Delaware Secretary of State letters warn of unclaimed property audits
TAX ALERT |
This alert was originally published on Feb. 28, 2020 and was updated on April 6, 2020.
On Feb. 20, 2020, the Delaware Secretary of State’s (SOS) office mailed over 100 letters to companies they identified as “likely being out of compliance” with Delaware’s unclaimed property law. The letter serves as an invitation to enroll in the SOS Unclaimed Property Voluntary Disclosure Program (VDA). While participation in the SOS VDA program is strongly encouraged, holders of unclaimed property who do not enroll in the program within 60 days of the mailing will be issued an unclaimed property audit notice by the Delaware Department of Finance.
On March 27, 2020, the SOS office hosted a public webinar to answer commonly asked questions about unclaimed property. The agenda included an overview of unclaimed property, workflow of the VDA, benefits of participating in the program and key questions about the VDA.
On April 2, 2020 the SOS issued an alert about its VDA program invitations. Due to the impact of COVID-19 worldwide and the current state of emergency declared by Delaware Governor John Carney, the SOS has extended the original 60-day response deadline. The deadline for letter recipients to join the VDA program has been extended to May 22, 2020. All communications must be sent via email to firstname.lastname@example.org. Delaware indicated that the state cannot rescind the letters that have been sent. Any letter recipient that does not enroll in the VDA program will be referred to the State Escheator for examination.
Delaware remains the largest enforcer of unclaimed property laws and regulations. As one of the state’s largest sources of revenue, unclaimed property audits are quite common and very lucrative for the state. The notice gives holders little room for options – either participate in the state’s VDA Program or be audited. For holders that received the letter, it should not be ignored. It is very important that companies understand the risks and the benefits of a VDA versus an audit within the 60-day response window.
This is not the first time that the Delaware SOS has issued such letters. These mailings serve as an important reminder for all companies, especially those incorporated in Delaware, to evaluate their compliance with unclaimed property laws and regulations and proactively mitigate their unclaimed property exposure.
Businesses that receive the Delaware notice or have questions about unclaimed property and various state compliance obligations should speak to an unclaimed property specialist. For more information and insights on unclaimed property, please see RSM’s Unclaimed Property Portal.