Delaware New Unclaimed Property Legislation

 
Delaware is expected to enact new unclaimed property legislation in January 2017 in response to holding in Temple Inland case.  The Delaware Secretary of State has already responded in part by reducing the Voluntary Disclosure period to 10 report years (e.g., 10 years plus 5 years dormancy from date of enrollment).  This would create a general look-back period of 2002 to current for holders entering the program in 2017.  See Statement from Delaware Secretary of State Bullock re Delaware VDA Program.  An additional BDO alert on this legislation will be available after legislation disclosure.  The result of that legislation will likely yield two concerning audit risks for holders to consider. 
 

Audit Risk - Delaware Voluntary Disclosure Program Letters Sent & Unanswered within 60 Day Requirement – Audit Eligible Immediate

Delaware reached out to approximately 400 companies between 9/15/15 and 2/28/16, informing them to participate in the Voluntary Disclosure program (VDA) or they may face being audited by the Department of Finance. It is estimated that approximately half of these companies have not responded to DE letters.  This could be because the letter was never received at corporate HQ level, may have been lost in the shuffle or not addressed for various reasons. These Companies are at immediate risk for unclaimed property audit.  Delaware Department of Finance is expected to issue audit letters after the new legislation is passed in January 2017.  See Sample Reach Out Letter.


Additional Audit Risk – Delaware Secretary of State VDA Letters Expected to be Issued Q1 2017 – Audit Eligible after 60 Days

As with prior calendar year-end periods, the Delaware Secretary of State expects to send 100 – 200 new letters to holders who are believed to be non-compliant with Delaware escheat statutes in Q1 2017.  These letters will act and feel the same as those sent in the past.  Under current law, holders will have 60 days to enter into the VDA program or become audit eligible.  See Sample Reach Out Letter.
 

Action Steps

In general, targeted companies now include middle market private and public companies that maintain annual revenues of $100M and above. If your organization has received a Delaware Secretary of State Letter like the one attached that is over 60 days old, there may still be time to enter the VDA program and avoid audit.  To find out what to do if you received a letter, what to expect if you haven't, or additional information on Delaware law changes, etc. please contact BDO professional.

For questions related to matters discussed above, please contact Joe Carr