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Politics & Government

Court decision could spell further budget woes after rebuke of escheat program

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Delaware Public Media
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The future of Delaware’s abandoned property program – which made up nearly an eighth of this year’s operating budget – could be in jeopardy after a federal court decision handed down Tuesday.

 

U.S. District Court Judge Gregory Sleet ruled that Delaware violated the due process rights of Temple-Inland, a Texas-based paper company, when it estimated how much money the business owed the state in escheat money from 22 years prior.

 

Escheat, or abandoned property, includes dormant stock holdings or unused gift cards a company might have on its books, which is collected by the state where the company is incorporated.

 

It’s big business for Delaware, which took in more than $510 million from the program in fiscal year 2015.

 

In his ruling, Sleet says the state can’t audit a company past six years without any proof it skirted collections, nor can it estimate how much Temple-Inland owed because the company didn’t retain certain records after a reasonable period of time.

 

In this case, he says Delaware waited 22 years to conduct an audit, looking back at Temple-Inland’s accounting from 1986-2002 “for no obvious purpose other than to raise revenue.”

 

Finance Secretary Tom Cook says his office is reviewing the decision, but adds it won’t have any effect on next year’s budget.

 

Delaware is also being sued by at least 21 other states in the U.S. Supreme Court over its abandoned property policies.

 

The state could appeal the ruling once Sleet outlines what Delaware is required to return to Temple-Inland.

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