United States

Delaware: Unclaimed Property Reform Signed Into Law

Aug 03, 2015
From KPMG TaxWatch

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On July 22, 2015, Senate Bill 141, which adopts certain reforms to Delaware’s unclaimed property law, was signed into law. The bill incorporates various recommendations from the Delaware Unclaimed Property Task Force’s final report (issued last year) on improving the fairness and transparency of the state’s unclaimed property regime. This is the legislature’s second effort to implement the Task Force’s recommendations; certain improvements were captured in Senate Bill 11, which was signed into law January 29, 2015.

The most significant change is that the look-back period for unclaimed property audits is now limited. Historically, Delaware auditors have gone back as far back as 1981 (34 years) when auditing a holder of unclaimed property. Senate Bill 141 reduces the look-back period to 22 years on a phased-in basis. For any unclaimed property audit that is ongoing as of the enactment date, the look-back period is limited to 1986. For audits beginning after the law is enacted through December 31, 2016, the state will not go back further than 1991. Beginning January 1, 2017, the look-back period is limited to 22 years from when the audit commences.

Further, Senate Bill 141 requires that, before initiating an audit, the state must notify the unclaimed property holder of its right to enter into a voluntary disclosure agreement (VDA). The holder has sixty days to agree to a VDA before the audit may commence. The look-back period for VDAs is shorter than the lookback period applied on audit—generally 19 years. For the “shorter” 19-year look-back period to apply, the holder must generally complete a review of its records and make payment (or enter into a payment plan) within two years of filing its application for a VDA. Senate Bill 141 also reinstates the imposition of interest on late or unremitted unclaimed property amounts reported and remitted on or after March 1, 2016, at the rate of 0.5 percent per month (not to exceed 25 percent of the unpaid amount). Imposition of interest was eliminated in June 2014.  

Finally, Senate Bill 141 requires that an employee of the holder—rather than a third-party adviser—be named as the primary contact for all unclaimed property correspondence. In addition, the State Escheator is now required to send annual notices to holders, reminding the holder of its obligation to file unclaimed property reports prior to March 1. For more information on Senate Bill 141, please contact Dennis Prestia at 212-872-6891, Samantha Petersen at 303-382-7220, Angela Gholson at 212-872-7910, or Nina Renda at 973-912-6528.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.