Delaware Bill to Provide for Alternative Voluntary Disclosure

On June 28, 2012, the Delaware House passed SB 258. It has now been passed by both the Senate and the House and proceeds to the governor.

Many questions remain about this program. Although the VDA would proceed through the Secretary of State, the Secretary can refer them at any time to the State Escheator instead of accepting the submission. Further, there is no reason to believe that the Secretary has any unclaimed property experience and would have to consult with the Escheator on whether to accept an agreement.

Originally Posted: June 27, 2012

Delaware has been one of the most aggressive states in audit and collection of unclaimed property. The primary Delaware budget committee, DEFACS, forecasts over half a billion in unclaimed property collections for next fiscal year. Therefore, it came as a bit of a surprise when Senate Bill 258 was introduced, which would provide for an alternative route to report past due unclaimed property for companies not in compliance or under audit.

Under SB 258, the Secretary of State would oversee a voluntary disclosure program whereby non-compliant holders would report and remit their unclaimed property through the Secretary of State. If an agreement is reached, it would prevent the State Escheator (the Delaware's Department of Finance's unclaimed property administrator) from conducting an audit for the periods covered by the VDA. The VDA would cover time periods back to 1996 or 1993, depending on when a holder initiates the VDA. In order to participate, a holder could not currently be under audit or have initiated a VDA with the State Escheator.

As originally written, SB 258 prohibited the Secretary of State from auditing a holder that successfully comes to agreement through the VDA program. As amended by the Senate, SB 258 would prohibit both the Secretary of State and the State Escheator from auditing a holder that reports unclaimed property through the Secretary of State.

Under the legislation, all VDAs through the Secretary of State would have to begin by June 30, 2014 and be completed by June 30, 2015.