On July 22, 2015, Delaware Governor Jack Markell signed into law a significant piece of unclaimed property reform legislation, S.B. 141. Alston & Bird issued an advisory on June 23 analyzing the changes brought about by the bill. Our advisory is available here: www.alston.com/advisories/serious-property-reform.
To summarize, S.B. 141 will do the following:
- Make permanent the Secretary of State’s voluntary disclosure program.
- Require the Department of Finance to provide holders with the opportunity to enter into the Secretary of State’s VDA program before being subjected to an audit.
- Changes the audit lookback period from 1981 to 1986 (which includes pending audits), 1991, and then ultimately to 22 years from date of commencement beginning in 2017.
- Provides that the VDA program lookback period will be to 1996 and then ultimately to 19 years from date of entry beginning in 2017.
- Reinstate Delaware’s ability to impose statutory interest on past-due unclaimed property (the one change that is unfavorable to holders).
This legislation provides a much-needed overhaul of Delaware’s unclaimed property regime and makes it significantly more business friendly. At a minimum, holders will now have options when faced with the potential of an audit conducted by one of Delaware’s contingency-fee auditors. Even holders that opt for audit rather than the VDA program will experience a far less unreasonable lookback period.
On the other hand, key issues related to Delaware’s administration of its unclaimed property law still remain unaddressed and holders may still seek to challenge those issues in court. For example, the legislation does little to answer the questions raised related to estimation of liability and/or the retention of records.