Tax Analysts Looks at Unclaimed Property

Today, Tax Analysts' Maria Koklanaris reports on unclaimed property in SALT Practitioners Stepping In as States Get More Aggressive With Unclaimed Property. The article, in which Barganier and Associates, LLC's founder Patricia Barganier Thorn is quoted, looks at some of the developments in unclaimed property over the past few years.

Some of the highlights include:

  • The increase in the number of third-party multi-state audit firms.
  • Payment incentives for the audit firms.
  • The use of non-disclosure agreements during audits.
  • Criticisms of the audit selection process.
  • The role of technology in the look-back period during audits.
  • The revolving door between Delaware and Kelmar Associates.

    The article also includes a response by Kelmar Associates, a primary third-party auditor for Delaware. Mark McQuillen, president of Kelmar Associates, blames holders for the increased scrutiny. He theorizes that there is a conspiracy among holders to mislead the public about unclaimed property audits. McQuillen is quoted as saying "People started challenging our math. They started challenging our math because they didn't understand it. When they figured out they couldn't argue the math, they started arguing the law." McQuillen accuses holder advocates of milking hours and fees out of their clients when advocating legal theories that would reduce payments to Delaware.

    Delaware and Kelmar, in particular, have received quite a bit of criticism over the past few months, with recent articles in Tax Analysts, Delaware News Journal, and the Wall Street Journal. In response, state Republicans have introduced two bills (SB 215 and SB 228), targeting the unclaimed property practices in the state. As the pressure has increased, the tone from the state and its auditors has become increasingly antagonistic towards unclaimed property holders. It is important to remember that as a holder, your best defense is annual compliance and proper policies and procedures.

    See Also:
    Lost that Loving Feeling in Delaware
    DeCarrera to Appear on Public Affairs on Peach
    Barganier Official Observer to ULC Model Act Drafting Committee