In a move of interest to both businesses organized under Delaware law and businesses that hold funds owned by Delaware residents, Delaware’s unclaimed property voluntary compliance program has been extended. Pursuant to 79 Del. Laws, c. 278 (the “Act”), which was signed by Governor Markell on June 30, 2014, the deadline to enter the Secretary of State’s voluntary compliance program (the “SOS VDA Program”), has been extended to September 30, 2014, and the deadline to resolve all unclaimed property liability under that program has been extended to June 30, 2016. Before the Act, those deadlines had been June 30, 2014 for entry into the SOS VDA and June 30, 2015 for resolution of liabilities.
The SOS VDA offers participants the opportunities to reduce years of liability and to eliminate interest and penalties.
Those who should participate include holders of property owned by Delaware residents and businesses organized under Delaware law that cannot locate a last known address for the owner of property. This second category, based on the holder’s place of organization, follows the U.S. Supreme Court case Texas v. New Jersey, 379 U.S. 674 (65), pursuant to which unclaimed property will be reported to the state of the owner’s last known address. However, if the owner’s last address is unknown or is in a foreign country, the unclaimed property is reported to the holder’s state of organization.
In addition to extending the entry and resolution deadlines, the Act made three other changes to Delaware’s unclaimed property law:
Record Confidentiality: The Act provides that it is unlawful for any officer or employee of the Department of Finance or the Department of State to disclose any of the following: (i) the amount of unclaimed property reported to the state; (ii) the terms of any annual filing, unclaimed property voluntary self-disclosure agreement or settlement agreement; or (iii) any supporting documentation related to such reports or agreements.
Penalties: Penalties for failure to file an unclaimed property report have been reduced from 5% of the amount owing under the report per month with a maximum penalty of 50% of the amount owing under the report to the lesser of (i) 5% of the amount owing under the report per month (not to exceed 50% of the amount owing under the report), or (ii) $100.00 per day (not to exceed $5,000).
Interest: The Act eliminates the imposition of 0.5% interest on unremitted unclaimed property.
For more information about unclaimed funds compliance, contact Polly Harris, Esq. at Porter Wright at mailto:pharris@porterwright.comor (614)227-1962. The Delaware Secretary of State’s unclaimed funds web site can be found at http://revenue.delaware.gov/unclaimedproperty.shtml.
