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December 17, 2020
2020-2887

Delaware employers required to file and pay certain withholding taxes electronically effective in 2021; Forms W-2/1099 reminders for 2020

The Delaware Division of Revenue announced that effective January 1, 2021, employers are required to electronically file and pay certain withholding tax returns and taxes in addition to certain other business taxes. The list of business taxes required to be filed and paid electronically can be found in Technical information memorandum 2020-2.

Beginning in January 2021, eighth-monthly and monthly withholding tax returns must be filed electronically. The Division encourages, but does not require, that quarterly withholding tax returns/payments and the state Form W-3, Annual Withholding Reconciliation Return, also be filed electronically. (Note that employers required to file Forms W-2 electronically with the Social Security Administration must also file Forms W-2 electronically with the Division by January 31 each year (February 1, 2021 for calendar year 2020 Forms W-2).)

The due dates for filing and paying withholding taxes remain unchanged.

New electronic filing system to launch by the end of the year

As part of the Division's modernization program, a new online filing system, the Delaware Taxpayer Portal, will provide a method for electronic filing beginning in January 2021. The Division expects to launch the new portal before the end of 2020. Some of the new features of the portal will allow taxpayers to file and pay taxes electronically, review account financials, set up payment plans, and apply for business licenses.

Employers can subscribe to receive updates regarding the modernization program by sending an email to DOR_IRAS_OCM@delaware.gov.

For more information on the Divisions modernization efforts, go here. Questions regarding the methods to file and pay electronically may be submitted by email to DOR_PublicService@delaware.gov or DOR_BusinessTax@Delaware.gov.

Forms W-2/1099-NEC due by February 1, 2021

The Division has updated its Form W-2/1099 frequently asked questions (FAQs) for calendar year 2020 filings to state that the new federal Form 1099-NEC, used to report nonemployee compensation that was previously shown in box 7 on Form 1099-MISC, must be submitted to the Division.

2020 Forms W-2 and 1099-NEC are due to the Division by February 1, 2021, whether filed on paper or electronically. Forms 1099-MISC and 1099-R are due by March 1, 2021.

New for calendar year 2020, the state annual reconciliation Form W-3 must be filed each year, without regard to whether Forms W-2/1099 are filed electronically (previously, state Form W-3 was not required to be filed if Forms W-2/1099 were filed electronically). Delaware Form W-3 is due January 31 (February 1, 2021 for calendar year 2020), if all state withholding for the business was reported on Forms W-2. If any state withholding was reported on Forms 1099-R, state Form W-3 is due when the annual Form 1099 data submission is due (March 1, 2021 for calendar year 2020).

For Forms 1099-R and 1099-MISC that do not reflect Delaware withholding, IRS Form 4804 should be submitted with the Forms 1099. If multiple submissions of Form 1099 data are made for a payer, Form 4804 should be submitted separately for each of type of 1099. Form 4804 is due at the same as the Forms 1099 it reconciles to (March 1, 2021 for calendar year 2020).

Employers required by the SSA/IRS to submit Forms W-2 and/or 1099 electronically are also required to file electronically with the Division. Magnetic media (CDs, diskettes and tapes) is not allowed for Form W-2 or 1099 submission.

For more information on Delaware withholding, see the Division's website.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)
   • Kenneth Hausser (kenneth.hausser@ey.com)

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