DALLAS, May 21, 2014 /PRNewswire/ -- On May 16, 2014, important proposed legislation (S.B.228) was introduced by a number of Delaware legislators, with Senator Blevins serving as the key Bill sponsor. If enacted into law, the understanding is that the Bill would extend the period of time the Delaware Secretary of State may accept a letter of intent to enter into an unclaimed property Voluntary Disclosure Agreement (VDA) from June 30, 2014 to September 30, 2014, and further extend the sunset of the VDA program by one year from June 30, 2015 to June 30, 2016.
Analysis of Key Points for Holders
Based on review of the proposed Bill, the holder community should be aware of the following:
- Extension of VDA Program – The proposed Bill extends the period that a holder may submit, and the Secretary of State may accept, a letter of intent to enter into an unclaimed property VDA from June 30, 2014 to September 30, 2014 (which essentially results in a 90-day extension to file the VDA-1 form from the current June 30, 2014 deadline). It further extends the sunset of the VDA program by one year, from June 30, 2015 to June 30, 2016 in order to provide sufficient time for all holders to complete, and the Secretary of State to process, all such VDAs. Thus, the period to make payment in full or enter into a payment plan under a Secretary of State VDA would be extended from June 30, 2015 to June 30, 2016 should this proposed legislation be enacted.
- Penalties Reduced on Filing of Unclaimed Property Reports – As indicated in the Bill's synopsis, the Bill "…changes the penalty for failing to file an unclaimed property report from 5% per month to the lesser of 5% per month or $100 per day." Significantly, the maximum penalty in the proposed Bill changes from 50% of the amount required to be shown on the report (i.e., the underlying principal amount to be reported to $5,000). This proposed change is significant, and, if enacted into law, constitutes a virtual elimination of the considerable threat of penalties posed under Delaware's current law.
- Elimination of Interest – The proposed Bill eliminates the assessment of interest on outstanding unpaid amounts. As current law provides that interest may be assessed up to 50% of the amount required to be paid, this too represents the potential elimination of a significant enforcement mechanism in Delaware.
- Treatment of Information as Confidential – The proposed Bill confirms and codifies the long-standing practice of the Department of Finance, and the Secretary of State, to hold as confidential the financial information obtained from holders during the course of examinations, settlements, or VDAs. This should encourage holders to have a reasonable expectation that their settlements remain confidential, although it's not entirely clear how this statutory provision, if enacted into law, would interface with any Freedom of Information Act requests. Interestingly, this provision states that it "…applies to all agreements entered into pursuant to this chapter, including past agreements."
In summary, the proposed Bill, if enacted into law, would provide significant benefits to the holder community, and provides a key extension of the "window of opportunity" for holders to take advantage of the Secretary of State's VDA program by enrolling in the program by September 30, 2014, as opposed to the current deadline of June 30, 2014, and provides an extra year to June 30, 2016, as opposed to the current sunset of June 30, 2015. Ryan unclaimed property professionals are available to provide more details on this program, and how it may impact your organization.
About Ryan
Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the sixth largest corporate tax practice in the United States. Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a three-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 1,800 professionals and associates serves over 9,000 clients in more than 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at www.ryan.com.
TECHNICAL INFORMATION CONTACTS:
Mark A. Paolillo
Principal
Ryan
857.362.7522
[email protected]
Susan Han
Principal
Ryan
425.440.2333
[email protected]
Available Topic Expert(s): For information on the listed expert(s), click appropriate link.
Mark Paolillo
http://www.profnetconnect.com/markpaolillo
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