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As the holiday season approaches, organizations should be vigilant with their mail. The next round of the Delaware unclaimed property Voluntary Disclosure Agreement (“VDA”) program invitations are scheduled to be mailed around November 15th, 2024. Businesses receiving these letters should take them seriously. Ignoring them could lead to significant risk. Understanding the Delaware VDA Program The Delaware VDA program is part of a broader system the state employs to enforce compliance with unclaimed property laws. These laws require businesses to report and return unclaimed property, such as inactive bank accounts, uncashed checks, or customer credits. The state has implemented various enforcement strategies, and the VDA program allows companies to voluntarily disclose unclaimed property while avoiding hefty penalties. Key Dates to Remember The VDA invitation letters will be mailed around November 15, 2024, with a 90-day window for response. Missing this deadline can trigger an unclaimed property audit, a situation that can have serious financial implications. Companies facing audits have seen interest and penalties reach up to 20% of the unclaimed property identified, alongside significant administrative headaches. Organizations that do not receive an invitation are still eligible to apply to the VDA program. Benefits of Participating in the VDA Program The advantages of enrolling in the VDA program are substantial: Reduced Liability: Companies that successfully complete the program receive a waiver of interest and penalties. Structured Resolution : The program offers a clear path to address unclaimed property issues. Businesses can engage directly with state officials and their auditors to resolve discrepancies more smoothly. However, it is essential to acknowledge that the VDA program may not suit every organization's needs. Conducting a thorough internal review is crucial to assess whether it aligns with specific business circumstances. Considerations Before Enrolling Before committing to the VDA program, businesses should evaluate their unclaimed property situations. Key considerations include: Historical Compliance : Review your company's record regarding unclaimed property laws. A history of non-compliance might attract more scrutiny during audits, making participation in the VDA essential. Legal Ramifications : Compliance regulations can evolve, affecting companies differently based on their structures. Joining the program can eliminate a company's ability to challenge Delaware's process. Seeking advice from unclaimed property compliance specialists can clarify potential impacts. Risks of Ignoring the Invitation Disregarding the invitation from the state about the VDA program can lead to severe consequences. Key risks include: Unclaimed Property Audit : Not responding within the designated period may prompt an audit. Financial Exposure : Failing to address unclaimed property can expose organizations to significant financial liabilities, particularly if overlooked properties come to light during an audit. How Advisely Can Help Navigating the complexities of unclaimed property laws is challenging. At Advisely, our professionals can assist you in understanding your options related to the VDA program. They bring significant experience and can help clarify the implications of various pathways for your organization. Managing unclaimed property obligations does not have to be overwhelming. With the correct strategies and expert support, businesses can ensure compliance and avoid unnecessary risks. Contact eburke@adviselyllc.com  for additional information.

Delaware changed its custodian for the reporting of securities to Wells Fargo Advisors. Any holders reporting and remitting securities to Delaware should follow the updated instructions that are available in the Holder Reporting Guide (page 40) ( https://unclaimedproperty.delaware.gov/docs/DE_Holder_Manual_2024.pdf) . Delaware provided the following reminders: Five days prior to delivery of securities, holders must e-mail their intent to deliver to Delaware’s custodian via an Excel Document containing the issue name, CUSIP, ticker symbol, number of shares, and the delivering party’s DTC participant number and/or delivering party’s information. Please email the Excel list to  Delawarecustody@kelmarassoc.com and escheat.holderquestions@delaware.gov . All reported shares should be delivered via ACATS using the following instructions: Wells Fargo Clearing Services, LLC ACATS Particip ant # 0141 Reference: State of Delaware Main Account Account # 3294-9051     Worthless or Non-transferable securities should not be reported until the securities become transferable or have gained value. Non-transferable securities with value should be liquidated by the holder, and then reported and remitted as the cash proceeds. Advisely offers unclaimed property management and reporting services for organizations during the annual reporting cycle. Contact Eric Burke ( eburke@adviselyllc.com ) to discuss the Advisely reporting checklist.

The State of Delaware recently issued another batch of verified report notices to several companies (“holders”). Holders are required to respond to the notice within 30 days. The goal of the verified report is to validate that the holder’s most recent annual report is complete and accurate. The process is often conducted by a third-party audit firm. The state requests the holder to verify the previous report, provide a list of entities included within that report, and submit a copy of unclaimed property policies and procedures (if applicable). Failure to adequately respond to the requests may result in additional enforcement efforts (Compliance Review, Voluntary Disclosure Agreement program, or examination). We encourage holders to review current policies and procedures to confirm they align with state expectations. If you have received correspondence from the state or need additional information about the process, contact Eric Burke ( eburke@adviselyllc.com ).

Those tasked with unclaimed property compliance duties in their organization understand that the reporting process is a year-round responsibility. As unclaimed property impacts several departments in a particular business, companies should implement procedural enhancements to prepare for reporting deadlines. Many jurisdictions have different requirements and reporting deadlines. Each department should work cohesively to address property (such as aged credits or uncashed disbursements) before reaching dormancy. Many states have unclaimed property reporting deadlines in the fall. Advisely recommends that companies compile listings of property reaching dormancy and begin owner outreach at least 4-6 months before the reporting deadline. As this timeframe aligns with many of the statutorily required due diligence mailings mandated by the states, it ensures owners have the best likelihood of receiving their unclaimed funds prior to being reported to the state. The time is now – identify aged property and work with your organization to reunite owners with their funds. At Advisely, we partner with companies using our technology and experience to proactively activate owner outreach and due diligence. Our process helps companies maintain relationships with customers, vendors, employees, and shareholders. Implementing tracking systems and organizing accurate owner contact information can be a daunting task if not addressed appropriately. Our professionals leverage our resources to help companies stay in compliance and avoid penalties and other state enforcement. For additional information regarding our services, contact Eric Burke ( eburke@adviselyllc.com ).

In Advisely’s March 7, 2024 blog post, we discussed the Delaware Voluntary Disclosure Agreement (“VDA”) program for unclaimed property. Delaware issues “invitations” to companies to enroll in the VDA program. The most recent mailings were issued in late February. The communication explains that failure to respond within 90 days will likely result in an audit. As the deadline is quickly approaching, companies should ensure personnel are educated regarding the current internal policies and how the VDA response will impact your organization. There is no one-size-fits-all approach to unclaimed property enforcement. As our experts have extensive experience with the VDA and audit processes, contact us to guide you through your options.