Posted on Apr 18, 2017 by JMS Advisory Group |
Earlier this month, the Delaware Secretary of State and the Delaware Department of Finance proposed new regulations that will repeal & replace the state’s old regulations pertaining to VDAs and audits, respectively. Here is a link to the new regulations
What each of these state agencies has done however, is troubling at best, and undoubtedly foolhardy. Essentially ignoring the ruling handed down in the Temple-Inland case, Delaware has doubled down on a hand on which you’re advised never to take that course of action. These regulations are an announcement to unclaimed property holders that Delaware intends to proceed with business as usual, in both its audit and VDA programs. Delaware is challenging the holder community to challenge it right back, and that undoubtedly will happen once these regulations are formally promulgated and put into practice. This is a gamble which may pay in the short term with some audit settlements, but is quite likely to lead to more litigation in the future. With such revenue dependency on escheat collections, the state’s position here is not surprising; but it will also most certainly be challenged and the state will face an uphill climb once it is back in the courtroom dealing with precedent that flies in the face of its new regulatory scheme.