The Duff & Phelps Unclaimed Property and Tax Risk Advisory team reported in February 2019 that the Delaware Secretary of State sent unclaimed property voluntary disclosure agreement (VDA) invitations to Delaware incorporated companies throughout the United States on February 15, 2019.
By law, recipient companies must have responded to these notices within 60 days, or they would 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.
It has been our experience that notifications from Delaware are addressed to C-Suite executives and often 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 U.S. companies incorporated in Delaware to make immediate inquiries to the CFO and mail room staff to determine if such a notification has been received.
Delaware Unclaimed Property VDA invitations were mailed to over 100 U.S. corporations in October 2018. We further reported that Delaware intended to send up to 800 to 1,000 invitations in 2019, beginning in the first quarter.
Audit notices were sent by the Delaware Department of Finance on January 3, 2019. These notices were sent to corporations that received but did not respond to the October 2018 Delaware unclaimed property VDA invitations.
Any corporation that receives a notice from either the Delaware Department of State or the Delaware Department of Finance is encouraged to contact the Duff & Phelps Unclaimed Property and Tax Risk Advisory team for a free consultation. Both events are highly sensitive and may have a material P&L impact.
The deadline to respond to these letters was April 15, 2019. At this time, notified companies that failed to respond have extinguished all rights to enter the program. Based on the recent history cited above, we would expect all remaining companies to receive an audit notice in early May 2019.
Our team is highly experienced at guiding our clients through both the Delaware Unclaimed Property Voluntary Disclosure and Audit Programs.