Rep. Bill Bush

This Act clarifies various aspects of the State’s unclaimed property laws, specifically: (1) Section 1 specifically exempts property owed to non-Delaware government entities and payment or credit arising under the 2022 Delaware Relief Rebate Program, Chapter 290 of Volume 83 of the Laws of Delaware. (2) Section 2 clarifies and confirms current practice that a holder under examination or in the voluntary disclosure program shall retain records from ten years plus the dormancy period to present day until completion of the examination or voluntary disclosure agreement. (3) Section 3 clarifies and confirms current practice regarding the timing of the liquidation of securities and the mailing of written notice to owners to eliminate litigation risk for the State. Under current practice, the State Escheator liquidates securities and mails written notice to owners relatively contemporaneously in weekly batches. Practically, however, at times liquidation may precede the mailing of notice by several days. However, because a claimant’s recovery is determined by the date the claim is filed relative to the date of notice, the claimant’s recovery is not impacted by this change. Because owner addresses reported by holders are often incomplete or have obvious errors, this Section also allows, but does not require, the State Escheator to take reasonable steps to update, correct, or validate owner addresses to make delivery of the written notice more likely, and limits liability for the State Escheator for any such actions or lack of actions. (4) Section 4 clarifies and confirms current practice regarding the timing of the liquidation of securities and the mailing of written notice to owners. (5) Section 5 clarifies how to determine the value of claims for securities property by clarifying a date certain for the statutory 558-day period to begin when the date of notice cannot otherwise be determined or when notice is not required or sent. (6) Section 6 clarifies and confirms current practice that the time for a claimant appeal to the Tax Appeal Board, where the State Escheator has paid the claim, begins to run on the initial issuance of payment, and is not reset or tolled by the re-issuance of a check. This Section also expressly permits the State Escheator to pay claims on a pro rata basis for property received before August 1, 2022, or resulting from a bankruptcy proceeding, when the reported amount of property exceeds the remitted amount, and expressly prohibits holders from relying on this Section to engage in this practice prospectively. (7) Section 7 clarifies and confirms current practice that the time for a claimant appeal to the Tax Appeal Board, where the State Escheator has paid the claim, begins to run on the initial issuance of payment, and is not reset or tolled by the re-issuance of a check. (8) Section 8 makes changes to allow the State Escheator to issue a notice of examination to any holder who has failed to respond to requests made pursuant to a verified report or compliance review or to complete a verified report or compliance review. This Section also makes changes to clarify and confirm current practice that a “reason to believe” standard does not apply to inquiries under § 1170 of Title 12. (9) Section 9 allows the State Escheator to issue a notice of examination to any holder who has failed to respond to requests made pursuant to a verified report or compliance review or to complete a verified report or compliance review under § 1170 of Title 12. (10) Section 10 responds to feedback received from the professional finder industry and clarifies and confirms current practice that the State will not disclose the exact amount of claimable property until a claimant’s rightful ownership of the property has been established and permits finder agreements to reflect this fraud prevention measure. (11) Section 11 states that Sections 1, 8, 9, and 10 of this Act take effect on enactment. (12) Section 12 states that it is the intent of the General Assembly that Sections 2, 3, 4, 5, 6, and 7 of this Act apply retroactively to any claims, examinations, voluntary disclosure agreements, or litigation pending as of the effective date of this Act. This Act also makes technical corrections to conform existing law to the standards of the Delaware Legislative Drafting Manual.

This Act will allow Delaware residents two new deductions from personal income tax. The first is a deduction from taxable income of up to $1,000 for contributions to an account in a Delaware-sponsored qualified tuition program, as that term is defined under 26 U.S.C. § 529 (a “529” College Savings Plan). The second is a deduction from taxable income of up to $5,000 for contributions to an account in a Delaware-sponsored ABLE program, as that term is defined under 26 U.S.C. § 529A (a “529A” Savings Account - a special account for meeting the needs of certain individuals with disabilities). The 529 and 529A deduction is only applicable to the Delaware-sponsored plan. A transfer or rollover from another account authorized under 26 U.S.C. §§ 529 and 529A or for a change in beneficiary of any such account does not qualify for the deduction. This Act takes effect on the date the Secretary of Finance provides written notice to the Registrar of Regulations that the Division of Revenue has implemented the personal income tax release of the Internal Revenue Administration System.

Section 1 of the Act amends section 3534 of Title 12 to include, within the class of persons who may receive notice under the statute, designated representatives under section 3339 of Title 12 (representatives under section 3547 of Title 12 already being specifically included within section 3534). Section 2 of the Act expands, within existing section 3536(e) of Title 12, on the ability of a beneficiary of a charitable remainder trust to transfer the remainder interest to charity by assignment in addition to a release, and expands on the ability of a beneficiary of a QTIP trust to transfer an interest in the trust by assignment or other means to the next succeeding beneficial interest. Section 3 of the Act creates a new section 3536A in Title 12, similar in concept to the laws of other states, to permit a beneficiary of a trust to release (in full or in part) the interest, even if the beneficiary previously accepted the benefits of such interest (a situation not addressed by Chapter 6 of Title 12 of the Delaware Code (regarding disclaimers, which includes releases of nonfiduciary powers)), but subject to many conditions (and would overrule Smith v. Bank of Delaware, 219 A.2d 576 (Del. 1966) and Bank of Delaware v. Smith, 211 A.2d 591 (Del. Ch. 1965), but would be consistent with Shepard v. Burr, 87 A. 1020 (Del. Ch. 1913)). It should be further noted that: (i) while there is existing statutory authority that may be used to achieve the same outcome afforded herein, this statute provides a more efficient framework for releases of interests in trusts; (ii) a typical scenario that this statute is designed to resolve in a streamlined way involves a longtime income beneficiary of a trust who no longer wants or needs the income, and would like her interest to terminate so that her children may receive the remainder interest, which would not otherwise occur until her death; (iii) with death being a random event that could occur at any time, permitting a beneficiary to terminate her interest before her death does not run afoul of a trustor’s intent; and (iv) the language of subsection (f) of this new section 3536A was drafted to parallel that of section 502(b) of Title 25 of the Delaware Code, thereby reflecting concepts discussed in, for example, section 116 of the Bogert treatise. Section 4 of the Act amends section 3546 of Title 12 to conform its provisions regarding receipt of notice to those of section 3585 as changed under this Act. Section 5 of the Act: (i) clarifies that the bar of section 3585 of Title 12 applies against judicial proceedings; (ii) expands the class of those against whom that bar would apply to persons other than beneficiaries; (iii) defines when a person is deemed to have received a 120-day notice under section 3585 (in conformity with the aforementioned amendment to Section 3546 of Title 12 under this Act); (iv) provides that a person may waive the 120-day period to accelerate what would otherwise occur upon expiration of that period; and (v) clarifies that the limitation period of section 3585 does not expand the limitation period for claims against the estate or revocable trust of a deceased individual fiduciary. Section 6 of the Act provides an effective date.

This Act directs that principal residence for purpose of this section may be proven by providing a copy of a current utility bill, bank statement, government check, paycheck, or other government document that shows the name and address of the applicant and the signing of an affidavit on a form created by the Secretary that provides such person is not receiving a similar benefit in any other state.

In a case of first impression, the Superior Court ruled, contrary to "common knowledge" of Delaware Criminal laws, that criminal impersonation requires proof that a real person (a human being who has been born and is alive) has been impersonated; in other words, one cannot impersonate a fictitious person. Evans v. State, Del. Super., June 5, 2019. This Act provides that criminal impersonation occurs when one impersonates a real or fictitious person.

This legislation imposes a new, elective entity-level tax on the income of partnerships and S-corporations, each of which are commonly referred to as “pass-through entities” for tax purposes. Prior to this legislation, the income of a pass-through entity was subject to the personal income tax of the owner in proportion to the ownership interest in the entity. In 2017, federal tax law reduced from an unlimited amount to $10,000 the amount an individual can claim as an itemized deduction for state and local taxes paid on an individual taxpayer’s annual tax return. State and local income taxes are commonly referenced to for tax purposes as “SALT” taxes. This 2017 federal limitation on the itemized deduction for SALT taxes included state taxes paid on the income of a pass-through entity and, as a result, materially limited the federal tax benefit of state income taxes paid personally by an owner on the taxable income of a pass-through entity. Consistent with guidance from the United States Department of the Treasury and the Internal Revenue Service as published in Internal Revenue Service Notice 2020-75, 2020-49 I.R.B. 1453, this legislation will enable the pass-through entity, rather than the owners of a pass-through entity, to take a federal tax deduction for SALT taxes elected to be paid by the pass-through entity. Accordingly, this legislation, conceptually similar to legislation enacted in more than 25 other states, will mitigate the new federal limitation on the personal itemized deduction for SALT taxes that otherwise would have been paid personally by an owner on the taxable income of a pass-through entity. Generally, the approach undertaken by this legislation follows a two-step process. First, an eligible pass-through entity that elects to pay the new entity-level tax, computes and pays Delaware income tax on income taxable in the State, which income, in the absence of the election, would have been subject to Delaware income tax at the individual level for each member of the entity. All income tax elected to be paid by the pass-through entity is taxed at 8.7%. Second, the electing pass-through entity allocates modified income to its members in proportion to their ownership interest in the entity, for which allocation each member is entitled to a reduction from federal adjusted gross income for individual State income tax purposes.

This Act decreases by 1% the rate of realty transfer tax to be received by the State, thereby returning to the rate that was applicable prior to August 1, 2017. This will be effective for documents recorded after July 1, 2022.

This Act provides state employees 30 days of leave with pay to attend training camp or special duty on orders as members of the military reserve of the United States or the National Guard. This is an increase from 15 days leave with pay currently provided.

This bill seeks to create the Expanded Protection for Our Communities and Homes (EPOCH) Grant Program through a one-time appropriation of $20 million. The grant money would be distributed to every Delaware police agency that chooses to participate. The distribution would consist of a minimum standard allocation made to each agency and an allocation based on the number of uniformed officers authorized for each agency. EPOCH grants could be used by the recipient agencies to recruit new officers; promote or encourage careers in law enforcement; initially pay the salaries of newly hired officers; pay for overtime to facilitate additional work to address issues of local concern (including traffic enforcement); and implement programs designed to improve public safety in the area of the agency’s jurisdiction. The grant allocations would be available for the agencies to use for up to three years, after which any unused and unencumbered funding would return to the General Fund.

This bill expedites the issuance of a temporary entrance permit for commercial and economic development projects.