Delaware franchise tax penalty: can you get it waived?
What Delaware law allows after a late annual report: what is owed, when a reduction can be asked, and why recalculating the tax matters more.
Summary
Our answer: for a taxable corporation that simply filed late, the Delaware Code provides no administrative waiver: the $200 penalty (8 Del. C. 502) and 1.5% monthly interest are owed. What you can change is the tax underneath. If it was fixed on the default Authorized Shares figure, compare it with the Assumed Par Value Capital Method, because the statute charges the lesser and interest runs on the tax and the penalty. If the tax, penalties or interest were erroneously or illegally fixed, Section 505 lets you petition the Secretary of State by March 1 of the second year after the tax year, then the Court of Chancery within 60 days, which may remit penalties. Exempt corporations are the only ones whose penalties the Secretary may remit directly.
8 Del. C. 505: petition for reduction or refund only if tax, penalties or interest were erroneously or illegally fixed, by March 1 of the second year; Court of Chancery review within 60 days; direct remission by the Secretary only for corporations not required to pay the tax.
| Late report | $200 penalty8 Del. C. 502; added to the franchise tax. |
|---|---|
| Interest | 1.5% per month or part of a monthOn unpaid tax and penalty (Delaware tax FAQ, 8 Del. C. 504). |
| Petition | If erroneously or illegally fixedBy March 1 of the second calendar year after the tax year (505(a)). |
| Appeal | Court of Chancery within 60 daysThe court may remit all or part of the 502 penalties and interest (505(d), (e)). |
| Direct remission | Only for corporations not required to pay the tax505(c), e.g., exempt corporations. |
Our verdict
The statute does not offer an administrative waiver to an ordinary late filer: the $200 and the interest run until the report is filed and paid. The tax underneath is the lesser of the two methods (503(a)), and interest runs on it, so the amount computed matters more than the penalty. If the tax, penalty or interest was erroneously or illegally fixed, Section 505 provides a petition before March 1 of the second year; whether that applies to you is a question for your adviser.
Who this page is for, and who it is not for
For: Delaware stock corporations that missed March 1 or received a penalty notice. Not for: LLCs (separate $200 penalty on the flat tax), void corporations needing revival, and Large Corporate Filers.
Example: three months late
A startup with 10,000,000 authorized shares files on May 20 instead of March 1.
| Method | Tax | Penalty | Interest (3 months at 1.5%) | Plus $50 fee |
|---|---|---|---|---|
| Authorized Shares (default) | $85,165 | $200 | about $3,841 | $89,256 |
| Assumed Par Value Capital (minimum) | $400 | $200 | $27 | $677 |
Interest computed on tax plus penalty, 1.5% per month or part of a month (May 20 counts as the third month). Rates: 8 Del. C. 503(a), 502, 504.
What Section 505 actually allows
Section 505(a): a corporation that claims the tax, penalties or interest were erroneously or illegally fixed may petition the Secretary of State for a reduction or refund, no later than March 1 of the second calendar year following the tax year. Section 505(d): within 60 days of the Secretary's determination, it may petition the Court of Chancery for review; under 505(e) the court may remit all or part of the penalties and interest of Section 502. Section 505(c) lets the Secretary remit penalties and interest directly only for corporations not required to pay the annual tax.
Next steps
Common questions
Can I ask Delaware to waive the $200 late penalty?
The Delaware Code gives the Secretary of State power to remit penalties directly only for corporations not required to pay the annual tax (8 Del. C. 505(c)). For other corporations, a reduction requires that the tax, penalty or interest was erroneously or illegally fixed (505(a)), with review by the Court of Chancery, which may remit penalties (505(e)). A late but correct report does not meet that test on its face.
Is there an extension for the March 1 deadline?
We found no extension for the corporate annual report in the Delaware Code chapter on franchise tax or on the Division's tax pages. Plan to file by March 1.
What reduces a late bill the most?
The tax itself. Interest is 1.5% per month on the tax and the penalty, so in our example a bill computed on 10,000,000 authorized shares ($85,165 for a full year) costs far more interest than the $400 minimum that the Assumed Par Value Capital Method gives that company. With large gross assets, the comparison can go the other way: compute both.
Recalculate before paying
The calculator compares both methods and estimates the $200 penalty and interest for a late par-value corporation report.
Open checkerRelated guides
Delaware franchise tax after March 1: penalty and interest checklist
What founders should check if a Delaware corporation missed the March 1 franchise tax and annual report deadline.
Overpaid Delaware franchise tax: amend the annual report and get the refund
How a Delaware corporation that paid the default Authorized Shares amount recovers the difference: amended annual report, refund request, deadline, and what to keep.
When is Delaware Franchise Tax due?
The March 1 annual report and franchise tax deadline for active domestic Delaware corporations.
Official sources for this guide
Last reviewed: .