust, statutory trust, estate, partnership, limited liability company, corporation, association or other organization. An entity shall be classified for purposes of this article as a corporation, association, partnership, trust or otherwise as such entity is classified for the purposes of the federal income tax imposed pursuant to the Internal Revenue Code of 1986, as amended, or any successor thereto.

Net profits means the net gain from the operation of a business, profession or enterprise after provision for all allowable costs and expenses incurred in the conduct thereof, either paid or accrued in accordance with the accounting system used, without deduction of taxes based on income.

Nonresident means an individual, copartnership, fiduciary, association or any other (noncorporate) entity domiciled outside the city, provided, however, that any nonresident corporate entity shall not be subject to liability for the earned income tax and other duties imposed by this article except in its capacity or status as an employer.

Person means every individual, copartnership, fiduciary, association or other entity, provided, however, that any corporate entity shall not be subject to liability for the earned income tax and the other duties imposed by this article except in its capacity or status as an employer.

Resident means an individual, copartnership, fiduciary, association or other entity domiciled in the city, provided, however, that any resident corporate entity shall not be subject to liability for the earned income tax and other duties imposed by this article except in its capacity or status as an employer.

Salaries, wages, commissions, and other compensation means all salaries, wages, commissions, bonuses, incentive payments, fees and tips that may accrue or have accrued whether directly or through an agent and whether in cash or in property for services rendered, but excluding:

(1)

Periodical payments for sick or disability benefits and those commonly recognized as old age benefits.

(2)

Retirement pay or pensions paid to persons retired from service after reaching a specific age or after a stated period of employment.

(3)

Any wage or compensation paid by the United States to any person for active service in the armed services of the United States.

(4)

Any bonus paid by the United States, this state or any other state for such service.

(5)

As a limited exception only, salaries, wages or other payments made to any public safety officers of the state or of any jurisdiction other than the city police department when such officers are acting in the performance of their duties pursuant to state authorization or pursuant to the exercise of a mutual aid agreement between the city and the other jurisdiction, being a separate political subdivision, municipality or other governmental body, for a limited period of time, such that those public safety officers shall not be liable for payment of the tax otherwise incurred under this article, unless such public safety officers reside in the city.

Tax means the principal amount of the tax assessed under this article plus all associated interest, penalties and costs assessed in connection therewith, unless the context clearly indicates to the contrary.

Taxpayer means any persons required by this article to file a return or to pay a tax.

(Code 1968, § 30-29; Ord. No. 97-057, § 1, 8-27-97; Ord. No. 05-052(sub 1), § 2, 8-18-05; Ord. No. 08-031, § 1, 6-5-08)

Cross reference— Definitions and rules of construction generally, § 1-2.

Sec. 44-107. - Imposition of earned income tax.

(a)

An annual tax for general revenue purposes is hereby imposed on the following:

(1)

Salaries, wages, commissions and other compensation earned by residents of the city;

(2)

Salaries, wages, commissions and other compensation earned by nonresidents of the city for work done or services performed or rendered in the city;

(3)

The net profits in businesses, professions and other activities conducted by residents of the city; and

(4)

The net profits earned in businesses, professions and other activities conducted in the city by nonresidents.

(b)

The tax rate shall be 1¼ percent on all amounts subject to tax under this section.

(c)

No earned income tax shall be imposed upon:

(1)

Any entity classified as a corporation;

(2)

Any entity that, if classified as a corporation, would be an entity described in 30 Del. C. §§ 1902(b)(8) or 6401(1); or

(3)

Any entity that does not regularly hold itself out to the general public as being engaged within the city in an active business, and whose activities within the city are confined to:

a.

The acquisition, maintenance, management and disposition of, and the collection and distribution of the income from, either intangible personal property, wherever located, or of real or tangible personal property physically located outside of the city;

b.

The issuance of evidences of indebtedness (or other incurrence of indebtedness), or of equity interests, beneficial interests or other interests in intangible personal property wherever located, or in real or tangible personal property physically located outside of the city; or

c.

Any combination of the activities described in subsection (c)(3)a. and (c)(3)b.

(Code 1968, § 30-30; Ord. No. 04-053(sub 1), § 2, 7-8-04; Ord. No. 05-052(sub 1), § 3, 8-18-05)

Sec. 44-108. - Returns; payment of tax; refunds.

(a)

Net profits. Each person whose net profits are subject to the tax imposed by this Code on or before April 15 of each year shall make and file with the department a return on a form furnished by or obtainable from the department setting forth the amount of such net profits earned during the preceding year and subject to such tax, together with such other pertinent information as the department may require. In addition:

Where a return is made for a fiscal year or for any other period different from a calendar year, such return shall be made by the 15th day of the fourth month following the end of such fiscal year or other period.

(b)

Wages. Each person who is or was employed on a salary, wage, commission or other compensation basis which is subject to a tax imposed by this Code and which tax is not withheld by his employer and paid to the city as provided in section 44-109 shall on or before the last day of January, April, July and October make and file with the department a return furnished by the department, setting forth the aggregate amount of salaries, wages, commissions and other compensation subject to such tax earned by the person for the three months ending on the last day of the month preceding, together with such other pertinent information as the department may require.

(c)

Whenever any person files a return required by this section, he/she shall at the time of filing pay to the department the amount of tax due thereon.

(d)

Between January 1 and December 31 of each year, persons may apply in the department in person or in writing for a refund on excess taxes or for a credit of such refundable amount toward future tax liability as the same may arise under this article of the Code.

(1)

Withheld from wages after December 31, 1989 and during the previous three calendar years; or

(2)

Paid by the persons in compliance with subsection (a)(2) of this section.

(e)

Application for a return of excess taxes under this section must be filed on forms provided by the department and must be submitted with appropriate W-2 forms. The director of finance may extend the three-year limitation on refund requests for a period of 90 days and promulgate regulations regarding the grant or denial of such extensions.

(f)

Extensions of time to file returns. The department of finance may, upon written request accompanied by a copy of a timely filed federal request for extension on or before the last day for filing any return, grant to the taxpayer required to file such return an extension of not more than 120 days within which to file the return. In case the federal income tax authorities at any time grant a longer extension of time for filing such return with the federal government, the department of finance may upon written request by the taxpayer accompanied by a copy of the notice of a further federal extension grant an additional extension of time within which to file the return required by this Code for a period not to exceed 60 days after the expiration or other termination of the federal extension. Where the taxpayer files his or her return timely within the extension period, but the tax due as of the initial payment due date remains in whole or part unpaid, then in addition to any other remedies, charges or additions to the tax provided for in this Code there shall be assessed both penalty and interest on any tax deficiency as provided in section 44-115(a). Where the taxpayer fails to file his or her return timely within the extension period, but the tax due as of the initial payment due date remains in whole or part unpaid, then in addition to any other remedies, charges or additions to the tax provided for in this Code there shall be assessed both penalty and interest on any tax deficiency as provided in section 44-115(b). If the return is not filed on or before the extended filing date, such non-filing shall be considered a failure or refusal to file the return within the meaning of section 44-115(b).

(Code 1968, § 30-32; Ord. No. 91-096, § 1, 1-2-92; Ord. No. 08-031, § 2, 6-5-08; Ord. No. 09-063(sub 1), § 1, 10-15-09)

Sec. 44-109. - Collection at source.

(a)

Each employer for whom or for which one or more persons subject to this tax render or have rendered services on a salary, wage, commission or other compensation basis shall deduct monthly or more often than monthly, at the time of payment thereof, the full tax rate of 1¼ percent on the salaries, wages, commissions and other compensation due from such employer to such employee, or former employees as the case may be, and made taxable under the provisions of this Code, except that due to employees engaged as domestic servants; such employer shall, on or before the 15th day of April, July, October and January of each year, make a return and pay to the department of finance the amount of tax so deducted from the three months ending on the last day of the month preceding. In addition:

(1)

The return shall be on a form furnished by the department of finance and shall set forth: The number of taxable employees; total salaries, wages, commissions or other compensation paid by the employer; total tax actually deducted; tax paid with the return, and the total number of employees reported by location within the City of Wilmington together with such other information as the department may require.

(2)

The employer making the return shall at the time of filing pay to the department the amount of tax due thereon.

(3)

Any employer required to withhold this tax shall be personally liable to the city for payment of this tax in the event that such employer fails, refuses, or neglects to withhold this tax. The failure of any employer, residing whether within or outside the city, to make such return and/or to pay such tax shall not relieve the employee from the responsibility for making the returns, paying the tax and complying with the regulations with respect to making the returns and paying the tax.

It is the intention of this section that the liability of the employer for the payment of the tax shall be coextensive with the liability of the employee in the event that the employer fails to withhold and remit the tax as required by this article.

(4)

Annually, on or before the last day of January of each year, every employer who or which made the returns and paid the tax for one or more quarters of the preceding calendar year, or, if not, was in any event, required to make such returns and pay such tax, shall file an annual information return which shall set forth the names and residences of each employee of such employer during or any part of the year covered by such return, the amounts of salaries, wages, commissions or other compensation earned for the entire calendar year by each of such employees, together with such other information as the department may require. Any employer making the annual information returns with respect to 50 or more employees in the State of Delaware for any calendar year shall file the return via electronic media unless such employer establishes to the satisfaction of the department of finance that compliance with the electronic media filing requirement for such calendar year would result in undue hardship to the employer.

(b)

When an employer required to make deductions or returns under subsection (a) of this section deducts an aggregate amount of such tax in excess of $50.00 during any calendar month, except the months of March, June, September and December, he shall within 15 days after the last day of such calendar month, deposit such deduction with the department of finance.

(c)

A person or entity that is an employer shall not be exempt from the withholding and payment obligations of this section solely by virtue of being exempt from the requirement of obtaining a business license pursuant to section 34 of Chapter 5 of the City Code. Upon application by an employer exempt under section 5-34 of the City Code, the department shall establish an employee account for such employer.

(d)

Every employer required to deduct and withhold tax under this article is made personally liable for such tax. For purposes of assessment and collection, any amount required to be withheld and paid over to the department, and any additions to tax, penalties and interest with respect thereto, shall be considered the tax of the employer. Any amount of tax actually deducted and withheld under this article shall be held in trust for the department. No employee shall have any right of action against an employer in respect to any money deducted and withheld from wages paid over to the department in compliance, or in intended compliance, with this article.

(e)

If an employer fails to deduct, withhold and remit the tax as required, and thereafter the tax against which such tax may be credited is paid by or on behalf of the employee, the tax so required to be deducted, withheld and remitted shall not be collected from the employer, but the employer shall not be relieved from liability for any unpaid additions to tax, including but not limited to penalties, (or) interest, that are otherwise applicable in respect to such failure to deduct, (and) withhold and remit.

(f)

It is the intention of this section that an employer shall be subject to the provisions of section 44-137

(g)

It is further the intention of this section that unless the context clearly indicates to the contrary, the liability of the employer for the payment of the tax, and any additions to tax, including but not limited to penalties, interest, reasonable attorney fees and the costs of collection that are imposed by this article, shall be coextensive with the liability of the individual employee of that employer in every respect.

(Code 1968, § 30-33; Ord. No. 01-032, § 1, 5-17-01; Ord. No. 01-071, § 2, 7-19-01; Ord. No. 05-052(sub 1), § 4, 8-18-05; Ord. No. 08-031, § 3, 6-5-08; Ord. No. 09-063(sub 1), § 2, 10-15-09)

Sec. 44-110. - Extension of payment.

If the due date for the payment of the taxes imposed by this Code falls on a Sunday or holiday or any day during which the agency collecting such tax is not open for a full business day, the department may postpone such due date to the next following business day.

(Code 1968, § 30-34)

Sec. 44-111. - Allocation of delinquent payment.

Unless otherwise provided, when a partial payment is made on account of any delinquent earned income tax assessment under this article, such payment shall be applied first to permitted costs and charges, including but not limited to costs of collection and reasonable attorney fees, then interest accumulated on the tax, then to penalties on the tax, and then to the principal amount of the tax. The city shall not be bound by any restrictive endorsements or payment instructions accompanying or incorporated into any payment instrument that are in conflict with this section and such restrictive endorsements or payment instructions shall be of no force and effect.

(Code 1968, § 30-35; Ord. No. 08-031, § 4, 6-5-08)

Sec. 44-112. - Records of taxpayer.

Every person who has paid or from whom there is due or alleged to be due any moneys collectible by the department, and any person upon whom there is imposed any other obligation to collect and remit to the city any such moneys shall:

(a)

Preserve and retain his or her books, records, accounts, copies of tax returns filed with other taxing authorities and other data relating thereto for a period of six years after such moneys become collectible or have been collected by the department, whichever is later;

(b)

When requested by the department, produce the books, records, accounts, and copies of tax returns filed with other taxing authorities and other data relating thereto, and give to the department the opportunity to make examination of such books, records, accounts, copies, data and any other property owned or controlled by such person in order to verify the accuracy of any report or return made, or if no report or return has been made, to ascertain the amount of tax due.

(c)

The director of finance (the "director") may permit the Commissioner of Internal Revenue of the United States, the proper officer of any state, the District of Columbia, or any possession or territory of the United States imposing a tax upon the incomes of individuals, (or) corporations or other artificial business entities, or a financial officer designated by any municipality of this state which imposes an income tax or wage tax, or the authorized representative of any (of) such officers, to inspect the tax return of any taxpayer, and the director may furnish to any such officer, or such officer's authorized representative, an abstract of the tax return of any tax payer or supply such officer or such officer's authorized representative with information contained in any return of such taxpayer or disclosed by the report of any examination or investigation of the income or return of such taxpayer, but only for the purpose of, and only to the extent necessary in, the administration of the tax laws of such other jurisdiction; provided, however, that no such permission shall be granted, and no such information shall be furnished, to any such officer or the officer's authorized representative unless the statutes of such other jurisdiction grant substantially similar privileges to the director or the director's legal representative. No such jurisdiction, or its representative, shall be permitted to examine a taxpayer's return unless such taxpayer shall have a place of residence, business or employment in such jurisdiction, and no jurisdiction or its representative shall be permitted to review any portion of a tax return filed under the authority of this chapter unless the governing body of such jurisdiction shall have adopted an ordinance requiring:

(1)

That any information obtained from, or as a result of the examination or investigation of such tax return be kept confidential and only for collection purposes.

(2)

That the jurisdiction reimburse to the department of finance its cost, if any, of acquiring and providing such information.

(Code 1968, § 30-36; Ord. No. 06-001(sub 1), § 1, 1-19-06; Ord. No. 09-063(sub 1), § 3, 10-15-09)

Sec. 44-113. - Limitation of actions.

Any suit to recover any tax imposed by this Code shall be begun within six years after such tax is due or within six years after a return or report has been filed whichever date is later, but this limitation shall not apply in the following cases:

(1)

Where the taxpayer has failed to have filed the return or report required under the provisions of this Code.

(2)

In any case where a return is shown to represent a fraudulent evasion of taxes, including but not limited to substantial understatement of gross income, moneys or funds in any such return or report.

(3)

Where the taxpayer has collected or withheld funds or moneys of any nature or description under this Code as agent or trustee for the city and has failed, neglected or refused to pay the amount so collected or so withheld to the city.

(4)

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 of finance is prohibited by reason of such case from making the assessment plus 60 days thereafter.

(Code 1968, § 30-37; Ord. No. 08-031, § 5, 6-5-08)

Sec. 44-114. - Construction.

(a)

Each tax imposed in this Code shall be in addition to any other taxes imposed by the city.

(b)

Nothing contained in this Code shall be construed to empower the city to levy or collect any tax not within the taxing power of the city under the Constitution of the United States or the constitution or laws of the state.

(Code 1968, § 30-38)

Sec. 44-115. - Interest, penalties and costs.

(a)

If any tax imposed under this Code is not paid when due, penalty at the rate of five percent of the amount of the unpaid tax shall become due and payable. In addition, interest at the rate of 1½ percent of the amount of the unpaid tax shall be added for each month or fraction thereof during which the tax shall remain unpaid and shall be collected together with the amount of the tax.

(b)

If any person shall fail or refuse to file any report or return, a penalty at the rate of five percent of the amount of the unpaid tax shall be added for each month or fraction thereof during which the report or return shall remain unfiled and shall be collected together with the amount of the tax.

(c)

Where suit is brought for the recovery of any such tax, the person liable therefor shall, in addition, be liable for the costs of collection, including attorney fees, and disbursements, together with the interest and penalties herein imposed.

(d)

In addition to any other sanction or remedial procedure provided, any person who shall:

(1)

Make any false or untrue statement on his report or return;

(2)

Fail or refuse to file any report or return or for any reason fails to withhold any sum due the city when required to do so by this Code;

(3)

Fail to pay over to the department any moneys which he may hold as agent for the city; or

(4)

Violate any provision of this Code or any regulation adopted under this article; shall be subject to a fine of not more than $300.00 for each offense and shall be subject to imprisonment of not more than 90 days if the fine and costs are not paid within ten days of imposition. The foregoing provision notwithstanding, any employer who is required to file tax information via electronic media and who fails to do so shall be penalized $25.00 per employee record which is not field via electronic media.

(e)

Any person who shall have paid or from whom there is due or alleged to be due any moneys collectible by the department and who fails and refuses to produce or permit the examination of his books, records, accounts and related data or to afford to authorized representatives of the department an opportunity for such examination shall be subject to a fine of not more than $300.00 for each such offense, with imprisonment for not more than 90 days if the fine and costs are not paid within ten days.

(f)

Any tax, penalty, interest or other sum of money due under any prior earned income tax code for the city shall not abate by the enactment of this Code and shall be deemed an obligation due and owing to the city.

(g)

Waiver of interest and penalty only. The director of finance, or his authorized agent, shall be authorized to waive interest or penalty, or both, in whole or in part under the following circumstances only:

(1)

If a taxpayer is required to file an information return showing changes in business income and/or business expense as required in Section 303(b)(9) of the Earned Income Tax Regulations of the City of Wilmington ("regulations") as reported to the city within 30 days of final notice of an additional income tax assessment by the Internal Revenue Service, a penalty may be waived by the director, or his agent, provided payment of an additional tax due to the city is made by the taxpayer of the additional tax assessment resulting from any federal income tax change.

(2)

Where litigation of the amount of taxes due is pending or threatened and waiver of interest, or penalty, or both on past amounts owed is proposed as part of the overall settlement of the litigation.

(3)

Where the assessment of penalty, or interest, or both is based on taxes assessed in error by the department of finance.

(4)

Where the waiver of interest, or penalty, or both is part of an agreement by which the entire principal amount of the taxes due shall be paid to the city whether litigation is pending or threatened or not.

The director of finance may promulgate rules and regulations deemed necessary to administer the provisions of this section, subject to approval by the administrative board.

(Code 1968, § 30-39; Ord. No. 91-095, § 1, 1-2-92; Ord. No. 94-003, § 2, 2-24-94; Ord. No. 94-080, § 1, 1-4-95; Ord. No. 08-031, § 6, 6-5-08)

Sec. 44-116. - Regulations.

The director of finance is authorized to prescribe, adopt, promulgate and enforce rules and regulations relating to any matter pertaining to the administration and enforcement of this article pursuant to section 8-407 of the charter.

(Code 1968, § 30-40)

Sec. 44-117. - Setoff or credit.

Any resident who is required to file a return or pay a tax to the City of Wilmington under this article shall be entitled to a setoff or credit against the tax otherwise due the City of Wilmington in an amount not to exceed the principal amount of the tax that he or she is otherwise required to pay and has paid for the same fiscal period to any other foreign municipality on account of the resident's earned income, provided, however, that such a resident shall not be entitled to a setoff or credit against the tax otherwise imposed by this article for any earned income not subject to tax by the foreign municipality.

(Code 1968, § 30-41; Ord. No. 08-031, § 7, 6-5-08)

Sec. 44-118. - Charter school registration—Earned income tax.

All charter schools established in accordance with 14 Del.C. ch. 5 § 501 et seq. and operating within the city, shall register with the city finance department on an annual basis, so that all applicable earned income taxes can be assessed for each employee in accordance with this chapter. Such registration information shall be provided in accordance with such rules as may be set forth by the department of finance.

(Ord. No. 99-138, § 2, 1-6-00)

Sec. 44-119. - Examination of return.

(a)

Deficiency or overpayment. As soon as practicable after any return is filed, the director of finance, or his or her designee, shall examine it to determine the correct amount of tax due. If the director of finance finds that the amount of tax shown on the return is less than the correct amount, the director of finance shall notify the taxpayer in writing of the amount of the deficiency proposed to be assessed. If the director of finance finds that the tax that has been paid by the taxpayer is greater than the correct amount, the director of finance may credit the overpayment against any other assessments, taxes, fees or other charges owed to and due the city by the taxpayer and upon request by the taxpayer 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 of finance 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.

(c)

Notice of proposed assessment. A notice of proposed assessment shall (i) be in writing, (ii) state that tax, interest, penalty, additional amount, or addition to tax is proposed for assessment and is due, and (iii) set forth the amount and the reason for the assessment. Such notice shall be mailed or otherwise transmitted to the taxpayer at the taxpayer's last known address by the director of finance within a time period consistent with section 44-113 of this Code and with applicable regulations promulgated by the director of finance and approved by the administrative board, provided, however, that such notice shall be mailed or otherwise transmitted in a manner prescribed by the director of finance.

(1)

If the taxpayer is deceased, is 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 a fiduciary relationship with respect to such taxpayer, such notice shall be mailed to the last known address of such fiduciary.

(2)

Except where the director of finance determines that collection would be jeopardized by delay, no notice of proposed assessment of any tax shall be mailed prior to the last tax date, including any date fixed by extension, prescribed for the payment of such tax.

(d)

Supplemental notice of proposed assessment. The director of finance 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 article of the City Code, whenever it is found that any notice is imperfect or incomplete in any material respect. Any reference in this article to a notice of proposed assessment shall be deemed to include a supplemental notice of proposed assessment issued under the authority of this subsection.

(Ord. No. 08-031, § 8, 6-5-08)

Sec. 44-120. - Assessment final if no protest.

Sixty days after the date on which it was mailed (or 30 days in the case of a proposed assessment of withholding taxes as provided under this article) or 120 days if the taxpayer resides outside the United States, a notice of proposed assessment as set forth in section 44-119 of this article 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 of finance as provided hereinafter in section 44-121 of this article.

(Ord. No. 08-031, § 9, 6-5-08)

Sec. 44-121. - Protest by taxpayer.

(a)

Within 60 days (or 30 days in the case of withholding taxes as provided in this article) after the mailing of a notice of proposed assessment or supplemental notice of proposed assessment under section 44-119 of this City Code or 120 days if the taxpayer resides outside the United States, the taxpayer may file with the director of finance a written protest against the proposed assessment or the supplemental notice of proposed assessment in which the taxpayer shall set forth the grounds upon which the protest is based.

(b)

Within 60 days (or 30 days in the case of withholding taxes as provided in this article) after the mailing of a notice of the disallowance of claim for credit or refund under section 44-108 of the Code, or 120 days if the taxpayer resides outside the United States, the taxpayer may file with the director of finance a written protest respecting the disallowance of such claim for credit or refund in which the taxpayer shall set forth the grounds upon which the protest is based.

(c)

If a protest is filed in connection with subsections (a) or (b) of this section, the director of finance shall reconsider the proposed assessment or the disallowance of claim for credit or refund.

(d)

The department of finance may in its sole discretion rescind a notice of proposed assessment or a supplemental notice of proposed assessment or at any time prior to the issuance of a final determination pursuant to section 44-122. No protest shall lie in the absence of a proposed assessment or supplemental notice of proposed assessment. The issuance of a supplemental notice of proposed assessment shall be deemed a rescission of any prior proposed assessment or supplemental notice of proposed assessment. If a notice of proposed assessment or supplemental notice of proposed assessment is rescinded, then any protest filed in response to any such notice of proposed assessment or supplemental notice of proposed assessment shall be deemed withdrawn and rescinded.

(Ord. No. 08-031, § 10, 6-5-08; Ord. No. 09-063(sub 1), § 4, 10-15-09)

Sec. 44-122. - Notice of determination after protest.

Within 60 days of the filing of the protest of proposed assessment, or the protest of the disallowance by the director of finance of a claim for refund or credit, written notice of the determination of the director of finance upon reconsideration of the taxpayer's assessment or the taxpayer's claim for refund or credit shall be transmitted in a manner prescribed by the director of finance.

(Ord. No. 08-031, § 11, 6-5-08)

Sec. 44-123. - Determination of director final.

The determination of the director of finance under section 44-122 of this City Code on the taxpayer's protest under section 44-121 shall be final and such determination shall constitute (a) a final assessment of any amount determined by the director of finance to be due or (b) a final determination by the director of finance on the taxpayer's claim for credit or refund.

(Ord. No. 08-031, § 12, 6-5-08)

Sec. 44-124. - Failure of director to respond to protest or to claim for refund or credit deemed disallowance.

If the director of finance fails to mail written notice of the director's action on any timely filed protest of a notice of proposed assessment or a disallowance of a claim for credit or refund under section 44-121 of this article, or if the director fails to mail written notice of his action with respect to a claim for a credit or refund made by or on behalf of any taxpayer, within six months after such protest or claim was filed, the taxpayer thereafter, and prior to notice of action by the director, may consider such protest or claim to have been disallowed by the director, and the taxpayer may, at any time prior to the expiration of three years from the date on which such protest or claim was filed, seek appropriate relief in a court of competent jurisdiction.

(Ord. No. 08-031, § 13, 6-5-08)

Sec. 44-125. - 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 of finance 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 penalty and interest thereon shall, subject to the right of protest under subsection (b) of this section, be deemed assessed on the original due date of the return.

(b)

Notwithstanding the provision for immediate assessment under subsection (a) of this section, a taxpayer may file with the director of finance, within 60 days after notice of the assessment is sent or 120 days if the taxpayer is outside of the United States, a written protest of the assessment under the provisions of section 44-121 of this City Code. In the taxpayer's protest, the taxpayer shall set forth the reasons the taxpayer believes there is no mathematical or clerical error made in the preparation of the return or calculation of the tax due.

(Ord. No. 08-031, § 14, 6-5-08)

Sec. 44-126. - Time for performing certain acts postponed by reason of service in combat zones.

In the case of an individual serving in the armed forces of the United States, or serving in support of the 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, 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 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 article, any tax liability (including any interest, penalty, additional amount, or addition to the tax) arising under this article in respect to such individual, whether or not any of the following acts was performed within the time otherwise prescribed therefore under this article:

(1)

Filing any return as prescribed by this article;

(2)

Payment of any tax prescribed by this article;

(3)

Filing a protest with the director under section 44-121 of this article;

(4)

Allowance of a credit or refund as otherwise prescribed by this article;

(5)

Filing a claim for credit or refund of any tax under this article;

(6)

Assessment of any tax under this article;

(7)

Giving or making any notice or demand for the payment of any tax assessed under this article;

(8)

Collection of the amount of any liability in respect to any tax assessed under this article;

(9)

Bringing suit or commencing any action, including the filing of any certificate or warrant, by the City of Wilmington or any officer on its behalf, in respect of any liability in connection with any tax assessed under this article; and

(10)

Any other act required or permitted under this article specified in regulations prescribed under this section by the director and approved by the administrative board.

(Ord. No. 08-031, § 15, 6-5-08)

Sec. 44-127. - 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 section 44-119, section 44-122, and section 44-125 of this article as a result of a mathematical or clerical error) shall be deemed to be assessed on the original due date for filing the return.

(b)

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.

(c)

If a notice of proposed assessment has been mailed pursuant to section 44-119 of this City Code, the amount of the proposed assessment shall be deemed to be assessed, if no protest under section 44-121 of this article is timely filed, on the date provided in section 44-120 of this article, or, if such a protest is timely filed, on the date when the determination of the director becomes final pursuant to section 44-123 of this article or section 44-124, as the case may be, provided, however, that if the notice of proposed assessment relates to a tax liability for a prior year, then the date of assessment for that prior tax year shall be deemed to be the original due date for filing the return.

(d)

If an amended return or report filed pursuant to this article concedes the accuracy of a federal or State of Delaware change or correction, any deficiency in tax under this article 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 article.

(e)

Any amount paid as a tax, or in respect of a tax shall be deemed to be assessed on the original due date, notwithstanding any other provision of this article.

(f)

For purposes of this article, a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day.

(Ord. No. 08-031, § 16, 6-5-08)

Sec. 44-128. - Recovery of erroneous refunds.

(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 section 44-119 of this article with respect to such erroneous refund may be mailed to the taxpayer at any time within the later of:

(1)

Three years from the making of such refund; or

(2)

The limitation period provided by section 44-113 of this article.

(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 section 44-119 of this article with respect to such refund may be mailed to the taxpayer at any time. The limitations period for filing suit to recover any tax under this section shall be governed by subsection 44-113(2).

(Ord. No. 08-031, § 17, 6-5-08)

Sec. 44-129. - Interest on underpayment.

In the event of an underpayment of tax, the taxpayer shall be assessed on the underpayment at the rate provided under section 44-115 of this article.

(Ord. No. 08-031, § 18, 6-5-08)

Sec. 44-130. - Venue.

The venue for an action brought by or against any taxpayer for any claim or cause of action arising under this article shall exclusively reside in a court of competent jurisdiction located within New Castle County, Delaware.

(Ord. No. 08-031, § 19, 6-5-08)

Sec. 44-131. - General powers of director of finance.

The director of finance, for the purpose of ascertaining the correctness of any return, or for the purpose of making an estimate of tax payable by any person, shall have the power to examine. or to cause to have examined by any agent or representative designated by the director of finance for that purpose, any books, papers, records or memoranda, regardless of the medium in which they are memorialized or preserved, bearing upon the matters required to be included in the return and may require the attendance of the person rendering the return or any director, officer or employee of the employer subject to audit by the department of finance, or the attendance of any other person having knowledge in the premises, and may take testimony and require proof material for the director of finance's information with power to administer oaths to such person or persons.

(Ord. No. 08-031, § 20, 6-5-08)

Sec. 44-132. - Jeopardy assessments.

(a)

If the director of finance finds that the collection of a tax, whether or not the time otherwise prescribed by law for making a return and paying such tax has expired, or the assessment or collection of a deficiency for any year, current or past, will be jeopardized by delay, the director of finance shall immediately assess such tax or such deficiency and shall mail or issue notice of the finding to the taxpayer together with a demand for immediate payment of such tax or such deficiency declared to be in jeopardy, together with all interest, penalties, additional amounts and additions to the tax provided by law.

(b)

In the case of a jeopardy assessment of a tax for a current taxable year or other taxable period, the director of finance shall determine such tax for the period beginning on the first day of such current taxable year or other taxable period and ending on the date of the director's finding under subsection (a) of this section as though such period were a taxable year or other taxable period of the taxpayer.

(c)

A jeopardy assessment shall be immediately due and payable, and proceedings for the collection of such assessments may be commenced at once. The taxpayer, however, may stay the collection of the whole or any part or portion of the assessment and prevent such assessment from becoming final by filing with the director of finance, within 15 days after the date of mailing or issuance of the notice of jeopardy assessment, a request for reassessment, accompanied by a bond or, in the discretion of the director of finance, other adequate security in an amount equal to the amount as to which the stay of collection is sought, conditioned upon the payment of the assessment amount together with all penalties, interest, additional amounts and additions to the tax provided by law. If a request for reassessment, accompanied by a bond or, in the discretion of the director of finance, other adequate security in the appropriate amount, is not filed within such 15-day period, the assessment shall become final upon expiration of such 15-day period.

(d)

If a request for reassessment, accompanied by a bond or other adequate security, is filed within the 15-day period provided by subsection (c) of this section, the collection of so much of the amount assessed as is covered by the bond or other security shall be stayed, and the director of finance shall reconsider the assessment. The determination of the director of finance on the request for reassessment shall become final upon the expiration of 30 days from the date when the director of finance mails notice of the determination to the taxpayer.

(e)

In any proceeding relating to the collection of a jeopardy assessment, the finding of the director of finance under subsection (a) of this section shall for all purposes be presumptive evidence that collection of the tax or the assessment or collection of the deficiency was in jeopardy.

(f)

The director of finance may abate the jeopardy assessment if the director finds that jeopardy does not exist.

(g)

The director of finance may rescind and withdraw a jeopardy assessment in his or her sound discretion at any time prior to the time that such jeopardy assessment becomes final. If a request for reassessment of the jeopardy assessment is pending at the time the jeopardy assessment is rescinded or withdrawn, then that request for reassessment shall be deemed rescinded and withdrawn.

(Ord. No. 08-031, § 21, 6-5-08; Ord. No. 09-063(sub 1), § 5, 10-15-09)

Sec. 44-133. - Liability of persons to collect, account for and pay over wage taxes.

(a)

Any person required to collect, truthfully account for, and pay over any tax imposed by this article on salaries, wages, commissions and other compensation who fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall be liable for the full amount of the tax, plus any additions to the tax, and penalties and interest assessed thereon.

(b)

For purposes of this section, "person" includes any shareholder, director, trustee, officer or employee of a corporation, or a partner or employee of a partnership, or a member of a limited liability company, or the sole proprietor of a sole proprietorship, or a third party who makes either direct payment of wages to the employees of another or advances funds to pay the wages of employees of another.

(c)

More than one person may be liable under subsection 44-133(a) with respect to the same employer, with each person being jointly and severally liable for the full amount of the tax, plus any penalties, charges, and interest assessed thereon.

(d)

This section is modeled upon Section 6672 of the Internal Revenue Code (26 U.S.C. § 6672), and it is intended that this section be construed in the same manner that Section 6672 has been construed.

(Ord. No. 08-031, § 22, 6-5-08)

Sec. 44-134. - Due date of the return.

Except as may be otherwise provided in this article, a return prepared in compliance with the provisions of this article shall be due on the last day provided for under such provision, or upon such later date as the director of finance may permit pursuant to any extension of the time to file the return granted in accordance with this article.

(Ord. No. 08-031, § 23, 6-5-08)

Sec. 44-135. - Signing of returns and other documents.

(a)

Any return, declaration, statement or other document required to be made pursuant to this article shall be signed in accordance with the rules or instructions prescribed by the director of finance. The fact that an individual's name is signed to a return, declaration, statement or other document shall be deemed prima facie evidence for all purposes that such return, declaration, statement or other document was actually signed by such individual and that the individual signed the return with authority to do so on behalf of the taxpayer.

(b)

The making of any return, declaration, statement or other document, or copy thereof, required to be made or filed pursuant to this article, including a copy of a federal or state return, shall constitute a certification by the person, making or filing such return, declaration or statement or other document, or copy thereof, that the statements contained therein are true and that any copy is a true copy.

(c)

The director of finance may require that any return or other writing required to be filed with respect to any tax imposed under authority of this article be signed by the maker of such return or writing under oath or affirmation, subject to penalties of perjury.

(Ord. No. 08-031, § 24, 6-5-08)

Sec. 44-136. - General requirements concerning returns, records and statements.

(a)

The director of finance may prescribe rules or regulations with respect to the keeping of records, and may prescribe the content and form of returns and statements and the filing of copies of federal and state returns and determinations. The director of finance may require any person, by regulation or notice served on such person, to make such returns, render such statements or keep such records as the director of finance may deem sufficient to show whether or not such person is liable under this article for the payment of any tax or for the collection of any tax. The director may permit or require the filing of returns by electronic means and, in any event, specify the form and content of such filing.

(b)

Notwithstanding any other provision of law, any return, declaration, statement or other document submitted through an electronic medium (or through such other medium as the director of finance deems appropriate) shall be deemed to be certified as true and correct and submitted subject to the penalties of perjury and such submission shall be treated for all purposes (both civil and criminal, including penalties for perjury) in the same manner as though signed or subscribed.

(Ord. No. 08-031, § 25, 6-5-08)

Sec. 44-137. - Accuracy-related penalty.

(a)

If this section applies to any portion of an underpayment of any tax imposed by this article required to be shown on a return, there shall be added to the tax an amount equal to 25 percent of the portion of the underpayment to which this section applied.

(b)

This section shall apply to the portion of an underpayment which is attributable to one or more of the following:

(1)

Negligence or disregard of rules and regulations; and

(2)

Any substantial understatement of tax;

(c)

For purposes of subsection (b) of this section, except as may be otherwise provided in 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 said § 6662:

(1)

"Negligence";

(2)

"Disregard";

(3)

"Substantial understatement of income tax"

(d)

For purposes of determining under subsection (b) of this section whether a portion of any underpayment is attributable to one or more of the items specified in paragraphs (1)-(2) of subsection (b) 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 article.

(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 such a return of tax is filed.

(f)

Notwithstanding any provision in the foregoing to the contrary, any underpayment of tax under this article shall be subject to the penalties set forth in this section if the underpayment exceeds $5,000.00 for any calendar year. The liability imposed by this section applies to any person, including but not limited to, any employer, who files tax or informational returns, reconciliations, or other documents with the City of Wilmington relating to the tax liability imposed by the article which individually or collectively serve to substantially understate such person's tax liability for any tax year and results in an underpayment of the actual tax liability imposed by this article for that tax year.

(g)

The penalty provisions appearing in this section shall be deemed to be in addition to all other additions to tax and penalty provisions relating to the earned income tax imposed by the city under in this article.

(Ord. No. 08-031, § 26, 6-5-08)

Sec. 44-138. - Report of change in federal tax liability.

If the amount of the taxpayer's federal income tax liability reported on the federal income tax return for any taxable period is changed or corrected by the Internal Revenue Service, or other competent authority, and such change increases the amount of income subject to the earned income tax under this article, then the taxpayer shall report to the director of finance such change or correction in federal tax liability within 90 days after the final determination of such change or correction and shall concede the accuracy of such determination, or state wherein it is erroneous. Any taxpayer filing an amended federal income tax return shall also (a) file within 90 days thereafter, the appropriate amended earned income tax return with the City of Wilmington, (b) provide the director of finance with such information as the director of finance may require in connection therewith, and (c) pay over to the City of Wilmington such other tax, penalties and interest as may be due in consequence of filing the amended earned income tax return with the City of Wilmington.

(Ord. No. 08-031, § 27, 6-5-08)

Sec. 44-139. - Resident employers mandatory withholding requirement; nonresident employees.

(a)

A resident employer shall be required to withhold and remit the earned income tax without regard to allocation on each employee who is employed at a work location situated within the jurisdictional limits of the City of Wilmington. The withholding and remittance of the tax by the employer pursuant to this chapter shall be based on the entirety of the employee's earned income derived from the employer without regard to any allocation of earned income based on time spent or income earned on work activities conducted within the City of Wilmington relative to time spent or income earned on work activities conducted outside the City of Wilmington or without regard to any other formula or method of allocation; provided, however, that a non-resident employee shall be entitled to seek a refund or credit for overpayment of earned income taxes based on a plan of allocation that is deemed reasonable and acceptable by the department, including but not limited to a plan of allocation that apportions time spent or income earned on work activities conducted inside the City of Wilmington relative to time spent or income earned on work activities conducted outside the City of Wilmington.

(b)

For the purposes of this article, a resident employer shall be defined as any employer having a place of business or physical presence situated within the jurisdictional limits of the City of Wilmington.

(Ord. No. 09-063(sub 1), § 6, 10-15-09)

Sec. 44-140. - Reserved.

Editor's note—

Ord. No. 10-067, § 1, adopted Nov. 18, 2010, amended by deleting the stricken language within brackets § 44-140, which pertained to subchapter S corporation; entity tax treatment; duty withhold and remit; shareholder tax treatment and derived from Ord. No. 09-063(sub 1), § 7, adopted Oct. 15, 2009.

Sec. 44-141. - Burden of proof.

Any earned income tax deficiency assessed, asserted or determined by the department against a taxpayer shall be entitled to a presumption of correctness. The burden of proof rests with the taxpayer to establish by a preponderance of the evidence that any income tax deficiency assessed, asserted or determined by the department is erroneous.

(Ord. No. 09-063(sub 1), § 8, 10-15-09)

Secs. 44-142—44-150. - Reserved.