Delaware Gov. Jack Markell signed legislation reducing the state’s aggressive collection of unclaimed property with an overhaul that shortens review periods, eliminates surprise audits and may reduce collections by millions of dollars each year.
The new law will have “a very significant impact on Delaware’s unclaimed property revenues” because of the shorter review period, said Kendall L. Houghton, Alston & Bird partner and co-leader of the firm’s Unclaimed Property Group.
The new law reinstates Delaware’s interest provision, which had been repealed in 2014, she said. The interest provision allows the state to impose interest of 0.5 percent per month on outstanding unpaid amounts of unclaimed property, to a cap of 25 percent of the total amount to be paid.
“This is sort of give with one hand, take back with the other,” Houghton said. “It’s a balancing act from a fiscal standpoint.”
Houghton noted that companies incorporated in Delaware that have been invited to the voluntary disclosure agreement (VDA) program should consult their advisors about how to move forward.
According to Delaware’s task force’s final report, more than 700 entities of the 5,000 that were invited are enrolled in the VDA program.
“That’s a pretty significant gap between companies that were notified of the VDA program and companies that participated,” said Houghton.
It’s unclear whether companies that received outreach in the past but didn’t join the program would be considered high-risk targets, she said, but added that “we would advise that if you received any communication from the Secretary of State that you review this law carefully and talk to your advisors” about the potential risks.