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9/29/17 1:53 PM

Delaware Secretary of State to Begin Issuing Notices to Non-Compliant Holders in Mid-October

by Jon D'Amato, David Poehler, Clive Cohen

delaware.pngOn Friday September 29th, the Delaware Secretary of State issued an update on their VDA program, indicating that in two weeks they will begin issuing notices to Holders who have been identified as likely being out of compliance with the Delaware escheat laws.  The full update is below:

As an unclaimed property professional who has represented Holders in the Delaware unclaimed property audit and/or SOS VDA Program, you should be aware of an important update about the Delaware SOS VDA Program.

In two weeks, my office will begin mailing notices to Holders who have been identified as likely   being out of compliance with Delaware law as it relates to reporting dormant abandoned or                unclaimed property.  Holders that do not enroll in the SOS VDA Program within 60 days of the          mailing of this notice will be referred to the State Escheator for examination.  If an audit notice         is issued, the Department of State will have no legal ability to accept a Holder into the SOS VDA        Program.  

The SOS VDA Program was put in place to respond to concerns about Delaware’s ongoing audit      program, and to encourage more companies to come into compliance with their legal    responsibilities as they relate to abandoned property.  Through recent changes in the law,               Delaware is providing every company with an opportunity to voluntarily comply prior to being              issued an examination notice.  We urge you, your clients and potential clients to take advantage   of this opportunity to enroll in the SOS VDA Program.

This information may be shared as you deem appropriate. Any questions can be directed to        Alison Iavarone at alison.iavarone@state.de.us or at 302-577-8959.

Thank you for your attention to this matter. 

Sincerely,                                                                                                                                      Jeffrey W. Bullock                                                                                                                          Secretary of State

Those that do not enroll in the program will be referred to the State Escheator for examination.  Once the audit notice is issued, the Department of State will have no legal ability to accept a Holder into their VDA Program.As stated in the update, Holders that receive a notice will have 60 days from the mailing of the notice to enroll in the VDA program.

This update comes in conjunction with Delaware’s ongoing efforts to amend their escheat laws and enforcement program.  Earlier this year, the Delaware Secretary of State announced guidelines, (see previous blog: Delaware Secretary of State Releases Proposed VDA Conversion Guidelines), detailing how Holders currently under audit may elect to convert to their VDA program.  We note that although the election timeline for these conversions has not been finalized due to the Delaware Department of Finance (“DOF”) needing to finalize their regulations, it now appears likely the DOF will do so very shortly in light of the Secretary of State’s current update.

For Holders that are out of or are unsure of their compliance, today’s announcement puts them on notice that they may be targeted by Delaware as the state looks for ways to increase Holder compliance and generate unclaimed property receipts.  It also provides a window of opportunity for Holders to evaluate their situation and proactively come into compliance on terms that are more favorable than being subject to an audit. 

We will continue to monitor further developments in Delaware and note that Holders who feel they may be out of compliance should consult with an unclaimed property expert to help them understand their options. Should you receive one of these notices, your unclaimed property advisor can assist you with understanding the VDA process, ensuing that your company’s personnel can remain focused on your core business activities.  

Topics: Delaware, Audit, Voluntary Disclosure Agreements