Delaware Passes SB 258: Establishes Voluntary Disclosure Program

On July 11, 2012, Delaware SB 258 was signed into law, establishing a new voluntary disclosure program overseen by the Delaware Secretary of State. This program provides holders a three-year window to enter into voluntary disclosure agreements (“VDA”) and report any past-due unclaimed property liabilities.

Effective immediately, holders that enroll in the program can take advantage of shortened “look-back” periods compared to the standard rules of a) reporting all property back to 1991 in a VDA process or b) reporting all property back to 1981 if facing an unclaimed property audit by the state.

Specifically, the new law provides the following:

  1. Holders that indicate in writing their intent to enter into an unclaimed property VDA on or before June 30, 2013, and make payment in full or enter into a payment plan on or before June 30, 2014 will be subject to a “look-back” period of 1996.
  2. Holders that indicate in writing their intent to enter into an unclaimed property VDA on or before June 30, 2014, and make payment in full or enter into a payment plan on or before June 30, 2015 will be subject to a “look-back” period of 1993.
  3. Holders that enroll in the Secretary of State sponsored voluntary disclosure program can do so without fear of audit by DE Secretary of State, unless it can establish evidence of fraud or willful misconduct in the voluntary disclosure.
  4. The State Escheator shall not initiate an examination of any holder who has indicated, in writing, their intent to enter into a VDA with the Secretary of State by June 30, 2014 unless the Secretary of State refers that holder to the State Escheator for examination.
  5. Holders currently engaging in the VDA process with the State Escheator shall have the benefit of the same shortened “look-back” periods but under the auspices of the State Escheator and not the Secretary of State.
  6. Holders currently under audit or who have received a notice of audit are not eligible for these reduced “look-back” periods.
  7. Holders that wish to participate must enroll by June 30, 2014 and complete the voluntary disclosure program by June 30, 2015 in order to take advantage of the shortened “look-back” periods.
  8. This legislation will cease to be effective on July 1, 2015.

Holders that are not currently reporting unclaimed property are encouraged to come forward and enter into the new program, as there is an incentive of a shorter look-back period for those that enroll sooner rather than later.

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