Have You Received an Unclaimed Property Notice?
Updated December 2023
Delaware's Verified Report Process, VDA Program, and Audit Notices
As the landscape of unclaimed property continues to evolve, Delaware remains among the top states for escheatment reporting and compliance. Over the last several months, the state has reached out to companies with a series of unclaimed property notices, seeking to confirm that holders are complying with unclaimed property requirements.
Delaware’s Verified Report Request and Compliance Review Process
The verified report notice is a request for the company's certification that its most recent annual filing is complete or that there is genuinely no property to report. Although this is not a formal examination, it is a way for the state to ask questions, as well as a push for holders to review their unclaimed property processes and correct errors or report property that has been inadvertently excluded. It is also an opportunity for the state to confirm a company has developed and implemented robust unclaimed property policies and procedures.
Response to the inquiry is required within 30 days of the notice date. The requested information should be provided as soon as possible, but no later than 180 days from the notice date. Failure to respond, providing an insufficient response, or a deficient finding will be escalated and could result in further enforcement action, including a notice of examination or voluntary disclosure program invitation. The state does not allow extensions.
Delaware’s VDA Invitation
The voluntary disclosure agreement (VDA) notice, which is an invitation to participate in the state’s VDA program, is sent to companies that Delaware has identified as possibly being out of compliance with Delaware law. If holders do not participate, they risk being audited by the Department of Finance. Companies that do not act within 90 days are expected to receive audit letters thereafter.
Companies should also be aware they may be audited by other states that piggyback Delaware onto the audit. In those cases, Delaware law does not require a 90-day notice.
Delaware’s Audit Notice
The audit notice confirms the state’s intention to examine the company’s books and records to determine if the company is complying with Delaware’s unclaimed property laws. The notice typically specifies who will be conducting the audit, the scope of examination, the lookback period, and next steps. A response to the state’s questionnaire must be submitted within 30 days of receipt.
Highest-risk, targeted companies include:
- Middle-market companies that maintain annual revenues of at least $100 million;
- Companies incorporated in the state of Delaware; and
- Companies in other states with significant operations in Delaware that have not addressed, or have underreported, their unclaimed property with Delaware.
What to Do
Given the above, a company that receives a notice should:
- Determine if it has received prior Delaware correspondence;
- Determine compliance history with the state of Delaware;
- Determine record retention policy for banking records, accounts receivable records, general ledgers, etc.;
- Determine if there are policies and procedures for unclaimed property (current and historical) and confirm they are being reviewed and updated annually;
- Evaluate the VDA decision tree; and
- Take any necessary action immediately.
If your organization has received an unclaimed property notice from Delaware or any other state, it is important to act quickly. If your organization has not received an unclaimed property notice, you should proactively address escheatment matters and implement a strong unclaimed property compliance process, including filing reports annually.
BDO has extensive experience and the comprehensive technical and technology resources necessary to mitigate unclaimed property exposure, including audit/self-audit defense, feasibility study and risk assessments, VDAs, policies and procedures, and compliance report preparation and filing. BDO can provide best practices to mitigate exposure and block other states from joining an audit.
Assess your company’s risk level by taking our Unclaimed Property Risk Assessment.
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