Delaware Unclaimed Property Notices: Voluntary Disclosure Program

Delaware sent another round of unclaimed property notices on or around July 14, 2023, inviting companies to enter their voluntary disclosure program (VCP).

What you should know about these notices

• There is a 90-day response deadline.
• If the state does not receive a response in 90 days, an unclaimed property audit letter will be issued.
• State expectations are that the notice not only covers the named company but also potentially any subsidiaries.
• The review lookback period is 15 years.
• Companies without records for the entire 15-year lookback could be subject to estimation for the missing years.
• Filing a negative report does not protect a company from an audit.
• Organizations with entities incorporated in Delaware or have significant Delaware or foreign activity are usually the targets for these VCP letters.

Areas of concern for companies

• Uncashed checks (Payroll, accounts payable, rebate, dividend, etc.)
• Unresolved accounts receivable credits, unidentified remittances, unapplied cash.
• Stale-dated checks or aged credits written off.
• Insurance payments or refunds.
• Dormant savings or checking accounts.
• Securities.
• Gift certificates/cards.
• Virtual currency.

Why enroll in the voluntary disclosure program over going through the audit

• There is a waiver of penalty and interest, which could be as much as 50% in an audit.
• The VCP is a self-directed review, not led by a 3rd party auditor.
• Testing criteria are more favorable in the VCP (i.e., – 90-day void vs. 30-day void testing criteria).
• The timeframe for completion is usually significantly less.

Given the quick response deadline, a company will need to act expeditiously. In talking with a trusted Marcum advisor, it can be determined how best to respond to this notice, any risk mitigation options available, and areas of potential concern for the company. So alert your accounting team, tax team, mail room, and upper management to be on the lookout for any letter about unclaimed property.