Authored by Cathleen Bucholtz, Managing Director and Matthew Chenowth, Senior Manager
Proposed Changes To Delaware Statutes
On January 12, 2017, Senate Bill (“SB”) 13 was introduced in Delaware, potentially significantly impacting the state’s existing unclaimed property program. If enacted the bill, which was cosponsored by Senator Bryan Townsend and Representative Bryon Short, would effectively rewrite some key provisions of Chapter 11, Title 12 of the Delaware Code.
It appears that many of the provisions in SB 13 were created to address recent challenges to Delaware’s unclaimed property program, including the constitutionality of Delaware’s practices in managing its current unclaimed property program that were at issue in the recent decision by the Delaware District Court in Temple-Inland, Inc. v. Cook et al., No. 1:14-cv-00654 (D. Del. June 28, 2016).
The bill’s synopsis also provides that some of the proposed changes were influenced by the 2016 Revised Uniform Unclaimed Property Act (“RUUPA”) developed by the Uniform Law Commission. In addition, the bill also adopts some recommendations from the Delaware Unclaimed Property Task Force, which was formed under Senate Concurrent Resolution No. 59 of the 147th General Assembly.
The changes proposed in SB 13 cover 36 pages and address many areas of Delaware’s existing unclaimed statutes. Among the most significant changes proposed by SB 13 to Delaware’s existing unclaimed property program are the following:
Finally, in what may be another salvo in Delaware’s ongoing challenge to gift card planning structures, SB 13 includes a provision for “Other Penalties” to be assessed if a person enters into a contract to evade an unclaimed property obligation, including a civil penalty of $1,000 per day, up to $25,000, plus 25% of the value of the property that should have been reported.
What This Means To Holders
It’s too early to predict whether all changes proposed by SB 13 will make it through the legislature unchanged, but the bill will undoubtedly have a significant impact on how Delaware manages its unclaimed property program. Any company that is currently undergoing an unclaimed property audit by Delaware will want to review the pros and cons of the new options that may be available to them through converting their audit to a VDA or entering into an expedited audit program. In addition, any company that is facing the use of estimation to determine its potential unclaimed property liability, including those participating in the current voluntary disclosure program, should be on the lookout for the State Escheator’s regulations outlining the scope and use of estimations (due on July 1, 2017).
While we can’t predict whether or when the bill will be signed into law, during the past week it has passed the Senate with no dissenting votes as it moves to the House for review. True Partners will continue to monitor this and other legislation impacting your company as it arises, and will release relevant updates as additional information is available.
About Unclaimed Property…
Unclaimed property is any intangible property that is owed by a company and has gone unclaimed for a specific period of time by the rightful owner. Every company is likely to generate unclaimed property and has a legal responsibility to report and remit that property to the appropriate jurisdiction. Generally, there is no statute of limitations on a Holder’s unclaimed property liability, and a holder’s state of incorporation can estimate a holder’s potential liability for periods where actual records are not available. Companies not in full compliance with the states’ unclaimed property laws often have many concerns about getting into compliance, including the likelihood of triggering interest and penalty assessments or being selected for an examination. However, once aware of the various rules and processes, every holder should consider taking advantage of the various opportunities available to get into compliance for any past-due property.
True Partners Consulting’s Unclaimed Property Management Solutions Team is comprised of a national group of professionals with a wealth of experience and knowledge and diverse backgrounds, including industry and government. Our team can offer your company the best combination of experience, expertise, and resources to assist your company, regardless of your company’s industry. We encourage you to contact one of our professionals to discuss any questions or concerns that you may have regarding unclaimed property.
Cathleen A. Bucholtz
Robert M. Tucci