Delaware Unclaimed Property Voluntary Disclosure Agreement (VDA) Update

Executive Summary/Abstract

The Delaware Secretary of State has begun issuing a new round of Voluntary Disclosure Agreement (VDA) invitation letters. These letters are part of Delaware’s ongoing initiative to encourage compliance with its unclaimed property laws.

Impacted Clients

Generally, any operating entity with at least $50 million in annual revenue and incorporated in the State of Delaware could be eligible to receive a letter.

When Does This Apply?

Recipients must respond within 90 days of the letter issuance date, to enroll in the VDA program. If they fail to meet the 90-day deadline, the State may refer the Company to the Department of Finance for an audit.

Overview and Observations

Key Details

The letter (on Delaware letterhead) is typically addressed to the CFO or CEO of a company. There are consequences for non-responsiveness, including likely referral to the Delaware Department of Finance for a costly audit as well as loss of eligibility to participate in the State VDA program.

Audits are typically conducted by third-party firms and may involve contingent fees, making them potentially more burdensome than the VDA process. In addition, the State will likely charge penalty and interest for any past due property located.

VDA Program Benefits

The program offers a variety of benefits. First, the State offers a waiver of penalty and interest for any past due property discovered. Second, the review process is considerably less arduous than an audit. Third, the program provides a roadmap for holders to get into compliance in all states, not just Delaware. Finally, the VDA process is more structured. A standard VDA typically can be completed within two years or less, depending on company circumstances. Audits can sometimes run for five years or even longer.

Action Items for Companies

Companies should monitor incoming mail, especially certified letters, in order to ensure a timely response. If a letter is received, do not ignore it. We also strongly encourage that the Company’s accounting, tax, and legal teams be alerted to prepare for potential VDA participation.

How We Can Help / Contact Information

If you receive a letter or suspect you may be selected, we strongly recommend contacting Citrin Cooperman immediately to evaluate all options and determine the best course of action. Our team has extensive experience guiding clients through Delaware’s VDA process and minimizing exposure to unclaimed property liabilities. We’re here to help respond strategically and efficiently. Please don’t hesitate to reach out with any questions or concerns.

For more information, please contact Eric Mauldin at rmauldin@citrincooperman.com or a member of Citrin Cooperman’s State and Local Tax team.