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Delaware Punts on Audit Regulations


When the Delaware legislature passed SB13 back in early February, the new law included a directive to the Secretary of Finance to put forth Regulations relating to its unclaimed property audit program. The Department of Finance did indeed draft Regulations pursuant to this directive and those were disseminated to the public on April 1, 2017 as proposed Regulations. These Regulations were not given the full effect of law, as they were subject to a 30 day open period for public comment. Once this comment period expired, JMS and the rest of the holder community expected that the Department of Finance would digest the comments received, and ultimately adopt final Regulations taking the body of commentary under advisement. It has now been nearly 3 months since the end of the public commentary period, and these Regulations have not been made final.

The Regulations are to provide clarity to holders under audit on matters such as: permissible base periods for extrapolation/estimation, items that may be excluded from estimation calculations, aging criteria for disbursements, and definitions relating to “complete” or “researchable” records. Absent these clarifications, holders under Delaware audit are essentially left in limbo as to the method of proceeding on these issues. Apparently we’re going to have to wait a bit longer.

At the end of June, Delaware Governor Carney signed into law a Substitute bill that makes additional revisions to the original SB13 framework, which in and of itself was a major overhaul of Delaware escheat law. The new law can be accessed here. There were several technical modifications and clarifications provided in this substitute bill, but most importantly, the new bill extended the deadline to December 1, 2017 for the Department of Finance to adopt final Regulations regarding estimation criteria. This all but guarantees continued confusion and limbo for holders under audit. Because of this extension, holders now can put off making a decision about the future of their exam (VDA/expedited audit/status quo) into the first quarter of 2018. JMS encourages the holder community to stay close to these developments and consult with your external advisors about appropriate action.

JMS also suggests considering audit settlement negotiations, something that would be unique to each audit situation. Contact us if that is something that is of interest to you.

Tagged: unclaimed property, escheat, delaware regulations, escheat comliance, delaware escheat audit, unclaimed property audit