Unclaimed Property Alert - July 2017

July 2017

Delaware SS1 Amends SB13 – Additional Unclaimed Property Law Changes


This Act makes corrections and changes to Senate Bill No. 13 of the 149th General Assembly (81 Del. Laws, c. 1), which was signed February 2, 2017.  First, Section 1 ensures holders have sufficient time to comply with Senate Bill No. 13’s due diligence requirements with owners.  Second, Section 2 clarifies that the State will indemnify and defend a holder against claims made by a foreign jurisdiction for property paid or delivered to the State Escheator in good faith. Third, Section 3 corrects an internal reference. Fourth, Section 4 corrects an inconsistency among dates. Fifth, Sections 5 and 6 correct certain date issues that may arise if the Department of Finance chooses to publish final regulations later than July 1, based upon comments received in May on the proposed regulations published in the April issue of the Register of Regulations. Sixth, Section 7 allows the State Escheator to waive interest in certain circumstances.

In summary, SS1 is very brief and is largely a technical corrections bill as follows:
  • Due diligence letter requirements are effective 7/1/2017, which should apply to regular business holders’ compliance returns due 3/1/2018.
 
  • Expands the definition of “state” for purposes of Delaware hold harmless provisions to include any foreign jurisdiction or subdivision of a foreign jurisdiction that is not a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States. 
 
  • Delaware extends the adoption date of published regulations to 12/1/2017.  To the extent the regulations are “adopted” on this date, it should change the “Voluntary Disclosure Agreement Conversion Date” to 2/1/2018.  It is unclear whether Delaware will need up to 12/1/2017 to address regulatory comments, and is possible regulations will be “adopted” prior to that date having a corresponding impact on VDA Conversion date as well.
 
  • Clarifies when interest is imposed and waived pre and post 1/1/2019:
    • Pre & Post 1/1/2019 can waive in whole or in part interest calculated under sections 1142 (annual compliance return) or § 1170 (compliance review program) of this title
    • Post 1/1/2019 can waive up to 50% of calculated interest on audits (excluding “expedited audits”) 1171 (right to conduct audit provision) or 1172 (rules & procedures on audit provision) of this title
    • Pre 1/1/2019 can waive in whole or in part, the calculable interest under § 1183 of this title for unclaimed property remitted to the State as a result of securities examinations in which estimation is not required under §§ 1171 and 1172  of this title.

 
BDO’s National Unclaimed Property Practice is dedicated to helping businesses address all facets of unclaimed property matters.  We have successfully helped hundreds of companies navigate and settle Delaware audits and VDAs.  Please feel free to reach out to BDO Tax Principal, Joe Carr at jcarr@bdo.com with any questions or concerns regarding this new update or any other unclaimed property matters you may face.