Key Takeaways From Delaware's Unclaimed Property Overhaul
A bill has been introduced in the Delaware Senate that would overhaul Delaware's unclaimed property law. The bill is on a fast track and could be enacted by the end of January. If enacted, companies currently under audit will have a limited window in which to make some key decisions.
After much speculation about an anticipated response by Delaware to the Temple-Inland decision1, a bill has been introduced in the Delaware Senate that would overhaul Delaware's unclaimed property law. Senate Bill 13 would rewrite Delaware's abandoned and unclaimed property law, using the recently completed Revised Uniform Unclaimed Property Act of 2016 as a baseline. The bill is on a fast track and could be enacted by the end of January.
The proposed amendments are sweeping and, in many cases, the legislation enshrines in statute, existing audit practices that have spurred much litigation by holders against Delaware. This alert addresses the significant time-sensitive issues contained in the Bill. Additional alerts in the future will address other significant changes.
The bill provides for a 10-year look-back applicable to both audits and the Voluntary Disclosure Agreement (VDA) program. Delaware's current unclaimed property statute is silent on the look-back period for audits for non-filers, but provides a look-back period for VDAs. Under the bill, the look-back for audits would be 10 report years from the date of the audit notice. The bill similarly proposes to increase the current three-year statute of limitations to 10 years from the date when the property became reportable. The statute of limitations for a report year is tolled once a holder has been provided with notices of an audit.
A 10-year document-retention period is also proposed. Current Delaware law has no document-retention requirement. We understand that regulations will be promulgated to provide more detailed guidance on the types of documents to be retained, but the statute requires that holders retain: (1) the verifiable information required to be included in the report; (2) the date, place, and nature of the circumstances that gave rise to the property right; (3) the amount or value of the property; (4) the last address of the owner, if known to the holder.
Provisions Impacting Audits
The legislation grants holders under audit as of July 22, 2015, the opportunity to transfer report years under audit to the state's unclaimed property VDA program administered by the law firm of Drinker...
To continue readingFREE SIGN UP