For more than an hour on January 8, Delaware Secretary of State Jeffrey Bullock and an attorney administering the new program, Geoffrey Sawyer, took questions from Sara Lima and Michael Wynne of Reed Smith’s State Tax Group. The questions concerned a program designed to provide a pathway to unclaimed property compliance for skittish corporations—many of which have been unaware of their filing obligation.
Delaware collects more than $500 million in unclaimed property per year, hiring private audit firms to conduct multi-year audits of Delaware-incorporated companies on a contingent-fee basis. The tactics of the Department of Finance—along with the specter of whistleblower claims—have caused companies to consider whether the unclaimed property exposure outweighs other benefits of incorporating in Delaware. As a result of such concerns, the legislature designed a new amnesty-like program to allow companies to become compliant with unclaimed property, and delegated authority over the program to the Secretary of State. The program cuts off 10 years of back liability, and provides interest and penalty relief, which could reduce exposure by more than half. The Secretary’s office promises a more efficient and company-friendly process than what companies had experienced from the state in the past.
In deference to the roll-out of the new program, Delaware’s Department of Finance had agreed to withhold issuing any new audit notices for unclaimed property, but that stay ends February 1. Thus, companies incorporated in Delaware that have not been filing annual unclaimed property returns should seriously consider filing the one-page form to enter the program. They become ineligible for participation if they receive a notice of audit.
Access to the presentation and audio of the teleseminar is available at:
Power Point Presentation
If you have questions about Delaware’s unclaimed property voluntary disclosure program, or other unclaimed property issues, please contact the authors of this alert, or the Reed Smith lawyer with whom you usually work.
Client Alert 2013-015