Update: SB 141 was signed by Governor Markell on July 22, 2015.
Delaware Senate Bill 141, introduced on June 16, would make permanent the Secretary of State Voluntary Disclosure Program, as well as provide other limitations and duties on the State Escheator. This bill is a follow-up to Senate Bill 11, passed in January 2015, that limited the audits any one outside audit firm may conduct, placed restrictions on senior unclaimed property administrators looking to join an audit firm, and mandated an audit manual, among other changes to the state unclaimed property law.
Secretary of State Voluntary Disclosure Program
SB 141 authorizes the Secretary of State to request any holder enter into a voluntary disclosure agreement to determine compliance with the state's unclaimed property law. If the requested holder does not in fact enter into the program within 60 days, the Secretary of State will refer the holder to the State Escheator for an audit. The bill provides for a nineteen (19) year look-back period for any holder than enters the VDA program beginning in 2017. The holder would have two years to complete the VDA process.
The Secretary of State would not have authority to enter into a VDA with any company that had previously enrolled but not completed the VDA process. However, the State Escheator would not be permitted to initiate a new audit if the holder had not first been notified by the Secretary of State about entering into a VDA.
State Escheator Audits and Enforcement
SB 141 places limitations on Delaware unclaimed property audits, in addition to those mentioned relating to the Secretary of State VDA program. The State Escheator may not seek payments for transactions prior to 1986 for pending audits nor initiate new exams through the end of 2016 that seek payments for transactions prior to 1991. Beginning in 2017, the look back period would be 22 transaction years from the calendar year in which the audit notice is given.
Section 1159, relating to penalties and interest, would be amended to once again allow interest at 0.5% per month, but no more than 25% of the amount due. The bill also makes it clear that the interest provision may apply to late filed unclaimed property reported and remitted after March 1, 2016. If this provision is passed, holders should expect interest notice assessments on future reports, similar to California's strict application of their interest provisions.
The State Escheator would also be required to send annual notices to holders, reminding the holder of their obligation to file unclaimed property reports prior to March 1. In their annual report, holders would also have to designate an individual employee to serve as the contact for all correspondence with the State.
The bill has been assigned to the Senate Banking and Business Committee.
SB 141 was passed by the Delaware House on July 1, 2015.
SB 141 was passed by the Senate on June 18 and sent to the House. The bill was then sent to the House where it was assigned to the Economic Development/Banking/Insurance/Commerce Committee. The Committee then considered and reported the bill out of Committee on June 25.
SB 141 was reported out of the Banking and Business Committee, with a vote of 2 in favor and 2 on the merits, on June 17.