Many states cast 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’s Secretary of State will be sending out VDA Program invitations on February 23, 2024, and again on July 26, 2024, to an unknown number of large companies that are incorporated in Delaware. In prior waves of letters, anywhere between 50 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 enforcement.
Companies should be on the alert in late February/early March and again in late 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. These VDAs have a very defined process to follow and are reviewed by one of three third-party administrators. The process typically takes about two years to complete, sometimes more or less depending on a company’s facts and circumstances.
Our team of experts is ready to help inform your team and guide you through the process.
TECHNICAL INFORMATION CONTACTS:
Mark A. Paolillo
Principal
Ryan
857.288.1976
mark.paolillo@ryan.com
Susan Han
Principal
Ryan
442.244.2447
susan.han@ryan.com
Jeff Henshall
Principal
Ryan
404.682.1200
jeff.henshall@ryan.com
Christopher Jensen
Principal
Ryan
469.399.4142
christopher.jensen@ryan.com
Sonja Roman-Molina
Principal
Ryan
954.740.6240
sonja.roman@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.