12 Del. Admin. Code § 104-2.0
Current through Register Vol. 28, No. 5, November 1, 2024
The Department of Finance's Office of Unclaimed Property ("DOF" or the "State") is committed to promoting Holder compliance. Holders of abandoned or unclaimed property reportable to the State of Delaware must file annual reports and remit property to the State of Delaware. To encourage compliance and to enforce the State's Abandoned or Unclaimed Property Law, Title 12, Chapter 11 of the Delaware Code (the "Abandoned or Unclaimed Property Law"), DOF recognizes the need to conduct examinations. DOF recognizes that each examination is unique. This manual is intended to create a framework so that a Holder undergoing an examination by the State of Delaware will have a basic understanding of the process and the State's expectations. The standards contained in this manual are to be implemented consistently to ensure fair and uniform treatment of Holders. Absent permission from the State Escheator, the standards are not discretionary, and third-party audit firms may not develop or utilize their own distinct applications of these standards and instructions.
The effective date of these Regulations shall be the date they are adopted, and the standards contained therein shall apply to all examinations commenced after that date. To the extent practical, the Regulations shall apply to any ongoing examinations that commenced prior to the effective date of these Regulations, though the failure of the State to have conformed to a Reporting and Examination Manual not-yet-in-existence would not invalidate an examination.
Line 2 COGS
+ Line 27 Total Deductions
- Line 19 Charitable Contributions
- Line 20 Depreciation
- Line 21 Depletion
Maximum Cost in Dollars
The Maximum Cost in Dollars divided by Line 1 Gross Receipts equals the Maximum Cost as a Percentage of Gross Receipts.
The following is an example of Notice of Examination letter issued by the State:
Dear [Holder Representative]:
Pursuant to § 1171 of Title 12 of the Delaware Code, you are hereby notified that the State of Delaware intends to examine the books and records of [Company Name] and all of its Subsidiaries & Related Entities (hereinafter "[Company Name]"), to determine compliance with the Delaware Abandoned or Unclaimed Property Law, Title 12, Chapter 11, of the Delaware Code (the "Law"). The examination will relate to all property that may be subject to escheat pursuant to the Law. Abandoned or unclaimed property is reported to the State of Delaware pursuant to the Law, as well as the priority rules and other provisions set forth in the United States Supreme Court case Texas v. New Jersey, 379 U.S. 674 and 380 U.S. 518 (1965) and reaffirmed by Delaware v. New York, 507 U.S. 490 (1993).
The review will be conducted by Assigned Audit Firm ("AUDITOR NAME") on the behalf of the State of Delaware (the "State"). ("AUDITOR NAME") will contact you within the next three weeks to arrange a mutually agreed upon date to commence the examination. It is the State's expectation that an opening conference will be held within ninety days of this notice. In advance of the opening conference, ("AUDITOR NAME") will send you an initial document request seeking routine but necessary material which you are expected to produce at or before the opening conference. If [Company Name] desires ("AUDITOR NAME") to execute a confidentiality agreement, ("AUDITOR NAME") shall be promptly notified. The execution of a standard confidentiality agreement is permitted by Delaware regulations, but not required, and it shall not delay the opening conference. If [Company Name] believes that it cannot accommodate an opening conference within this timeframe, you should contact me immediately. The scope of the examination will be for the period of 10 years prior to when property is presumed abandoned under this chapter as of the date of this letter through the most recent reportable year due at the conclusion of the examination, or as otherwise agreed to by the State Escheator and the Holder. See 12 Del.C. § 1172 (h).
The State is hereby requesting that you issue a hold notice so that all records are retained, including, but not limited to, bank statements, bank reconciliations, outstanding check lists, detail general ledgers, aged accounts receivable reports, aged accounts payable reports, and if applicable, information surrounding gift card issuances and redemptions. The State requests that all records will be retained, notwithstanding any [Company Name] record retention policies to the contrary, until the examination is completed. See 12 Del.C. § 1145. Your cooperation in making necessary records available for both past and present years for the purposes of determining [Company Name] compliance with the Law will facilitate the completion of the examination. In addition to specific document requests that will be forthcoming, please have available all of [Company Name] prior years' reports of unclaimed property and supporting documentation for all states, including Delaware. You will be advised throughout the course of the examination of what records will be required to complete the review.
If [Company Name] is presently working with or intends to retain a third-party consultant to assist [Company Name] in the conduct of this examination, please provide me with the name and contact information of the third-party consultant. As expressly stated in the Delaware regulations, the retention of a third party is no basis to delay the examination or the production of records.
In closing, you are specifically requested to have the appropriate individual in your organization contact ("AUDITOR NAME contact") of ("AUDITOR NAME") at (xxx) xxx-xxxx within three weeks of receipt of this notice in order to facilitate the exchange of prefatory information and to discuss scheduling of an opening conference.
If you have any questions about this notice, you may contact me at (302) 577-8776. Please be assured that, although ("AUDITOR NAME") is performing the examination as the State's agent, I am the final arbiter of any disputes that may arise during the course of the examination. I look forward to resolving this examination in an expeditious and cooperative manner.
Sincerely yours,
Audit Manager
CONFIDENTIALITY & NONDISCLOSURE AGREEMENT
This Confidentiality & Nondisclosure Agreement (the "Agreement") is made and entered this ___ day of _____________, 20___ by and between ___(AUDITOR NAME), a _____(STATE OF INC AND CORP FORM) company, ("_____________") and ________________________, a ________________, and its subsidiaries and related entities (collectively, the "Holder") (at times "_____________" or the "Holder" may be referred to as a "Party" and collectively as the "Parties").
Contact Name: ____________________________
Title: ____________________________
Company: ____________________________
Street Address: ____________________________
City, State, Zip ____________________________
Telephone Number: ____________________________
Email Address: ____________________________
IN WITNESS WHEREOF, the Parties have caused this Confidentiality & Non-Disclosure Agreement to be executed and delivered the day and year first above written.
[HOLDER NAME] [AUDITOR NAME]
its subsidiaries and related entities
* Base period - Period of time where complete and researchable records are available
* Sampling unit - Examples include aged checks or customer net credit balances
* Remove potential anomalies - Outliers, duplicate records, error
* Number of strata
* Stratum boundaries
* Desired confidence
* Desired precision
Checks that remain outstanding less than 90 days after issuance shall be excluded from the population, unless the State, in the sole discretion of the State Escheator, determines that a redefined outstanding period is necessary. A check that is voided within 30 days of issuance shall be excluded from the population, unless the State, in the sole discretion of the State Escheator, determines that a redefined outstanding period is necessary.
Commonly reported types of Unclaimed Property along with the National Association of Unclaimed Property Administrators ("NAUPA") Property Type Codes with Applicable Dormancy Periods are as follows:
NAUPA Code
| ACCOUNT BALANCES | Property Type | Dormancy Period(Years) |
| AC01 | Checking Accounts | 5 |
| AC02 | Savings Accounts | 5 |
| AC03 | Mature CD or Save Cert | 5 |
| AC04 | Christmas Club | 5 |
| AC05 | Money on deposit to secure fund | 5 |
| AC06 | Security Deposit | 5 |
| AC07 | Unidentified Deposit | 5 |
| AC08 | Suspense Accounts | 5 |
| UNCASHED CHECKS | ||
| CK01 | Cashier's Checks | 5 |
| CK02 | Certified Checks | 5 |
| CK03 | Registered Checks | 5 |
| CK04 | Treasurer's Checks | 5 |
| CK05 | Drafts | 5 |
| CK06 | Warrants | 5 |
| CK07 | Money Orders | 5 |
| CK08 | Traveler's Checks | 15 |
| CK09 | Foreign Exchange Checks | 5 |
| CK10 | Expense Checks | 5 |
| CK11 | Pension Checks | 5 |
| CK12 | Credit Checks or Memos | 5 |
| CK13 | Vender Checks | 5 |
| CK14 | Checks Written Off To Income | 5 |
| CK15 | Other Outstanding Official Checks | 5 |
| CK16 | CD Interest Checks | 5 |
| EDUCATIONAL SAVINGS ACCOUNTS (ESEA) | ||
| CS01 | ESA - Cash | 5 |
| CS02 | ESA - Mutual Funds | 5 |
| CS03 | ESA - Securities | 5 |
| COURT DEPOSITS | ||
| CT01 | Escrow Funds | 5 |
| CT02 | Condemnation Awards | 5 |
| CT03 | Missing Heir's Funds | 5 |
| CT04 | Suspense Accounts | 5 |
| HEALTH SAVINGS ACCOUNT (HSA) | ||
| HS01 | Health Savings Account | 5 |
| HS02 | Health Savings Account Investment | 5 |
| INSURANCE | ||
| IN01 | Individual Policy Benefits or Claim Payments | 5 |
| IN02 | Group Policy Benefits or Claim Payments | 5 |
| IN03 | Proceeds Due Beneficiaries | 5 |
| IN04 | Proceeds from Matured Policies, Endowments or Annuities | 5 |
| IN05 | Premium Refunds | 5 |
| IN06 | Unidentified Remittances | 5 |
| IN07 | Other Amounts Due Under Policy Terms | 5 |
| IN08 | Agent Credit Balances | 5 |
| MINERAL PROCEEDS | ||
| MI01 | Net Revenue Interest | 5 |
| MI02 | Royalties | 5 |
| MI03 | Overriding Royalties | 5 |
| MI04 | Production Payments | 5 |
| MI05 | Working Interest | 5 |
| MI06 | Bonuses | 5 |
| MI07 | Delay Rentals | 5 |
| MI08 | Shut-in Royalties | 5 |
| MI09 | Minimum Royalties | 5 |
| MISCELLANEOUS INTANGIBLE PROPERTY | ||
| MS01 | Wages, Payroll, Salary (payroll cards) | 5 |
| MS02 | Commissions | 5 |
| MS03 | Workers Compensation Benefits | 5 |
| MS04 | Payments For Goods & Services | 5 |
| MS05 | Customer Overpayments | 5 |
| MS06 | Unidentified Remittances | 5 |
| MS07 | Unrefunded Overcharges | 5 |
| MS08 | Accounts Payable | 5 |
| MS09 | Credit Balance - Accounts Receivable | 5 |
| MS10 | Discounts Due | 5 |
| MS11 | Refunds Due | 5 |
| MS12 | Unredeemed Gift Certificates | 5 |
| MS13 | Unclaimed Loan Collateral | 5 |
| MS14 | Pension & Profit Sharing | 5 |
| MS15 | Dissolution or Liquidation | 5 |
| MS16 | Miscellaneous Outstanding Checks | 5 |
| MS17 | Miscellaneous Intangible Property | 5 |
| MS18 | Suspense Liabilities | 5 |
| SECURITIES | ||
| SC01 | Dividends | 3 |
| SC02 | Interest (Bond Coupons) | 3 |
| SC03 | Principal Payments | 3 |
| SC04 | Equity Payments | 3 |
| SC05 | Profits | 3 |
| SC06 | Funds Paid to Purchase Shares | 3 |
| SC07 | Funds for Stocks & Bonds | 3 |
| SC08 | Shares of Stock (Returned by Post Office) | 3 |
| SC09 | Cash for Fraction Shares | 3 |
| SC10 | Unexchanged Stock of Successor Corp | 3 |
| SC11 | Other Certificates of Ownership | 3 |
| SC12 | Underlying Shares or other Outstanding Certificates | 3 |
| SC13 | Funds for Liquidation / Redemption of Unsurrendered Stock or Bonds | 3 |
| SC14 | Debentures | 3 |
| SC15 | U S Govt Securities | 3 |
| SC16 | Mutual Fund Shares | 3 |
| SC17 | Warrant (Rights) | 3 |
| SC18 | Mature Bond Principal | 3 |
| SC19 | Dividend Reinvestment Plans | 3 |
| SC20 | Credit Balances | 3 |
| TANGIBLE PROPERTY | ||
| SD01 | SD Box Contents | 5 |
| SD02 | Other Safekeeping | 5 |
| SD03 | Other Tangible Property | 5 |
| FIDUCIARIES | ||
| TR01 | Paying Agent Account | 3 |
| TR02 | Undelivered or Uncashed Dividends | 3 |
| TR03 | Funds held in Fiduciary Capacity | 3 |
| TR04 | Escrow Accounts | 3 |
| TR05 | Trust Vouchers | 3 |
| IR01 | Traditional IRA - Cash | 3 |
| IR02 | Traditional IRA - Mutual Funds | 3 |
| IR03 | Traditional IRA - Securities | 3 |
| IR05 | Roth IRA - Cash | 3 |
| IR06 | Roth IRA - Mutual Funds | 3 |
| IR07 | Roth IRA - Securities | 3 |
| UTILITIES | ||
| UT01 | Utility Deposits | 5 |
| UT02 | Membership Fees | 5 |
| UT03 | Refunds or Rebates | 5 |
| UT04 | Capital Credit Distributions | 5 |
<Holder Letterhead>
<Date>
<Owner Name/Address>
Dear <Owner>,
Notice: The State of Delaware requires us to notify you that your property will be transferred to the custody of the State Escheator if you do not contact us before <insert date 30 days after the date of this notice.>
The State requires us to make a diligent attempt to <renew contact with> <reissue the property to> the owner. If contact is not renewed we are required to transfer your property to the custody of the State of Delaware. The State may sell property that is not U.S. legal tender. If property is turned over to the State, you may file a claim with the State for the return of the property or the proceeds of the sale.
Property Specifics:
Type of Property: ____________________ Account/Check No.: _______________
Amount: ___________________________ Date of last Contact: _______________
Any Additional Information: ______________________________________________________
To <reestablish contact> <receive your property>, you may sign below and return this letter in the enclosed envelope to later than <insert # of days> from the date of this letter. Once we have the signed letter we will <restore your account to and active status> <or reissue the property>. If you have any updated address information, please provide it in the space below.
Signature: _____________________________________________________________________
Title: ___________________________________ Date: ____________________________
Address (if new): _______________________________________________________________
Social Security # (last four) or Federal Tax ID Number (if applicable): ______________________
If you require additional assistance, please call us at <insert telephone contact and/or email>.
<Holder Letterhead>
<Date>
<Owner Name/Address>
Dear <Owner>,
Our records indicate that the check detailed below, issued to <Owner>, has not cleared the bank. In order for us to determine whether this obligation is still due and owing or whether the obligation may have been satisfied, we are requesting that you please review your records and respond back to us as to your findings. After reviewing your records, complete the form below and return it to us within 15 days. If your address has changed, please provide the new address as well as a telephone number.
If a response is not received, state unclaimed property laws may require us to remit the funds to the state of your last known address (i.e. the state listed on the address block of this letter). That state will hold the funds in perpetuity or until you claim the funds from the state.
Check Number Date Issued Invoice Invoice Date Amount
123456 04/04/2001 Inv 9999 03/15/2001 $250.00
Check the appropriate box below and return this confirmation to us:
receiving a subsequent payment on, or
through a settlement agreement on, or
through some other method on.
If other method, please explain and include all applicable dates:
Please sign here:
Print name and title here:
Business telephone number:
Address (if other than above):
Sincerely,
<Signature>
<Printed name of holder contact person> <Holder Phone Number>
<Holder Name>
<Holder Address>
If at any time before or during the course of an examination the Holder files for bankruptcy, the Holder shall give notice of the filing to the Auditor. The Auditor shall, within seven (7) calendar days of the Holder's notice or the discovery of the event, notify the State of the bankruptcy filing. If the State Escheator so elects, the Auditor shall assist the State Escheator to ensure that a proper proof of claim is filed timely in the bankruptcy action.
As provided in 12 Del.C. § 1172 (c), certain Holders may have the option of expediting the completion of a pending examination. The State shall publish a form "Intent to Expedite Completion of Examination" which shall outline the expectations of the Holder in that circumstance.
12 Del. Admin. Code § 104-2.0