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UNCLAIMED PROPERTY FOCUS is a blog written by and for UPPO members, featuring diverse perspectives and insights from unclaimed property practitioners across the U.S. and Canada. We welcome your submissions to Unclaimed Property Focus. Please contact Tim Dressen via tim@uppo.org with any questions about submitting a blog post for consideration and refer to our editorial guidelines when writing your blog post. Disclaimer: Information and/or comments to this blog is not intended as a substitute for legal advice on compliance or reporting requirements.

 

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Delaware unclaimed property task force releases final report

Posted By Emily Lee, UPPO, Monday, January 5, 2015

The Delaware Unclaimed Property Task Force (task force) released its final report of its findings and recommendations to the Delaware General Assembly. The recommendations and findings resemble those in the draft report released in December, retaining a heavy focus on audit practices, and the contracts Delaware holds with contract auditors.

Below are the recommendations the task force has included in its final report. For more background on each of the recommendations.

 

1) Develop a “best practices” manual to ensure greater transparency and predictability as to what can be expected during a Delaware unclaimed property audit. 

 

2) Modify the appeals process outlined in the Delaware Code to include a greater role for third-party review and remove the Secretary of Finance as the final decision maker.

 

3) Adjust the look back period in Delaware’s unclaimed property audits, create a new VDA program, and ensure that the look-back period achieves an effective balance of incentives inherent in audits and VDAs. 

 

4) Revisit the term that requires state employees to “cool-off” before accepting employment with one of the State’s contract auditors.  

 

5) Amend the statute of limitations relating to unclaimed property audits to avoid holders being audited after reasonable record retention requirements has passed.

 

6) Renegotiate downward the length of its current contracts with unclaimed property audit firms.

 

7) Achieve more balance among contract auditors.

 

8) Continue to enhance efforts to reunify property with its rightful owner.

 

9) Enhance efforts to bring audit and VDA processes in-house.

 

More Resources
Check out how UPPO was involved in the Delaware Unclaimed Property Task Force


Tags:  DE SCR 59  Delaware  final report  task force  unclaimed property 

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Calling Fairness Into Question: Delaware’s Unclaimed Property Task Force to Hold Fourth Meeting

Posted By Administration, Monday, September 29, 2014

Aggressive and fairness were the buzzwords at the past three Delaware Unclaimed Property Task Force (task force) meetings. Delaware Senate Concurrent Resolution 59  established a task force of legislators, government official, and subject-matter experts to study how the Delaware unclaimed property program can improve fairness and compliance.

At each meeting, task force members have delved into discussion on topics questioning the fairness and affecting compliance, such as audit practices used by the state, relationships with third-party auditors, and non-uniform regulations.

What is fairness?
One of the first points made was to understand that its likely holders and the state will have varying definitions of “fairness”. To better understand what “fairness” looks like the task force members explored issues that put fairness into question.

Most of the issues that surfaced centered on audit methods; such as the length of audits, the look-back period employed during an audit, and the contracts that Delaware holds with audit companies were specific issues that surfaced during the various meetings.

In light of the Temple-Inland case, the length of the look-back period used during audits resurfaced at several points in conversation. Currently, Delaware can require holders in an audit setting to produce records that date back to 1981. Here’s a string of conversation that has been sourced from the Aug. 12, 2014 task force meeting minutes between task force members on the look-back period.

Mr. Michael Houghton: “…When holders call auditors ‘aggressive’ Mr. Houghton believes they are referring to aspects of the auditing program, such as the long look-back period and the estimation process. … He asked what the DOF’s position was on shortening the look-back period.”

Senator Lavelle: “Senator Lavelle said that the 1981 look-back period was very aggressive and was out of step with other states. He asked whether any study or analysis has been done to examine what the effect on revenue would be if the look-back period was significantly reduced.”

Secretary Bullock: “Said the more important question is if someone could quantify how changing the look-back period was going to improve compliance. The VDA program offers a shorter look-back period and 2/3 of companies still have not signed up. Changing the look-back period seems to have had no impact.”

Mr. Robert Tunistra Jr.: “Said that one of the issues around perceived fairness is the look-back period. One of the reasons that companies are more compliant with tax than with unclaimed property is because there is a well-known and well-defined look-back period that is shorter. Companies maintain their records in preparation for a possible audit. The unclaimed property look-back period covers more than twenty years; finding records that old is next to impossible for companies.” 

Secretary Bullock: “Stated that he has no problem reducing the look-back period. He is focused on increasing compliance.”

Though a definition hasn’t been reached of what constitutes fairness, there has been positive discussion, such as the dialogue above, about the issues that the holder community would consider positive changes and enabling compliance.

Aggressive Behavior
During the first two task force meetings the word aggressive was thrown around by a number of task force members to describe the sentiment holders have toward third-party auditors and the Delaware unclaimed property program.

Deputy Secretary Gregor expressed that he wanted to ensure that an aspect of the process was being considered “aggressive” and not the behavior of the contractors, as department policy is something he is willing to discuss changes to. Pointing out, “The policies of the department are separate from the behavior of the auditors.”

By digging into the perceived issues a bit more, no one was able to pin point a specific example of aggressive behavior. Houghton suggested that the aggressive description is, “labeling [that] is a broad critique of the entire Delaware audit system.”

The task force requested that holders provide testimonials of their experience working with the Delaware unclaimed property program and auditors. UPPO is working to collect testimonials from the holder community to submit to the task force for their review during its fourth meeting on Oct. 2, 2014.   

UPPO’s Presentation

Sara Lima, UPPO member, presented a report during the task force’s third meeting regarding issues that UPPO feels would enable Delaware’s unclaimed property program to be fairer and increase compliance. Included in the report are requests to: clarify definition of “contact”, decrease the use of estimation techniques during audits, among other issues UPPO feels would assist the task force in reaching its goal.

After presenting Lima said the experience was, “Very empowering! Holders so rarely have the opportunity to directly address the legislature in this way. To be able to verbalize the precise compliance and audit challenges holders face and, potentially, to influence real change through UPPO, was very satisfying.”

The task force’s next meeting is Thursday, Oct. 2.

More Information
Check out UPPO’s Advocacy Page

Tags:  Delaware  SCR 59  unclaimed property  unclaimed property task force 

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Delaware's Unclaimed Property Legislation Update

Posted By Administration, Wednesday, July 2, 2014
Updated: Wednesday, July 2, 2014

Delaware’s  147th General Assembly has produced a number of bills on the unclaimed property front. The nature of each bill suggests Delaware’s unclaimed property program will see some changes in its auditing process. Below are the pieces of legislation introduced or that have seen movement since May 2014.

Senate Concurrent Resolution 59
Status: Passed House - June 26, 2014
Author: Senator Townsend
This resolution establishes a task force to study and make finding and recommendations to improve fairness and compliance in Delaware’s unclaimed property program. The makeup of the task force will be diverse and have representation from political parties, House, Senate, executive branch, the public and various external organizations. Organizations requested to submit a representative are: Delaware State Bar Association, Delaware State Chamber of Commerce, Delaware Bankers Association, Delaware Business Roundtable, and the Uniform Law Commission. Recommendations made by the task force must be submitted by Nov. 1, 2014.


Senate Bill 215
Status:  Assigned to Banking Committee in Senate - May 8, 2014
Author: Senator Lavelle
This bill forbids the State Escheator from paying outside auditors by commission.  In addition, auditors would be required to rebid for a contract at minimum every three years.

Senate Bill 228
Status: Passed House – June 26, 2014
Author: Senator Blevins
This would change the penalty a holder is required to pay when failing to file a report from 5 percent per month to the lesser of 5 percent per month or $100 per day.  The maximum penalty changes from 50 percent of the amount required to be shown on the report to $5,000.  It would also eliminate the assessment of interest on outstanding unpaid amounts.

The period a holder may submit a letter of intent to enter into the voluntary self-disclosure agreement from June 30, 2014 to Sept. 30, 2014. It also extends the sunset of the Secretary of State’s voluntary self-disclosure program by one year from July 1, 2015 to July 1, 2016 in order to provide sufficient time for all holders to complete and the Secretary of State to process all such voluntary self-disclosures agreements.

Senate Bill 242
Status: Assigned to Executive Committee in Senate – June 05, 2014
Author: Senator Townsend
Two year post-employment restrictions would be implemented to restrict State of Delaware employees who worked with the Delaware unclaimed property program, from beginning any arrangement with Delaware in any manner directly or indirectly to matters involving escheat, abandoned property or unclaimed property.


More Resources
Join UPPO to get access to govWATCH, UPPO’s legislative and regulatory tracking service
UPPO Member to Sit on DE Unclaimed Property Task Force

Tags:  Delaware  legislation  unclaimed property 

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Attend "The VDA Update: DE Opens the Doors for Holders" at the Holders Seminar

Posted By Joe Carr & Kendall Houghton, presenters at the Holders Seminar, Wednesday, July 24, 2013
Updated: Tuesday, July 23, 2013

Delaware opened its doors to holders last year with its revamped Voluntary Disclosure Agreement (VDA) program. In the past, participating in Delaware’s VDA program meant entering into what some holders have described as an unpredictable, lengthy process that could potentially result in an audit. As is widely known, many holders that had filed VDAs were audited for various reasons. Reverting back to its business-friendly mantra, Delaware has thrown out its old VDA program, in favor of a clearer, more predictable model. 

To conclude the Holders Seminar on Aug. 15, Kendall Houghton, partner with Alston & Bird LLP, and Joe Carr tax partner at BDO, will present "The VDA Update: DE Opens the Doors for Holders.” This session is relevant and open to all attendees, regardless of experience level.

Both Houghton and Carr are experienced practitioners and have extensive knowledge of Delaware's VDA program. During the presentation, Houghton and Carr will push the published guidelines aside and share the realities of Delaware's VDA program. We want to pull attendees toward how things are actually working and give them the nitty-gritty of the opportunity areas and issues they will face.

Highlights of Delaware's VDA Program

  • Expectations and guidelines are clear and guaranteed
  • Maximum duration of VDA program is two years
  • The Secretary of State is the administrator of the VDA
  • Completing the VDA program releases responsibility of all past due unclaimed property liability
  • Certainty that all liability for historic unclaimed property is released

"The VDA Update: DE Opens the Doors for Holders" will be a great learning opportunity for all attendees. If you haven't yet registered for the Holders Seminar, there is still time!

More Resources
Delaware's Secretary of State's post on the VDA program

Join UPPO today and receive an exclusive member discount at the Holders Seminar!


Tags:  Delaware  education  Holders  Holders Seminar  Members  news  UPPO  VDA 

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