Payment Plan Options for Overdue Delaware Franchise Tax

Missed the deadline for your Delaware Franchise Tax? Facing a large bill because of a high share count or late filing penalties? You’re not alone. Fortunately, Delaware offers payment options—but only if you act fast and file correctly.

This blog walks you through what to do when you can’t pay your full Delaware Franchise Tax bill upfront in 2025, including installment options, compliance tips, and how to protect your good standing.

Relevant IRC Codes & Definitions

Delaware’s Franchise Tax is a state-level obligation, but your payment plan impacts federal tax reporting and accounting as well:

• IRC §162 – Franchise Tax and late fees may be deductible as ordinary business expenses.
• IRC §446 – Requires consistent accounting methods for installment payments.
• IRC §481 – Governs adjustments due to changes in accounting methods, which may apply if reporting tax payments across fiscal periods.

IRS & State Form References

Federal Reporting:

• Form 1120 – Corporations may deduct the amount actually paid toward state taxes in the year the payment was made.

Delaware Payment Options (as of 2025):

• Partial Payment: Delaware accepts partial payments, but interest continues to accrue.
• Self-Managed Installments: Pay as you can, but no formal payment plan is offered online.
• CPA-Initiated Arrangements: In limited cases, a CPA may request a structured payment plan with the Delaware Division of Corporations.
• Good Standing Not Restored until full payment is received.

Real-World Example

Case Study:
AltaLoop Inc., a C Corporation with 20M authorized shares, filed its Annual Report late and owed $72,000 in Franchise Tax using the Authorized Shares Method.

Unable to pay in full:

• They paid $15,000 immediately
• Paid $5,000/month over 12 months
• Accrued additional interest during the period
• Maintained communication with their CPA and Delaware to avoid escalation

Result: They retained their EIN and business operations while gradually clearing the tax liability.

Step-by-Step Guide to Paying Off Overdue Franchise Tax

1. Log into Delaware’s online system
2. Calculate your total outstanding tax, penalty, and interest
3. Pay as much as you can immediately to reduce accruing interest
4. Notify your CPA to communicate with the Division of Corporations
5. Track monthly payments with receipts for proof
6. File the following year’s Annual Report on time to avoid compound issues
7. Request Good Standing Certificate after balance is cleared

Conclusion

Delaware doesn’t publicly advertise payment plans—but if you’re proactive, you can break down your tax bill into manageable chunks. The key is to remain in communication, file correctly, and avoid going dark, which can trigger administrative dissolution and loss of founder credibility.

Call to Action

Facing a large Delaware Franchise Tax bill? Don’t panic.

👉 Schedule a consultation with Anshul Goyal, CPA, to create a payment strategy, stay in good standing, and avoid long-term damage to your corporate reputation.

Disclaimer

This article is for general information purposes only and does not constitute tax, legal, or financial advice. Delaware does not currently publish formal payment plan guidelines for Franchise Tax obligations. However, taxpayers may work with a CPA to structure informal, CPA-managed installment arrangements.

Anshul Goyal, CPA EA FCA, is a U.S.-licensed Certified Public Accountant, an IRS Enrolled Agent, and a Chartered Accountant from India. He assists startups and growth-stage founders in resolving complex Delaware tax obligations, penalty negotiations, and IRS deduction alignment. Always consult with a tax advisor for individualized support.

FAQs (Top 5 High-Searched)

Q1. Can I set up a formal payment plan with Delaware?
A1. Delaware does not advertise formal plans, but partial payments are accepted, and CPAs may assist in establishing an informal plan.

Q2. Will my corporation be shut down if I don’t pay?
A2. If you remain unresponsive, Delaware may revoke your charter. Pay partially and communicate to maintain standing.

Q3. Does interest stop once I start paying?
A3. No. Interest continues until the full tax and penalties are paid.

Q4. Can I still file next year’s return if this year’s bill is unpaid?
A4. Yes, but it may not restore good standing until the balance is cleared.

Q5. Is Franchise Tax debt reported to the IRS?
A5. No. It is not federally reported, but unpaid state taxes may trigger IRS audit red flags if deductions are misaligned.

About Our CPA

Anshul Goyal, CPA EA FCA, is a U.S. Certified Public Accountant, IRS Enrolled Agent, and Chartered Accountant (India). He’s helped 2,000+ businesses resolve late taxes, restructure payment plans, and maintain compliance with Delaware and the IRS—even when capital is tight.