The Duff & Phelps Unclaimed Property and Tax Risk Advisory Team received notification on September 24, 2019 from Kristopher Knight, Delaware’s Chief Deputy Secretary of State, that the latest round of unclaimed property voluntary disclosure agreement (VDA) invitations were sent within the last few days to Delaware-incorporated companies throughout the U.S. Typically, Delaware mails approximately 200 invitations per quarter.
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.
It has been Duff & Phelps' 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’s most recent round of VDA invitations were mailed on or about May 24, 2019. Subsequently the Department of Revenue mailed audit notices on August 21, 2019 to companies who failed to reply to the May 2019 VDA mailing.
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 profit and loss (P&L) impact.
The Duff & Phelps Unclaimed Property and Tax Risk Advisory team has learned that the response rate to Delaware’s unclaimed property VDA invitations has increased from less than 10% from the October 2018 mailing to just under 50% for the February 2019 mailing. It is presumed that the increase is attributable to enhanced awareness among U.S. corporations to this issue and that the response rate will continue to rise throughout 2019 and beyond. Simply stated, U.S. corporations will find the Delaware Unclaimed Property Voluntary Disclosure Program far more advantageous than the Delaware Unclaimed Property Audit Program.
Our team is highly experienced at guiding clients through both the Delaware Unclaimed Property Voluntary Disclosure and Audit Program.