On June 2, 2017, the Delaware general assembly introduced a substitute version of S.B. 79, entitled “DE Senate Substitution No.1 for Senate Bill 79” (“DE SS1 SB79”), to make certain technical corrections to the May 5, 2017 original bill. 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).
DE SS1 SB79 - KEY UPDATES
Following are the current key provisions to DE SB 79 as updated, which are subject to any further revisions by the Delaware legislature and ultimately subject to them being passed in order for them to become law.
- The Delaware Department of Finance (“DOF”) has pushed back the date by which they must adopt regulations (including those pertaining to estimation) to December 1, 2017, which is a departure 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.
- Interest & 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, for good cause penalties. 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 - The substitute version of SB 79 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. By virtue of this revision, if the substitute version of SB 79 is enacted as law, 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 Foreign Property – DE SS1 SB79 did not include any changes surrounding foreign property and Delaware will continue to indemnify holders for any property with a foreign address, as per the original version of DE SB 79.
KEY CONSIDERATIONS & WHAT LIES AHEAD
The introduction of DE SS1 SB79 represents Delaware’s most recent efforts to overhaul their escheat laws. Holders should continue to stay tuned for any further amendments Delaware introduces, as they move towards enacting revisions to their existing escheat laws. We encourage holders to take advantage of this extended window of time to work with their unclaimed property advisor to create an action plan that addresses all areas of their unclaimed property planning and compliance program.