KeepUP™ Blog

7/7/17 2:30 PM

Delaware Governor Signs Legislation Delaying Estimation Regulations

by David Poehler

delaware-unclaimed-property-law-udpates.jpgOn June 29, 2017, Delaware Governor John Carney signed into law DE Senate Substitution No.1 for Senate Bill 79 (“DE SS1/SB79”), which makes certain technical corrections to the May 5, 2017 original SB 79.  (see previous blog from 6/21/17). These technical corrections mark yet another adjustment to Delaware’s ongoing efforts to overhaul their escheat laws, which began in February 2017 with the passage of Delaware SB13 (see previous blog: Delaware Governor Signs Legislation to Overhaul Their Unclaimed Property Laws), and includes Delaware’s proposed draft estimation regulations from early April (see previous blog: Delaware Releases Draft Estimation Regulations).       

Key Updates of DE SS1/SB79

  • Adoption of Regulations - The date by which the Delaware Department of Finance (“DOF”) must adopt regulations (including those pertaining to estimation) has been pushed back to December 1, 2017 from the original July 1, 2017 date. Holders will still have a 60 day window starting with the date the regulations are finalized to elect whether they would like to convert their existing audit to a VDA or expedited audit.
  • Due Diligence - The requirement for due diligence letters to be sent to owners commences on July 1, 2017. These notices must be sent not more than 120 days nor less than 60 days before filing the report.
  • Interest and Penalties
    • Under the VDA program, the Secretary of State continues to have the authority to waive interest and penalties.
    • For expedited audit conversions, the State Escheator must waive interest, and may waive penalties for good cause. It remains to be seen how interest and penalties will be treated for holders subject to an expedited audit, who are deemed not to have acted in good faith to complete the expedited audit process.
    • For holders who do not elect a VDA or expedited audit conversion and remain in the audit process, up to 50% of interest and 100% of penalties continue to be waivable for good cause.
  • Assignment & Transfer of Liabilities – DE SS1/SB79 strikes out language, which under the original version of SB 79, would have allowed for holders to assign or otherwise transfer its’ obligation to pay or deliver property or to comply with the unclaimed property statute. By virtue of this revision, the language in SB 13 would apply, and holders would not have the ability to transfer or assign property to any entity other than to a parent, subsidiary or affiliate.
  • Indemnification by Delaware for Property Received – DE SS1/SB79 clarifies the definition of “state” with respect to indemnification for property received. Delaware now extends the definition of “state” to include “any foreign jurisdiction or subdivision 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.”

What Lies Ahead

The signing of DE SS1/SB79 represents Delaware’s most recent efforts to overhaul their escheat laws.  Holders should continue to stay tuned for any further bills Delaware introduces that may result in additional revisions to their existing escheat laws. 

We encourage holders to take advantage of the extended window of time regarding the adoption of regulations to work with their unclaimed property advisor to create an action plan that addresses all areas of their unclaimed property planning and compliance program.

Topics: Delaware, Audit, Voluntary Disclosure Agreements, U.P. Law