Duff & Phelps'
Unclaimed Property and Tax Risk Advisory team learned that the
Delaware Secretary of State sent approximately 100 unclaimed
property voluntary disclosure agreement (VDA) notices to Delaware
incorporated companies throughout the United States within the last
30 days. By law, recipient companies must respond to these notices
within 60 days or they will be referred to the Delaware Department
of Finance to commence an unclaimed property audit. Traditionally,
Delaware uses third-party, contingently paid, multistate
auditors to conduct unclaimed property audits.
Our experience is that notifications from Delaware are often
addressed to c-suite executives and do not reach appropriate
parties in time to prevent an audit. We believe it is critically
important for all senior accounting or tax professionals at
companies incorporated in Delaware throughout the United States to
make immediate inquiries to both the CFO and mail room staff to
determine if such a notification has been received. At the time of
publication of this article, there are approximately 30 days left
to respond to these notifications.
As we noted previously,
Delaware is the most active state in the nation regarding
enforcing unclaimed property collection law. The U.S. Supreme Court
precedent allows for enhanced unclaimed property collections for
states of incorporation. Many companies are incorporated in
Delaware, and it has taken an aggressive posture over the
years.
Since the inception of the state's current VDA program in 2012,
over 1,000 Delaware incorporated companies have enrolled in the
program. In 2017, due to a legal challenge, Delaware re-wrote its law. As part of that
change, the state adopted a rule that corporations could not be
audited without receiving an invitation to join the VDA program.
Companies that do not respond within 60 days must be referred for
audit.
Recently, the Delaware Secretary of State, the Honorable Jeffrey
W. Bullock, contributed an article to Duff & Phelps'
publication titled, "
What is the Future State of Unclaimed Property?". In his
article, Secretary Bullock provides valuable insight into
Delaware's VDA and audit programs.
After retooling their unclaimed property program in 2018, we
believe Delaware's recent action signals a return to an
enforcement-oriented posture for 2019 and beyond. At Duff &
Phelps, we are deeply experienced with the laws and regulations
that drive unclaimed property compliance in Delaware. We encourage
all who receive a Delaware unclaimed property VDA letter to contact
our
Unclaimed Property and Tax Risk Advisory team for a
complimentary consultation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.