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Delaware

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Baker McKenzie attended the U.S. Supreme Court’s oral arguments yesterday in South Dakota v. Wayfair, Docket No. 17-494.  At issue in the case is whether the Court should abrogate the physical presence nexus standard that it first articulated in National Bellas Hess v. Dep’t of Revenue, 386 U.S. 753 (1967), and later affirmed in Quill Corp. v. North Dakota, 504 U.S. 298 (1992).  The Court’s decision could have a profound impact on sales and use tax nexus in the United States by altering the limitations currently imposed on a state’s ability to require out-of-state retailers to collect such tax.

Since the beginning of 2017, Delaware’s abandoned and unclaimed property law has undergone continuous statutory and regulatory changes, e.g., the enactment of SB 13 (Delaware’s new unclaimed property statute) and SB 79 (an amendment to SB 13), as well as the promulgation of final regulations from the Secretary of State (the “SOS”) regarding estimation practices in its voluntary disclosure agreement (“VDA”) program. To read our prior coverage relating to these unclaimed property developments in Delaware, see Delaware Issues New Abandoned and Unclaimed Property Regulations, Technical Correction to Delaware’s Unclaimed Property Overhaul Legislation Includes Extension of Time to Convert an Audit to a Voluntary Disclosure Agreement, and UPDATE: The Delaware Secretary of State Releases the Final Version of its Estimation Regulations With No Substantive Changes.

The Delaware Secretary of State recently finalized its estimation regulations without any substantive change to Delaware’s proposed estimation practices. The final version of these regulations, which became effective July 11, 2017, acknowledges that the state received numerous public comments criticizing the proposed regulations, including the state’s practice of extrapolating unclaimed property liability to Delaware based on all unclaimed property reported in the base period, including property that was escheatable to other states.  However, as anticipated, the Secretary of State “decided to not make [any] suggested changes”.  The Secretary of State’s finalized estimation regulations can be viewed here:  Abandoned or Unclaimed Property Voluntary Disclosure Agreement Program.

On June 29, 2017, the Delaware Governor signed a technical correction bill (“SB 79”) to the State’s unclaimed property overhaul legislation (“SB 13”), after SB 79 unanimously passed the Delaware House of Representatives and the Delaware Senate. To briefly recap, Delaware enacted SB 13 on February 2, 2017 in an effort to reform its widely-criticized unclaimed property laws. Some of the more beneficial changes in SB 13 included a reduced audit look-back period of 10 report years, and the ability for certain holders currently under audit to elect to convert the existing audit into a voluntary disclosure agreement or to elect an expedited audit option — both of which would result in the waiver of penalties and interest.