A partnership must meet Delaware partnership return filing requirements whenever it has any income or loss connected to a Delaware source, regardless of where the partnership was formed or where it keeps its books. The return is Form PRT-RTN (formerly Form 300), and it is due by the 15th day of the third month after the tax year closes — March 15 for calendar-year filers.1Delaware Division of Revenue. Form PRT-RTN Delaware Partnership Return Instructions If the partnership has no Delaware-sourced income or loss, no return is required.
Which Partnerships Have to File
Any entity treated as a partnership for federal tax purposes — general partnership, limited partnership, or LLP — must file if it earned income or incurred a loss connected to a Delaware source during the tax year.1Delaware Division of Revenue. Form PRT-RTN Delaware Partnership Return Instructions
Income counts as Delaware-sourced when it comes from property located in the state, business operations conducted there, or services performed within state borders. Rental income from Delaware real estate, revenue from a Delaware-based office, and sales made through employees working in the state all trigger the obligation. The threshold is low. Even a small amount of Delaware-connected income or loss creates a filing duty.
Partnerships organized outside Delaware follow the same rule. A partnership without a physical office in the state can still be caught if it earns income through employees or business transactions there, because Delaware reads business activity broadly.
One boundary worth noting: a partnership formed in Delaware but earning all of its income elsewhere does not owe Form PRT-RTN. Delaware anchors the filing duty to sourced income, not to place of formation.1Delaware Division of Revenue. Form PRT-RTN Delaware Partnership Return Instructions There is also no small-partnership exemption. Federal rules provide a simplified option for certain partnerships with ten or fewer partners; Delaware does not.2Delaware Division of Revenue. Partnership Return Instructions – Form PRT-RTN
When the Return Is Due
The return is due by the 15th day of the third month following the close of the taxable year — March 15 for calendar-year partnerships. That lines up with the federal Form 1065 deadline, so both returns come due together.1Delaware Division of Revenue. Form PRT-RTN Delaware Partnership Return Instructions
For more time, a partnership can send a copy of its federal extension application to the Delaware Division of Revenue on or before the original due date, or file Delaware’s own extension form, PRT-EXT. An extension buys time to file but does not extend the deadline to pay. Interest continues to accrue on any unpaid amounts during the extension period.
What Goes on the Return
Form PRT-RTN requires a breakdown of the partnership’s total income, deductions, and the portion of income apportioned to Delaware. A complete copy of the federal Form 1065 as filed with the IRS must be attached, including all schedules except the Schedules K-1.1Delaware Division of Revenue. Form PRT-RTN Delaware Partnership Return Instructions The K-1 exclusion catches filers who assume the entire federal package must travel with the state return.
Delaware does not impose an entity-level income tax on partnerships by default. The return reports each partner’s share of Delaware-sourced income so partners can report it on their own Delaware returns. Nonresident partners use Form PIT-NON, the Delaware nonresident individual income tax return, unless the partnership files a composite return for them.3Delaware Division of Revenue. Delaware Form 300 Instructions – Delaware Partnership Return
Apportioning Income Across States
Partnerships that operate in Delaware and at least one other state must apportion income using Schedule 2 of the return. The formula uses up to three factors: property, payroll, and gross receipts. Each factor compares the partnership’s Delaware amounts to its totals everywhere.1Delaware Division of Revenue. Form PRT-RTN Delaware Partnership Return Instructions
If the partnership has all three factors, the percentages are added together and divided by three. With only two applicable factors — say, no property in Delaware — the total is divided by two. With only one factor, that single percentage is the apportionment rate. The result is applied to total income to determine what portion counts as Delaware-sourced.
Getting this calculation wrong is one of the more common triggers for Division of Revenue audits, particularly for partnerships that operate mostly outside Delaware but have some activity there.
Nonresident Partners
When a partnership has nonresident partners with Delaware-sourced income, those partners must file Form PIT-NON to report their share.3Delaware Division of Revenue. Delaware Form 300 Instructions – Delaware Partnership Return The partnership can instead handle the reporting on their behalf through a composite return.
Composite Returns
Form CMP-TAX, the Delaware composite return, lets the partnership report and pay tax for qualifying nonresident partners as a group. Each partner included must have been a nonresident of Delaware for the entire tax year, must have no Delaware-sourced income other than the distributive share from the partnership, and must share the same tax year as the other partners on the composite return.4Delaware Division of Revenue. Form CMP-TAX Delaware Composite Return Instructions
A partner included on the composite return cannot also file an individual PIT-NON reporting the same income. Any partner who doesn’t meet the eligibility rules, or who prefers to file separately, files PIT-NON individually.4Delaware Division of Revenue. Form CMP-TAX Delaware Composite Return Instructions Partnerships with a mix of resident and nonresident partners often end up filing PRT-RTN plus a composite return for the nonresidents.
Withholding on Nonresident Partners
Separate from the composite option, Delaware requires partnerships to withhold and remit tax on behalf of nonresident partners receiving Delaware-sourced income. The partnership calculates, withholds, and remits the correct amount to the Division of Revenue. This obligation exists regardless of whether the partnership also files a composite return.
The Pass-Through Entity Tax Election
Delaware offers an optional entity-level tax election for qualifying pass-through entities, including partnerships. Created by House Bill 489, the election lets the partnership itself pay state income tax on its Delaware-sourced income rather than leaving all liability at the partner level.5Delaware General Assembly. House Bill 489 – Taxation of Pass-Through Entities
Not every partnership qualifies. The partnership must be entirely owned and controlled by individuals, or certain qualifying trusts, who would be eligible to be shareholders of an S corporation. It must have at least one member who owes Delaware personal income tax on their distributive share. And the election requires the consent of all members at the time it is made.5Delaware General Assembly. House Bill 489 – Taxation of Pass-Through Entities
The appeal is the federal SALT deduction workaround. Partners in high-income partnerships limited by the $10,000 federal SALT cap may benefit from shifting the tax payment to the entity level, where it becomes a deductible business expense rather than a personal state tax payment. Whether the election makes sense depends on the ownership structure and the tax situations of the individual partners.
The Separate $300 Franchise Tax
Independent of the income tax return, every domestic and foreign partnership registered in Delaware owes a $300 annual franchise tax to the Division of Corporations. This covers general partnerships, limited partnerships, and LLPs. Payment is due on or before June 1, and no annual report accompanies it.6Delaware Division of Corporations. LLC/LP/GP Franchise Tax Instructions
Missing the payment triggers a $200 penalty plus 1.5% monthly interest on the combined tax and penalty amount.6Delaware Division of Corporations. LLC/LP/GP Franchise Tax Instructions Unpaid franchise taxes can also cost the partnership its good standing with the state, which blocks it from conducting business, obtaining licenses, or filing lawsuits in Delaware courts. The tax is assessed for any year the entity is active in the Division of Corporations’ records at any point between January 1 and December 31, so a partnership formed mid-year still owes the full $300.
Penalties for Filing Late
The penalty for failing to file the partnership return, or failing to provide required information on it, is $25 multiplied by the number of partners during any part of the taxable year, assessed for each month the failure continues. It caps at five months.3Delaware Division of Revenue. Delaware Form 300 Instructions – Delaware Partnership Return A partnership with ten partners runs $250 per month, capped at $1,250. Larger partnerships face proportionally larger exposure.
Beyond the return-level penalty, individual partners who fail to pay their share of Delaware tax face their own interest and penalties on their personal returns. Continued noncompliance can lead to administrative assessments and loss of good standing in the state.
The Division of Revenue may waive or reduce penalties when the taxpayer shows reasonable cause, such as a natural disaster, serious illness, or an error by the Division itself. A written request with supporting documentation is required. Partnerships with clean compliance histories may receive more favorable treatment on a first-time abatement request.
Amending a Return
To correct a previously filed partnership return, file an amended Form PRT-RTN with the amended-return box checked. Attach a copy of any amended federal Form 1065 and all supporting schedules.3Delaware Division of Revenue. Delaware Form 300 Instructions – Delaware Partnership Return
An amended return is also required after a federal audit. The federal audit report and related documentation must accompany the amended Delaware return. If the amendment produces additional tax owed, paying with the amended return avoids further interest and penalties. If the partnership overpaid, a refund request can generally be submitted within three years of the original filing date.