COST and other concerned parties recently took steps to hold Delaware responsible to principles of fairness and clarity in its unclaimed property activities. As a result, the Delaware General Assembly created the Delaware Unclaimed Property Task Force in 2014 to examine the state’s administration of unclaimed property and make recommendations. The task force recently released its findings, and the Delaware legislature has already begun to make changes in the state’s unclaimed property laws. The industry is abuzz. What happens in Delaware tends to influence other states.
Delaware task force recommendations and bill highlights
In our opinion, the Delaware task force findings and the bill are positive developments for holders of unclaimed property.
The bill as passed by the Delaware General Assembly includes many of the task force recommendations. Among other things, it includes a two-year “cooling off” period before state officials can be hired by contract auditing companies, limits the percentage of a state’s audits that any one third-party audit firm can take on, and limits contracts with third-party auditors to five years.
The bill includes a task force recommendation for the creation of a Delaware best-practices audit manual to guide holders, using input from key stakeholders. It also includes a mandate for updating regulations “to ensure greater transparency and predictability as to what should be expected by holders during a Delaware unclaimed property examination.” Both of these additions to the law must be developed by December 31, 2015.
Unfortunately, the current bill does not address the task force’s suggestion that the law should include a reduction in the look-back period. However, many people in the industry believe task force members will be working with the state soon to come to an agreement on a shortened audit and VDA “look-back” period.
What Delaware’s changes mean to holders
It’s important to remember both auditors and holders will be required to follow Delaware’s new laws and guidelines if applicable to their businesses.
For holders, the clarity and insight these changes could provide will be invaluable in ensuring compliance. The bill won’t necessarily reduce holders’ financial burden as much as it would have with a limited look-back, but provisions in the bill do appear to reduce pressure holders experience from states and third-party auditors.
The findings of this task force and the new Delaware bill serve as a springboard for ongoing scrutiny of not only Delaware, but all states’ unclaimed property enforcement efforts. We expect to see continued pressure from COST and other bodies to standardize, clarify, and equalize the unclaimed property process everywhere. In Delaware, audit methodologies of the state and Kelmar, the most aggressive of that state’s audit contractors, will likely continue to be scrutinized by COST and others, and further legislative changes are likely.
Advice to unclaimed property holders
Little in the Delaware bill requires operational changes by holders. We recommend they continue to operate as usual, diligently working to comply with the states’ unclaimed property statutes.
In conclusion, Delaware’s task force and legislative activity seem to pave the way for clearer guidelines and better-organized unclaimed property processes. At the same time, clearer legislation makes it less advisable to operate “under the radar” or to hope noncompliance will be overlooked. If you have questions about how these developments could affect your specific company and industry, please contact either Mike Hughes at email@example.com or Heather Steffans at 816-559-0619 /firstname.lastname@example.org.