Monday, July 27, 2015

Delaware Audit / VDA Bill Signed by the Governor

Earlier this month, we mentioned the legislative approval of Delaware Senate Bill 141. The bill has now been signed by the Governor and enacted into law.  As noted earlier, the legislation extends voluntary disclosure program run by the Secretary of State, and implements some new audit practices, including:
  • limiting the lookback period for audits already underway to January 1, 1986;
  • limiting the lookback period for new audits to January 1, 1991; and
  • beginning in 2017, limiting the lookback period for new audits to 22 years.

Wednesday, July 1, 2015

Senate Bill 141 Passes House, Awaiting Executive Action

Early this morning Delaware Senate Bill 141 passed the House, and now is ready to be signed by the Governor.  If passed, the bill would make some significant changes to the First State's audit practices and would further extend the voluntary disclosure program run by the Secretary of State (which is closed at the moment, but would become permanent if the law passes).

As to the state's audit practices, the new legislation:
  • limits the lookback period for audits already underway to January 1, 1986;
  • limits the lookback period for new audits to January 1, 1991; and
  • effective January 1, 2017, limits the lookback period for new audits to 22 years
The bill also reopens the Secretary of State's VDA program, and provides that any holder entering into the VDA program by December 31, 2016, and agrees to pay within 2 years of entry will have its records reviewed back to the "transaction" year 1996.  Holders enrolling thereafter would have similarly have a 19 year lookback period.

The law provides that no new audits will be commenced until such time as the Secretary of State notifies the holder of the ability to enter into the VDA program, and the holder fails to do so within 60 days.


On the negative side for holders, effective March 1, 2016 the bill also reinstates interest on overdue amounts at 0.5% per month unless (up to 25% of the amount to be paid) unless the failure to pay "is due to reasonable cause and not willful neglect."