Delaware Unclaimed Property Update: Secretary of State Voluntary Program Entrance and Resolution Deadlines Extended
July 14, 2014
Publication| Corporate Transactions| Corporate & Chancery Litigation| Tax
Pursuant to 78 Del. Laws, c. 317, Delaware established an unclaimed property voluntary compliance program administered by the Office of the Secretary of State (the “SOS VDA Program”). Some of the benefits of participating in the SOS VDA program included potentially reduced years of liability and the elimination of all interest and penalties. The deadline to enter the SOS VDA Program was previously June 30, 2014, and the deadline to resolve all Delaware unclaimed property liability under such program was June 30, 2015. However, pursuant to 79 Del. Laws, c. 278 (the “Act”), which was signed by Governor Markell on June 30, 2014, those deadlines were both extended. As a result of the passage of the Act, the deadline to enter the SOS VDA Program has been extended until September 30, 2014, and the deadline to resolve all unclaimed property liability under that program has been extended until June 30, 2016.
In addition, the Act made three additional statutory changes regarding unclaimed property law:
- Record Confidentiality: The Act establishes 12 Del. C. § 1141(b), which provides that it will be unlawful for any officer or employee of the Department of Finance or the Department of State to disclose any amount of unclaimed property reported to the state or disclose the terms of any annual filing, unclaimed property voluntary self-disclosure agreement or settlement agreement, or any supporting documentation related to such reports or agreements.
- Penalties: Previously, the penalties for failure to file an unclaimed property report were equal to 5% of the amount owing under the report per month, with a maximum penalty of 50% of the amount owing under the report. Pursuant to the Act, the penalty is reduced 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: Previously, Delaware could impose interest on unremitted unclaimed property equal to 0.5% per month. However, the Act eliminates the imposition of such interest on unremitted amounts.
Please contact us if you would like to discuss the potential benefits of participating in the SOS VDA Program or to discuss the additional changes to Delaware unclaimed property law.