Delaware sends another wave of unclaimed property letters
TAX ALERT |
On Aug. 21, 2020, the Delaware Secretary of State’s Office (SOS) mailed another 200 letters to various businesses in which the state identified as ‘likely being out of compliance’ with Delaware’s unclaimed property law. The letter serves as an invitation to enroll in the SOS Voluntary Disclosure Agreement (VDA) program. 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.
Delaware previously mailed 100+ letters to various businesses on Feb. 20, 2020 with the intent for companies to enroll in the SOS VDA program by April 2020. Given the COVID-19 impact, Delaware granted multiple extensions for responding to the Feb. 20, 2020 letter, which ultimately ended on July 18, 2020. Just one month later, the SOS has mailed letters to another 200 businesses. It is unclear when the state will push out the next round of letters. A Delaware VDA typically spans two years on average, whereas an audit examination can typically cover five or more years.
Delaware remains the largest enforcer of unclaimed property laws and regulations. It is very important that businesses understand the risks and the benefits of a VDA versus an audit within the response window.
These mailings serve as an important reminder for all businesses, especially those incorporated in Delaware, to evaluate their compliance with unclaimed property laws and regulations and proactively mitigate their unclaimed property exposure. It is anticipated that more invitations to the VDA program will be mailed in the future.
Businesses that receive the Delaware letter 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.