With over 1.5 million entities incorporated in Delaware and only 20% of companies in compliance with unclaimed property laws, any legislative changes Delaware makes causes a stir in the industry. Delaware recently passed two bills with significant impact on unclaimed property in the state, DE S 103 and DE S 104. Our dedicated unclaimed property compliance and regulatory team constantly updates our solutions to ensure compliance. We’ve outlined some of the most impactful changes below.
DE S 103: Virtual Currency
This bill adds provisions to the Delaware Unclaimed Property Act specifically requiring the reporting and remittance of virtual currency. DE S 103 defines virtual currency as a digital representation of value, including cryptocurrency, that does not have legal tender status recognized by the United States. This bill requires reporting and remittance of virtual currency five years after the owner’s last indication of interest and requires that holders liquidate virtual currency prior to reporting and remitting to the state. In relation to the liquidation of virtual currency, this bill also includes language limiting the exposure against the holder or the State Escheator to recover any gain in value that occurs after the liquidation.
DE S 104: Audit Practices, Statutory Authority, IRAs
Some of the provisions in DE S 104 apply retroactively to claims, examinations, or litigation pending as of the effective date (August 1, 2021). Below are highlights from this bill:
Audits
- Expands Delaware unclaimed property audit authority to determine the completeness and accuracy of holder reports, including record review from the holder and third-parties unrelated to unclaimed property due and owing to Delaware.
- Eliminates third-party contingent fee arrangements and replaces them with payment on an hourly basis. However, certain industries are excluded and therefore still subject to contingent fee audits.
- Expedited examinations procedure incentivizing participation by providing a significantly reduced interest rate.
- Records obtained in a Delaware audit may not be used in a joint examination conducted with another state without written consent.
Delaware Unclaimed Property VDA (Voluntary Disclosure Agreements)
- Incentivizes Delaware unclaimed property VDAs by potentially waiving or significantly decreasing interest.
- Extends the period for a holder to respond to a VDA invitation.
- Records obtained in a Delaware VDA may not be used in a joint examination conducted with another state without written consent.
Individual Retirement Accounts (IRAs)
- Decreases the dormancy period on IRAs to three years after the owner’s last indication of interest following the required minimum distribution age, if the holder has no knowledge of an owner’s death.
- If the holder has knowledge of owner death, the account is presumed abandoned one year following the date specified in the income tax laws.
Take Action on Delaware Unclaimed Property
If you are concerned about compliance or audit preparedness for Delaware or any other jurisdiction, our consulting services can help, contact us today for details.
