Mon, Mar 3, 2014

Delaware Issuing New Unclaimed Property Audit Notices - Are You at Risk?

Corporations who have yet to voluntarily enter into Delaware’s unclaimed property Voluntary Disclosure Agreement (VDA) have been granted a bit of a reprieve with the passing of S.B. 228 just as the June 30 deadline was set to expire.

Legislature has extended the deadline to September 30, 2014 for Corporations to submit a letter of intent to the Delaware Secretary of State to enter into the VDA program. This means that Corporations who come forward before September 30, 2014 will now have until June 30, 2016 to complete the submission process to declare any prior years’ unclaimed property liability to avoid penalties, interest and the risk of audit. The period to make payment in full or enter into a payment plan under the VDA has also been extended to June 30, 2016. The new legislation does not extend the completion date for prior program submissions entered into before June 30, 2013.

The new legislation also eliminates interest that previously may have been imposed on outstanding unpaid amounts and reduces the penalty that may otherwise be imposed from 50% of the amount required to the lesser of 5% per month or $100 per day, not to exceed $5,000. These revisions substantially restrict the State’s ability to use the imposition of substantial penalty and interest assessments as a means of persuading a holder to settle otherwise disputed amounts resulting under audit. Such tactics were highly criticized within the business community.

Though the deadline has been extended, it is still recommended that companies act quickly to take advantage of the Delaware VDA program.

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