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Delaware’s Verified Report Process—Another Wave of Letters

Nouvelles fiscales août 28, 2024

Delaware’s Verified Report Process—Another Wave of Letters

If you were one of the many companies that recently received a Delaware verified report process letter, you are in good company. Our understanding is that well over 700 letters were sent out in the mid-August timeframe, consistent with Delaware’s wave of letters sent late last fall. Delaware anticipates expanding this to 2,500 letters next year, with the goal of reviewing holders on a regular cadence going forward, possibly up to once every five years.

In November 2023, the Delaware Department of Finance, Office of Unclaimed Property (OUP) began issuing notices to businesses across all sectors requesting that holders complete the state’s verified report process or face further enforcement due to inaction. Given the potential implications of the state’s campaign, the Ryan team has outlined key components of the statutory provision and next steps for addressing this critical request.

Delaware Verified Report Regulation: Key Developments 

Based on Section 1170(a) of the Delaware Unclaimed Property Statute, the state escheator is authorized to require the holder to complete a verified report analysis within 180 days from the date of the notice. A key driver of this development was a June 2022 Delaware Senate Bill, which broadened the scope of Section 1170 by allowing the OUP to call for a verified report from any company—without question and regardless of their compliance profile. As an example, many of our clients have a robust and lengthy compliance history but still received a letter.

Prior to June 2022, only holders that did not file a report or were believed to have summitted an insufficient, inaccurate, or false filing could be required to provide a verified report. Today, the landscape has changed with the OUP now executing this program with support from third-party audit firms including DAS, EECS, Kelmar, and SAS.

Complying with the Verified Report Process: Vital Steps and Considerations 

Holders that receive outreach from the Delaware OUP must respond within 30 days of the letter date and acknowledge receipt of the communication and their intent to complete the verified report process. The letter is somewhat misleading on the 30-day requirement, as it appears to indicate that all three of the requested items must be provided in that timeframe. However, the actual timeframe required is within 180 days of the notice date. Holders are required to provide the following:

  • A verified report for report year 2023
  • A list of the legal entities included in the 2023 verified report
  • A description and copy (if available) of the company’s unclaimed property compliance policies and procedures

Based on our research, it does not appear that extensions will be granted to companies that do not execute the steps referenced above within the specified timeline. Failure to initiate or complete the process within the timeframes outlined by the state could result in escalation to a more detailed compliance review, an audit, or referral to the Delaware Voluntary Disclosure Agreement (VDA) Program. Companies in receipt of a verified report notice are not precluded from entering the Delaware Secretary of State VDA Program—another vehicle for holders pursuing an alternate path to compliance.

If you receive outreach directly from the Delaware OUP or would like more information, contact a Ryan unclaimed property expert listed below today.

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
954.740.6255
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.