Now that the holidays are over, many states are casting a wide net to pursue participants for their voluntary disclosure programs. Voluntary Disclosure Agreements (VDAs) are a type of amnesty program in which companies can disclose previously unreported and currently due unclaimed property, usually in exchange for a waiver of interest and penalties. A number of these state programs are also administered by third parties, as disclosed in the outreach letters.
Delaware has the most robust unclaimed property enforcement program in the country, often targeting companies incorporated in that state for audits that typically last multiple years and become a drain on internal resources. As part of a periodic and ongoing effort, and as published on the state’s website, Delaware will be sending out VDA Program invitations on February 24, 2023, and again on July 14, 2023, to an unknown number of large companies that are incorporated in Delaware. In prior waves of letters, anywhere between 30 to more than 100 letters have been mailed.
According to the invitation letters, if a company receives one of these invitations and does not respond within 90 days (previously 60 days), the company will be referred to the Delaware Department of Finance for audit. In other words, if ignored, the “invitation” letters are a first step towards a potential audit.
Companies should be on the alert in late February/early March and again in mid-July for the arrival of an invitation letter, sent by the state via certified mail and usually addressed to the CEO or CFO, to ensure proper and timely action is taken.
Florida Department of Financial Services has begun its outreach program by contacting companies doing business in the state but not reporting unclaimed property to the state. Companies are being advised to review their records and promptly voluntarily report appropriate unclaimed property to the state. Our team’s understanding is that these letters were sent to numerous companies in early January. This voluntary compliance program is administered by a third party. Companies should be aware of the potential issues and pitfalls of ignoring the letter or rushing to file a negative (zero) report pursuant to the outreach.
Massachusetts is utilizing third-party vendors to reach out to companies in the state that have reported minimal or no unclaimed property to the state. These outreach letters are encouraging companies to voluntarily review their records for any unclaimed property to be reported. Like Florida, our team has been made aware of companies that have received a Massachusetts outreach letter and should similarly be aware of the potential risk of ignoring the letter or rushing into an incomplete review and findings.
Although these programs are all “voluntary compliance programs,” there are complexities in the review process where our team’s expertise will provide insight and value. These form letters could easily be overlooked, with significant consequences to the company. If your company receives a Delaware VDA invitation letter, Florida voluntary compliance letter, Massachusetts outreach letter, or similar correspondence from any other state, please contact one of Ryan’s unclaimed property professionals to discuss appropriate options for responding to the communication.
TECHNICAL INFORMATION CONTACTS:
Mark A. Paolillo
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