Recently enacted Delaware legislation significantly revised the administration of Delaware’s unclaimed property laws by placing several limitations on unclaimed property audits performed by outside contractors and amending the administrative appeals process. [S.B. 11, enacted 1/29/15]
The law, which implements certain recommendations of the Task Force to Study and Make Findings and Recommendations to Improve Fairness and Compliance in Delaware’s Unclaimed Property Program, follows a string of recent litigation revolving around unclaimed property audits conducted by a third-party contractor.
S.B. 11 allows Delaware to conduct unclaimed property examinations
through outside contractors, but requires the state to adhere to certain
limitations when doing so. Under the legislation, no contractor may be assigned
more than 50 percent of the unclaimed property exams undertaken after Jan. 1,
2015. It also limits the term of the independent contractor’s contract with
Delaware to five years.
In addition to limiting the number and term of contracts with outside auditors, the legislation prohibits the contractors from employing or compensating senior members of Delaware’s Division of Revenue or the Department of Finance for their work or involvement with unclaimed property audits for two years after the official stops working for the state. According to the committee report published by the Delaware House of Representatives’ Economic Development/Banking/Insurance/Commerce Committee, this limitation was included “in order to create and preserve a positive public image” for the state.
S.B. 11 also amends the amends the administrative appeal process regarding the assessment of unremitted abandoned or unclaimed property, most notably by making the independent reviewer’s determination binding on the department unless it is appealed to the Delaware Court of Chancery by either the state or the property holder within 30 days. Previously, the Delaware Secretary of Finance had the discretion to adopt or reject the independent reviewer’s findings, which could then be appealed by the property holder.
The amended administrative provisions also require the independent reviewer to simultaneously send its determination to the secretary and the property holder by certified mail within 90 days of the oral hearing or post-hearing briefing, whichever is later.
Finally, the legislation directs the secretary to develop a detailed manual containing procedural guidelines for conducting unclaimed property examinations and to update its regulations accordingly. The secretary must then ensure that Delaware’s contract auditors comply with the newly developed manual.
Because Delaware often serves as a model for other states addressing unclaimed property issues, it will be interesting to see whether these changes spark a trend towards increased fairness and accountability among the states in coming months.
Continue the discussion on Bloomberg BNA’s State Tax
Group on LinkedIn: Do you think other states will follow in Delaware’s
footsteps and amend their unclaimed property audit procedures?
For more information about this and other state tax and unclaimed property issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library today.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)