Delaware Code Title 6 Sec. 18-1107 – Taxation of limited liability companies and registered series
(a) For purposes of any tax imposed by the State of Delaware or any instrumentality, agency or political subdivision of the State of Delaware, a domestic limited liability company or a foreign limited liability company qualified to do business in the State of Delaware shall be classified as a partnership unless classified otherwise for federal income tax purposes, in which case the domestic or foreign limited liability company shall be classified in the same manner as it is classified for federal income tax purposes. For purposes of any tax imposed by the State of Delaware or any instrumentality, agency or political subdivision of the State of Delaware, a member or an assignee of a member of a domestic limited liability company or a foreign limited liability company qualified to do business in the State of Delaware shall be treated as either a resident or nonresident partner unless classified otherwise for federal income tax purposes, in which case the member or assignee of a member shall have the same status as such member or assignee of a member has for federal income tax purposes.
Terms Used In Delaware Code Title 6 Sec. 18-1107
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Certificate of formation: means the certificate referred to in § 18-201 of this title, and the certificate as amended. See Delaware Code Title 6 Sec. 18-101
- Contract: A legal written agreement that becomes binding when signed.
- Deed: The legal instrument used to transfer title in real property from one person to another.
- domestic limited liability company: means a limited liability company formed under the laws of the State of Delaware and having 1 or more members. See Delaware Code Title 6 Sec. 18-101
- Foreign limited liability company: means a limited liability company formed under the laws of any state or under the laws of any foreign country or other foreign jurisdiction. See Delaware Code Title 6 Sec. 18-101
- Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Lien: A claim against real or personal property in satisfaction of a debt.
- Manager: means a person who is named as a manager of a limited liability company in, or designated as a manager of a limited liability company pursuant to, a limited liability company agreement or similar instrument under which the limited liability company is formed, and includes a manager of the limited liability company generally and a manager associated with a series of the limited liability company. See Delaware Code Title 6 Sec. 18-101
- Member: means a person who is admitted to a limited liability company as a member as provided in § 18-301 of this title, and includes a member of the limited liability company generally and a member associated with a series of the limited liability company. See Delaware Code Title 6 Sec. 18-101
- Month: means a calendar month, unless otherwise expressed. See Delaware Code Title 1 Sec. 302
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Partner: means a limited or general partner. See Delaware Code Title 6 Sec. 17-101
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Person: means a natural person, partnership (whether general or limited), limited liability company, trust (including a common law trust, business trust, statutory trust, voting trust or any other form of trust), estate, association (including any group, organization, co-tenancy, plan, board, council or committee), corporation, government (including a country, state, county or any other governmental subdivision, agency or instrumentality), custodian, nominee or any other individual or entity (or series thereof) in its own or any representative capacity, in each case, whether domestic or foreign. See Delaware Code Title 6 Sec. 18-101
- Protected series: means a designated series of members, managers, limited liability company interests or assets that is established in accordance with § 18-215(b) of this title. See Delaware Code Title 6 Sec. 18-101
- Registered series: means a designated series of members, managers, limited liability company interests or assets that is formed in accordance with § 18-218 of this title. See Delaware Code Title 6 Sec. 18-101
- Series: means a designated series of members, managers, limited liability company interests or assets that is a protected series or a registered series, or that is neither a protected series nor a registered series. See Delaware Code Title 6 Sec. 18-101
- State: means the District of Columbia or the Commonwealth of Puerto Rico or any state, territory, possession or other jurisdiction of the United States other than the State of Delaware. See Delaware Code Title 6 Sec. 18-101
- Year: means a calendar year, and is equivalent to the words "year of our Lord. See Delaware Code Title 1 Sec. 302
(b) Every domestic limited liability company and every foreign limited liability company registered to do business in the State of Delaware shall pay an annual tax, for the use of the State of Delaware, in the amount of $300. There shall be paid by or on behalf of each registered series of a domestic limited liability company an annual tax, for use of the State of Delaware, in the amount of $75 per registered series.
(c) The annual tax for a domestic limited liability company shall be due and payable on the first day of June following the close of the calendar year or upon the cancellation of a certificate of formation. The annual tax for a registered series shall be due and payable on the first day of June following the close of the calendar year or upon the cancellation of a certificate of registered series. The annual tax for a foreign limited liability company shall be due and payable on the first day of June following the close of the calendar year or upon the cancellation of the certificate of registration. The Secretary of State shall receive the annual tax and pay over all taxes collected to the Department of Finance of the State of Delaware. If the annual tax remains unpaid after the due date, the tax shall bear interest at the rate of 1 and one-half percent for each month or portion thereof until fully paid.
(d) The Secretary of State shall, at least 60 days prior to June 1 of each year, cause to be mailed to each domestic limited liability company and each registered series thereof and each foreign limited liability company required to comply with the provisions of this section in care of its registered agent in the State of Delaware an annual statement for the tax to be paid hereunder.
(e) In the event of neglect, refusal or failure on the part of any domestic limited liability company, registered series or foreign limited liability company to pay the annual tax to be paid hereunder on or before June 1 in any year, such domestic limited liability company or foreign limited liability company shall pay the sum of $200, and such registered series shall pay the sum of $50, to be recovered by adding that amount to the annual tax and such additional sum shall become a part of the tax and shall be collected in the same manner and subject to the same penalties.
(f) In case any domestic limited liability company, registered series or foreign limited liability company shall fail to pay the annual tax due within the time required by this section, and in case the agent in charge of the registered office of any domestic limited liability company or foreign limited liability company upon whom process against such domestic limited liability company or any protected series or registered series thereof or foreign limited liability company may be served shall die, resign, refuse to act as such, remove from the State of Delaware or cannot with due diligence be found, it shall be lawful while default continues to serve process against such domestic limited liability company or any protected series or registered series thereof or foreign limited liability company upon the Secretary of State. Such service upon the Secretary of State shall be made in the manner and shall have the effect stated in § 18-105 of this title in the case of a domestic limited liability company or any protected series or registered series thereof and § 18-910 of this title in the case of a foreign limited liability company and shall be governed in all respects by said sections.
(g) The annual tax shall be a debt due from a domestic limited liability company, registered series or foreign limited liability company to the State of Delaware, for which an action at law may be maintained after the same shall have been in arrears for a period of 1 month. The tax shall also be a preferred debt in the case of insolvency.
(h) A domestic limited liability company that neglects, refuses or fails to pay the annual tax when due shall cease to be in good standing as a domestic limited liability company and all registered series thereof shall also cease to be in good standing. A registered series that neglects, refuses or fails to pay the annual tax when due shall cease to be in good standing as a registered series. A foreign limited liability company that neglects, refuses or fails to pay the annual tax when due shall cease to be registered as a foreign limited liability company in the State of Delaware.
(i) A domestic limited liability company or registered series that has ceased to be in good standing or a foreign limited liability company that has ceased to be registered by reason of the failure by the limited liability company, registered series or foreign limited liability company to pay an annual tax shall be restored to and have the status of a domestic limited liability company or registered series in good standing or a foreign limited liability company that is registered in the State of Delaware upon the payment of the annual tax and all penalties and interest thereon for each year for which such domestic limited liability company, registered series or foreign limited liability company neglected, refused or failed to pay an annual tax.
(j) On the motion of the Attorney General or upon request of the Secretary of State, whenever any annual tax due under this chapter from any domestic limited liability company, registered series or foreign limited liability company shall have remained in arrears for a period of 3 months after the tax shall have become payable, the Attorney General may apply to the Court of Chancery, by petition in the name of the State of Delaware, on 5 days’ notice to such domestic limited liability company, registered series or foreign limited liability company, which notice may be served in such manner as the Court may direct, for an injunction to restrain such domestic limited liability company, registered series or foreign limited liability company from the transaction of any business within the State of Delaware or elsewhere, until the payment of the annual tax, and all penalties and interest due thereon and the cost of the application which shall be fixed by the Court. The Court of Chancery may grant the injunction, if a proper case appears, and upon granting and service of the injunction, such domestic limited liability company, registered series or foreign limited liability company thereafter shall not transact any business until the injunction shall be dissolved.
(k) A domestic limited liability company that has ceased to be in good standing by reason of the domestic limited liability company’s neglect, refusal or failure to pay an annual tax shall remain a domestic limited liability company formed under this chapter, and each registered series thereof shall remain a registered series formed under this chapter, and each protected series thereof shall remain a protected series established under this chapter. A registered series that has ceased to be in good standing by reason of the registered series’ neglect, refusal or failure to pay an annual tax shall remain a registered series formed under this chapter. The Secretary of State shall not accept for filing any certificate (except a certificate of resignation of a registered agent when a successor registered agent is not being appointed) required or permitted by this chapter to be filed in respect of any domestic limited liability company, registered series or foreign limited liability company if such domestic limited liability company, registered series or foreign limited liability company has neglected, refused or failed to pay an annual tax, and shall not issue any certificate of good standing with respect to such domestic limited liability company, registered series or foreign limited liability company, unless or until such domestic limited liability company, registered series or foreign limited liability company shall have been restored to and have the status of a domestic limited liability company or registered series in good standing or a foreign limited liability company duly registered in the State of Delaware.
(l) A domestic limited liability company that has ceased to be in good standing (and each protected series and registered series thereof), a registered series that has ceased to be in good standing, or a foreign limited liability company that has ceased to be registered in the State of Delaware by reason of the domestic limited liability company’s, registered series’ or foreign limited liability company’s neglect, refusal or failure to pay an annual tax may not maintain any action, suit or proceeding in any court of the State of Delaware until such domestic limited liability company, registered series or foreign limited liability company has been restored to and has the status of a domestic limited liability company, registered series or foreign limited liability company in good standing or duly registered in the State of Delaware. An action, suit or proceeding may not be maintained in any court of the State of Delaware by any successor or assignee of such domestic limited liability company (or any protected series or registered series thereof), registered series, or foreign limited liability company on any right, claim or demand arising out the transaction of business by such domestic limited liability company (or any protected series or registered series thereof) or registered series after the domestic limited liability company or registered series has ceased to be in good standing or a foreign limited liability company that has ceased to be registered in the State of Delaware until such domestic limited liability company, registered series or foreign limited liability company, or any person that has acquired all or substantially all of its assets, has paid any annual tax then due and payable, together with penalties and interest thereon.
(m) The neglect, refusal or failure of a domestic limited liability company, registered series or foreign limited liability company to pay an annual tax shall not impair the validity of any contract, deed, mortgage, security interest, lien or act of such domestic limited liability company or any protected series or registered series thereof or foreign limited liability company or prevent such domestic limited liability company or any protected series or registered series thereof or foreign limited liability company from defending any action, suit or proceeding with any court of the State of Delaware.
(n) A member or manager of a domestic limited liability company, registered series or foreign limited liability company is not liable for the debts, obligations or liabilities of such domestic limited liability company, registered series or foreign limited liability company solely by reason of the neglect, refusal or failure of such domestic limited liability company, registered series or foreign limited liability company to pay an annual tax or by reason of such domestic limited liability company, registered series or foreign limited liability company ceasing to be in good standing or duly registered. A protected series or registered series of a domestic limited liability company is not liable for the debts, obligations or liabilities of such domestic limited liability company or any other series thereof solely by reason of the neglect, refusal or failure of such domestic limited liability company or other series to pay an annual tax or by reason of such domestic limited liability company or other series ceasing to be in good standing.
68 Del. Laws, c. 434, § ?1; 69 Del. Laws, c. 260, §§ ?38, 39; 70 Del. Laws, c. 75, § ?28; 70 Del. Laws, c. 186, § ?1; 71 Del. Laws, c. 341, § ?18; 72 Del. Laws, c. 129, § ?18; 74 Del. Laws, c. 52, §§ ?30, 31; 76 Del. Laws, c. 287, § ?3; 77 Del. Laws, c. 78, § ?36; 79 Del. Laws, c. 212, § ?3; 81 Del. Laws, c. 357, § 30; 81 Del. Laws, c. 89, § 12; 82 Del. Laws, c. 48, § 17;