The case is: Temple-Inland, Inc. v. Cook, (D. Del. June 28, 2016)
The federal district court in Delaware concluded that actions by Delaware—while not singularly leading to the due process violation—in combination led to the violation. Specifically, the court found that Delaware waited 22 years to audit the holder; exploited loopholes in the statute of limitations; failed to notify holders of the need to maintain unclaimed property records; failed to articulate a purpose for the unclaimed property law other than raising revenue; employed a flawed estimation method that negatively affected the holder; and subjected the holder to multiple liability. In the court’s view, Delaware “…engaged in a game of ‘gotcha’ that shocks the conscience.”
The court’s decision did not include any remedy for the state’s violation that would have an immediate impact on Delaware’s estimation techniques. However, the case remains one to watch because the ultimate decision(s) made by the court and/or by Delaware may have a implications for the state’s reach in terms of audit assessments of other companies in the future.
Read a July 2016 report [PDF 140 KB] prepared by KPMG’s State and Local Tax practice: Combination of Several Aspects of Delaware’s Unclaimed Property Audit Process, Including the Estimation Methodology, Violates a Holder’s Substantive Due Process
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