Update on the Elimination of Redundant Municipal Business Licenses
As a result of HB 235 of 2019, as amended and championed by the Delaware Association of REALTORS®, you are no longer required to obtain business licenses for municipalities that charge a business license fee outside of your brokerage’s physical location.
Please be sure to read this entire document because there are exceptions allowing taxes to be charged.
Per the legislation, as of July 1, 2020, any county, municipality, or other political subdivision of the state is prohibited from imposing local business licensing requirements, fees, or taxes on real estate brokers, associate brokers, brokerage organizations, or real estate salespersons for any of the following activities in that jurisdiction:
- Listing real estate for sale
- Representing buyers in the purchase of real estate
- Rental of real estate for property owners or tenants unless the property is in a city with a population over 50,000 (as of today, the City of Wilmington is the only city that qualifies)
However, if a real estate broker, associate broker, brokerage organization, or real estate salesperson has a physical office in a jurisdiction that charges for business licenses, taxes, or fees, they MAY still be required to pay those fees and taxes on the same basis as other businesses with physical offices in that jurisdiction. Please check with the municipality in which your brokerage’s physical office is located to see if you must pay for a business license.
- Example 1: If you operate a brokerage organization in the Town of Bethany Beach, the Town of Bethany Beach requires a business license at the cost of $250.00. You are required to pay this business license fee as your physical office is located within the Town of Bethany Beach. As a result of the legislation, if your company conducts business in a surrounding municipality, you no longer need to obtain separate licenses for every municipality. You only need a license where your physical office is located.
- Example 2: If you are a real estate broker, associate broker, or real estate salesperson, you MAY still be required to obtain a business license and pay local fees or taxes if your physical brokerage (your real estate license will state your brokerage’s physical address) is within a municipality’s jurisdiction that requires business licenses or charges local fees or taxes. As a result of the legislation, you no longer need to obtain separate licenses in every municipality in which you practice—only within the jurisdiction where your physical brokerage is located IF they require you to have a business license. In addition, a municipality may have ordinances that permit them to charge a wage tax calculated on the same basis as other wages earned in that jurisdiction.
- Example 3: Your office is not in the City of Wilmington, but you handle rentals in the City of Wilmington. You are still required to obtain a City of Wilmington business license and pay the City wage tax (earned income tax) on that part of your commissions or other income attributable to time spent or services rendered in the City.
- Example 4. You handle sales in the City of Wilmington. You are still required to pay the City wage tax (earned income tax) on that part of your commissions or other income attributable to time spent or services rendered in the City. This applies whether or not you have a physical office in the City of Wilmington.
Note: The information above is specifically in regard to municipal business licenses, taxes, and fees. The State of Delaware still requires a state business license to operate by “any person or entity conducting a trade or business.” It is very important to note that real estate salespersons are EXEMPT from the state business license requirement at per a 1991 memo from the Division of Revenue. Therefore, the Brokerage organization is still required to obtain a State of Delaware business license. Individual salespeople and associate brokers do not need a State of Delaware business license.
Please understand that many of our local municipalities are aware of this legislation but do not have the capability to automatically take you out of their database. If you paid local business license fees to a municipality in the past, where your physical office is not located today, contact them directly to be removed.
We hope these clarifications make this very clear. Please do not hesitate to contact us directly if you have additional questions or concerns.
2020 Delaware General Assembly Wrap-up
The 2020 Legislative Session of the Delaware General Assembly was unprecedented. The global pandemic and Governor Carney’s efforts to prevent the spread of the COVID-19 presented an unusual set of circumstances.
Changes were made in how we all work and interact with others, and the Delaware Legislature was no exception.
House Concurrent Resolution (HCR) 85 was passed on May 27, adopting rules of procedure for conducting virtual meetings of the General Assembly and legislative committees during the COVID-19 emergency.
We were not able to work on the repeal of the 1% increase in the realty transfer tax, but we were able to lobby extensively to ensure our members were able to continue to work while under the pandemic State of Emergency.
Some of the highlights and achievements of the 2020 Legislative Session are summarized below.
The Delaware General Assembly passed three key pieces of legislation that allow our state government to continue providing vital services to residents, help fund school construction and road improvement, and provide critical support to our fire companies and other nonprofits.
Delaware’s $4.55 billion operating budget essentially carries over the 2020 spending plan into the fiscal year that begins on July 1. It also includes an additional 2.1% of funding to meet the state’s obligations under all existing collective bargaining agreements and sets aside $63 million to help manage any future economic downturns.
The Bond Bill for the coming fiscal year totals $708 million and includes $363.6 million for transportation projects and $344.4 million for other one-time investments.
The Grant-In-Aid legislation holds the line on spending at slightly less than the current fiscal year levels.
A number of bills related to healthcare passed, including those dealing with insulin prescriptions; allowing hospitals to petition for court-appointed guardians; and telemedicine, price gouging protections, and unemployment benefits.
Thanks to the passage of House Bill 346, COVID-19 will not prevent a single eligible voter in Delaware from exercising their fundamental right to participate in our upcoming elections—votes may be cast by mail.
Justice for All Agenda
The General Assembly sent some of the Delaware Legislative Black Caucus (DLBC) Justice For All Agenda to Governor Carney for his signature, including House Bill 350 to explicitly ban law enforcement officers throughout Delaware from using choke holds, knee holds, or other unsanctioned techniques.
Unanimous approval of Senate Bill 191 began the process of amending our state Constitution to explicitly prohibit discrimination on the basis of race, color, and national origin.
Senator Harris McDowell
Senator Harris McDowell, the longest serving member of the General Assembly, represented the First District for 44 years. He was co-chair of the Joint Finance Committee; served on the Agricultural, Environmental & Natural Resource and Executive committees; and was at various times majority whip and majority leader. As chairman of the Senate Energy and Transit Committee, he became a nationally and internationally recognized leader in sustainable energy, establishing the Delaware Sustainable Energy Utility. Sen. McDowell also authored legislation which created the Department of Services for Children, Youth and Families and the SEED Program, a statute offering countless students’ access to tuition-free education for an associate degree or funding toward a bachelor’s degree.
Representative S. Quinton “Quin” Johnson
Representative Quinn Johnson represented the 8th District for 12 years. Rep. Johnson served as cochair of the Joint Bond Bill Committee, vice-chair of the House Agriculture Committee, and as a member of the Economic Development, Gaming and Pari-mutuels, Health and Human Development, Natural Resources, Revenue and Finance, Veterans Affairs, Delaware Sea Level Rise, and Flood Plain and Storm Water Management committees. He chaired the Special Needs Subcommittee, was a member of both the Kids and Small Business caucuses, and his accomplishments include legislation to improve the education system, better the lives of children, and support small businesses.
State Political Coordinators visited Legislative Hall during the DAR 2020 session kickoff. Learn more about the SPC program here.