Delaware Offers Amnesty for Unclaimed Property

Delaware is currently offering an amnesty opportunity for unclaimed property. Currently, if the state of Delaware locates and contacts a taxpayer for an unclaimed property audit (generally conducted by third party auditors), the state can go back to 1981. Few companies have the level of detailed records needed to handle an audit back to 1981. If a taxpayer has entities incorporated in Delaware, the state (as the state of incorporation) is entitled to all transactions for which there is an unknown address. Unclaimed property is not a tax, therefore, the normal tax audit statute periods provide no period limitation protection. Some frequent unclaimed property types include: outstanding accounts payable and payroll checks; voided transactions lacking documentation support; customer credit balances and deposits; use of third-party administrators; gift certificates/credit memos; unidentified remittances/receipts; actual property (products not picked up); stock certificates/dividends; and mergers/acquisitions (bundled debt/liability). Under the amnesty program, if a company applies for amnesty eligibility by 6/30/2013, the look-back period is dramatically reduced to 1996 (as opposed to 1981), and penalties and interest are abated. A self-audit is required with reporting and payment due by 6/30/2014. If a company applies for amnesty eligibility by 6/30/2014, the look back period is reduced to 1993 (as opposed to 1981), and penalties and interest are abated. A self-audit is required with reporting and payment due by 6/30/2015. Companies that have previously receive a Notice of Audit are ineligible to participate.

Posted on February 25, 2013