Delaware Softens Unclaimed Property Audit Posture
In the two decades subsequent to the UnitedStates Supreme Court decision in Delaware v.New York, Delaware maintained what was generallyrecognized as the broadest and most aggressiveabandoned and unclaimed property auditprogram in the country. In Delaware v. New York,the United States Supreme Court confirmed thestate of incorporation as the second priority stateas it relates to state’s claims to escheat dormantunclaimed property held by a corporate holder.Thus, in the case of dormant unclaimed propertyheld by a Delaware incorporated holder for whichsuch holder does not have a last known addressfor the rightful owner on its books and records,Delaware is the state with the highest claim toescheat and take possession of such property. AsDelaware remains the preeminent state for incorporation,escheat has not surprisingly become asignificant source of funds to Delaware.
According to the most recent projectionsby the Delaware Economic Financial AdvisoryCommittee (DEFAC), in the fiscal year runningfrom July 1, 2015, to June 30, 2016, Delaware isexpected to collect approximately $475 million ofunclaimed property. This represents the third-largestsource of state revenues to Delaware, behind onlycorporate franchise tax and personal income tax.For the upcoming fiscal year, unclaimed propertycollections represent approximately 13 percent ofall Delaware revenues collected. While Delawareremains legally obligated to return all dormantunclaimed property that it collects to the rightfulowner, in actuality only a small percentage of collectedproperty is returned to the rightful owner;thus, unclaimed property serves as a source of revenueto the Delaware general fund.