Delaware Sends Additional Unclaimed Property Audit Notes

Delaware Sends Additional Voluntary DisclosureAgreement (VDA) Program Invites & Audit Notice Letters

Delaware reached out to an additional group of companies through a series of correspondence issued on or around February 15, 2019. A previous wave of letters was sent last October. These letters seek to invite holders to participate in the state’s Unclaimed Property VDA Program (SOS VDA Program) based on a record of non-compliance. If holders do not file a VDA with the state, they risk being audited by the Department of Finance. Companies that do not act within 60 days are expected to receive audit letters thereafter. Companies should also be aware that they may be audited by other states that piggyback Delaware onto the audit.
 
Targeted companies now include middle market companies that maintain annual revenues of $100M and above

What to Do

Given the above, companies that receive this VDA notice should:

• Determine if your organization has received prior Delaware correspondence
• Understand what historical compliance, if any, there has been with the state of Delaware and all states for that matter
• Determine record retention policy for banking records, A/R records, general ledgers, etc.
• Determine if policies and procedures exist around unclaimed property (current and historical)
• Evaluate the Pros and Cons of filing a VDA
• Take immediate action where appropriate

If your organization has received an “audit notice,” it is important to reach out to us as soon as possible for best practices on mitigating exposures. Even if an organization has not received a notice, the above steps are best practices for addressing escheatment matters. Moreover, some companies, especially de-centralized organizations, may have received a letter but it was never routed to the appropriate department, which without following the steps above, may lead to an audit. For those that have received audit letters, you should contact your client service professional as soon as possible for best practices and steps you can take to mitigate additional state exposure, if timely addressed.

Companies at Highest Risk

• Operating Entities Incorporated in the state of Delaware
• Companies located in other states with significant operations in Delaware who have not addressed or who have under-reported their unclaimed property with the state.

For additional information or questions, please contact our unclaimed property experts.