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Delaware Enacts Revamped Unclaimed Property Law

Delaware Unclaimed Property LawJust four short weeks from its introduction on January 12, Delaware Senate Bill 13 was signed into law on February 2, 2017, effective immediately.

Significant Changes to Delaware Unclaimed Property Law

Delaware Senate Bill 13 has the potential to make the largest impact on Delaware unclaimed property compliance since the inception of the Voluntary Disclosure Agreement program conducted by the Secretary of State.

Major changes to Delaware escheats law include:

  • A definitive statute of limitations of ten years
  • A standard record retention requirement of ten years, in alignment with the 2016 RUUPA
  • Reduced look-back periods for voluntary disclosure agreements and audits
  • New options for holders currently under audit

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Options for Holders Under Audit

One of the most important provisions in DE SB 13 is the opportunity for holders currently under audits that began prior to July 22, 2015, to convert their audit into a voluntary disclosure agreement under the oversight of the Secretary of State’s VDA program. In order to take advantage of this opportunity, holders must notify the Secretary of State prior to July 1, 2017.

Holders in the midst of a Delaware unclaimed property audit may also choose to take advantage of the newly created expedited audit process. Under this option, holders will be required to complete the audit requirements within a two year period in exchange for a waiver of penalties and interest. Holders looking to fast track their audit are well advised to promptly notify Delaware of their intent, as noted below.

Amendments to DE SB 13

During the legislative process, the following amendments were made to DE SB 13:

  • The deletion of “Net Card Value” and “Virtual Currency” as defined terms, including the removal of virtual currency from the definition of “Property”,
  • The amount unclaimed for a stored value card or gift card is the amount representing the maximum cost to the issuer, and not the net card value minus an amount representing the maximum cost to the issuer,
  • Property in tax-deferred IRA accounts is presumed abandoned upon the earlier of,
    • 3 years after the owner’s last indication of interest in the account following the date specified in the income tax laws of the US by which distribution of the property must begin in order to avoid a tax penalty, or
    • Knowledge of the death of an account owner that has been confirmed by the holder of the unclaimed property in its ordinary course of business.
  • Holders under audit seeking to apply for an expedited audit must do so within 60 days of the adoption of DE SB 13.

Conclusion

Organizations that are incorporated in Delaware or have a reporting obligation to Delaware should consider the implications of these changes and how their organizations will be affected, especially those that have already received a notice/invitation to enroll in the VDA program. It is anticipated that Delaware will resume enforcement activities in the coming months, including the mailing of additional VDA notices to holders.

To help your organization assess the impact of these changes, you can watch our Delaware Compliance Update Webinar recording. The webinar reviews the changes to Delaware unclaimed property law and how they will affect your compliance obligations. Guest speakers include the Delaware Secretary of State, Jeffrey Bullock and Geoffrey Sawyer from Drinker Biddle & Reath LLP, the administrator of the Delaware Voluntary Disclosure Agreement Program.

Keane will also continue to track and monitor all legislative activity and provide updates here on our blog and within our Compliance Portal. We invite you to sign up for our free legislative alerts to receive real-time updates on the latest happenings within the unclaimed property industry.

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