SALES TAX TUESDAY 2018: Delaware

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Delaware has been listed in Kiplinger’s 10 most tax-friendly states for retirees, because one of the most significant benefits of the state was no state sales tax…in fact, no sales tax at all.

So, this week’s Sales Tax Tuesday state, Delaware, so that actually makes this a ‘No Sales Tax Tuesday (2018) State’ feature. Delaware has no sales tax, and in fact, the state prohibits cities or counties from assessing any type of sales tax. 

Being proud of their ‘sales tax free’ status, Delaware prominently promotes this noted exception to state taxation.

So, while we are normally taking a tour and paying sales taxes all along the way of the various states, this week we are taking advantage of Delaware’s hospitality and finding some great food, places to see, things to do, and shopping experiences that are all ‘sales tax free.’

By the way, even though we are spending some ‘sales tax free’ time in one of the few states with no sales tax, I still need to remind you that Sales Tax Tuesday (2018) is a joint venture between Insightful Accountant and Avalara, the 'tax people,' designed to cover the various sales tax issues associated with each and every state tax jurisdiction in the United States. This time we are publishing not only our state-by-state review, but what's new and different with sales, use and special taxes to help insure that you are aware of the key tax facts impacting you and your clients.

With that said, let’s take a look at a few ‘tax free’ destinations within Delaware. Consistently ranked among the top beaches in the nation, Rehoboth Beach is a town that inspires love and devotion, and a place that lingers in the memory of its faithful visitors for a lifetime.

Rehoboth is a place of easy, friendly charm where artsy boutiques invite travelers to stroll, shop and maybe stop for a nibble in one of Rehoboth’s fun, funky restaurants where remember, you will eat without a ‘sales tax’ bill to pay at the end of your meal.

Speaking of meals, in Delaware, blue-claw crabs hold a place of honor in not only the minds and hearts of people, but their bellies as well. Once place to enjoy this ‘sales tax free’ delicacy is at Claws Seafood House while you are in Rehoboth.

Of course, you might want to the experience of ‘crabbin’ for yourself rather than simply having them cooked up for you at one of the many ‘crab shacks’ throughout Delaware. Located in Millville on the Indian River Bay, Holts Landing State Park is home to the only pier on Delaware's inland bays that is purpose-built for crabbing, and that’s as good a place as any for an amateur to ‘crab’ for themselves.

Be aware there are regulations governing this adventure including a license to crab, minimum size requirements, a limitation on the number of crab pots that can be placed by recreational crabbers, and a maximum number of crabs per person per day. Still the same, it makes eating your catch all the more enjoyable, especially with plenty of melted butter, and ‘no sales tax.’

Turning our attention away from seafood and the shore, we will focus briefly on some of the outstanding places to visit. More than fifty years ago, Delaware native Henry Francis duPont began welcoming visitors to his childhood home, Winterthur, with its magnificent gardens and amazing architecture and decorative arts. 

Today you can experience this 175-room mansion and be amazed by the lovely gardens while visiting the Wilmington area. In fact, there are more than 30 historic homes, mansions, halls and homesteads you can tour, many of which are associated with the state’s rich history, on your ‘sales tax free’ visit to Delaware.

Of course, why not take full advantage of the shopping opportunities while visiting this ‘sales tax free’ state? Spend the day grabbing up all the deals at name-brand stores and outlet centers.

Big-box retailers line the commercial corridor in Wilmington, there are great Main Street shopping opportunities in Newark and Milford, and the Christiana Mall and Tanger Outlet Centers near Rehoboth Beach. No matter where you do you shopping in Delaware you will be more than happy when your check-out experience includes ‘no sales tax.’ We can’t put it any more simple than that.

You may find yourself wondering how Delaware pays for their state, county and local government operations if they don’t collect sales tax. Well, they are not a totally ‘taxless state,’ they have other forms of taxation including a businesses tax based upon gross receipts of the sale of tangible or other goods, or provisions of services, as an alternative to sales tax. But, this tax is specifically prohibited from being passed on to consumers. Retailers are permitted to deduct the first $100,000 of gross receipts each month prior to calculating and paying the tax.

Delaware also collects a 3.75% "document fee" on all automobile sales, and occupational license taxes of up to 1.92% are also collected on certain business activity.

Gasoline, alcohol and cigarettes are subject to various Delaware excise taxes. At present, the Gasoline excise tax was $0.2300, the Cigarette excise tax was $1.60 per pack, the Liquor excise tax was $3.75 per gallon, the Wine excise tax was $0.97 per gallon, and the Beet excise tax was $0.16 per gallon.

Delaware also has an 8.7% flat tax on corporations, but really that’s pretty low in the overall scheme of things.

Companies doing business in Delaware must register online at Delaware’s One Stop Business Registration and Licensing Portal, so there are still tax reporting responsibilities. It seems not matter what, there is always the ‘paperwork’ of government bureaucracy, even in a ‘no sales tax’ state.

I would be remiss however if I didn’t mention the fact that in most states, 45 out of the 50, to be specific Sales and Use Taxes are a major source of revenues and states tend to frown when businesses fail to properly collect and remit the taxes. With the growing implementation of ‘economic nexus’ the sales and use tax requirements being imposed by states on out-of-state suppliers and retailers to in-state customers is an ever-demanding source of confusion and additional tax reporting.

You need Avalara solutions for sales tax automation, like AvaTax which includes tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. Automation via Avalara allows businesses to be fully sales tax compliant without sacrificing productivity. Your sales tax is always right, streamlined and seamless no matter where you are located, or where you are doing business.