Delaware - Unclaimed property “voluntary disclosure” program is extended 

July 2:  In Delaware, an unclaimed property “voluntary disclosure agreement” (VDA) program, that was originally established in 2012, has been extended.

Originally, the deadline for applying to participate in the VDA program was June 30, 2014. Legislation (Senate Bill 228) enacted June 30, 2014, provides additional time under the program by:


  • Extending the deadline to enter into the VDA program to September 30, 2014
  • Extending the sunset date of the program from July 1, 2015, to July 1, 2016

Companies that have received an audit notice from the Delaware State Escheator, however, cannot participate in the VDA program.

Penalty and interest provisions

The legislation also revises the penalty and interest provisions as applied to holders of Delaware unclaimed property that fail to remit property in a timely manner.


Previously, holders of unclaimed property that fail to file an unclaimed property report are subject to a penalty equal to 5% per month of the amount required to be shown on the report. The maximum penalty cannot exceed 50% in the aggregate.


Under the new legislation (Senate Bill 228):


  • The revised penalty for failing to file an unclaimed property report is the lower of 5% per month or $100 per day.
  • The maximum penalty that can be imposed is 50% of the amount required to be shown on the report—not to exceed $5,000.
  • The assessment of interest on the amount of a holder’s outstanding unreported unclaimed property is repealed (whereas previously, interest charges could equal up to 50% of the amount required to be reported).

Senate Bill 228 does not indicate an effective date for the revised penalty and interest provisions.

Confidentiality

In addition to expanding the timeframe for participating in Delaware’s unclaimed property VDA program, Senate Bill 228 codifies the state’s long-standing practice of treating financial information obtained during unclaimed property examinations, settlements, and VDAs as confidential.

Task force

The Delaware Legislature also passed a concurrent resolution to create an Unclaimed Property Task Force to study and make recommendations for improving fairness, as well as compliance, in Delaware’s unclaimed property program. The task force is expected to complete its report by November 1, 2014.

KPMG observation

Companies currently or previously incorporated in Delaware, or with Delaware-incorporated subsidiaries, need to be aware of the recent changes to the Delaware VDA program and of the potential consequences of failing to make a timely request for participation in the VDA program.



For more information, contact a KPMG State and Local Tax professional:


Dennis Prestia

212 872-6891


Angela Gholson

212 872 7910


Marc Grossman

404 222 3508


Samantha Petersen

303-382-7220


Nina Renda

973-912-6528


Chris Sray

412-232-1565




©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

Share this

Share this

Subscribe

Current and future KPMG clients may subscribe to TaxNewsFlash email alerts.


Email your contact information.

TaxNewsFlash-United States by year