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9/14/22 2:22 PM

CA AB 2280, Containing Voluntary Compliance Program, Signed by Governor

California AB 2280 was signed by Governor Gavin Newsom on September 13, 2022 and becomes effective on January 1, 2023.

Holders have been closely following CA AB 2280, as it authorizes the Controller to establish a voluntary compliance program (“VCP”), which would allow holders to voluntarily report and remit past due property. Holders that are eligible for the program and successfully complete the requirements outlined in the bill would receive a waiver of the mandatory 12% interest assessed on late property reported to California.

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Topics: Compliance, California, Audit, Voluntary Disclosure Agreements

8/23/22 8:32 AM

Delaware Actively Mailing Notices Requesting Verified Reports

We recently discussed in a previous blog post that DE SB 281, enacted and made effective on June 30, 2022, among other things, expands the state’s enforcement powers by allowing the State Escheator to request a verified report or compliance review from a holder for any reason. Prior law required the State Escheator to have “reason to believe” that the holder failed to file a report, or who the State Escheator believed had filed an inaccurate, incomplete, or false report.

Holders are presently receiving notices requesting verified reports for the prior report year, even if they did not have any unclaimed property to report for that year. Under Delaware law, a negative report, or “zero report” is not required.

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Topics: Delaware, Audit, Voluntary Disclosure Agreements

1/24/22 8:12 AM

UPDATE: Delaware VDA Invitations Scheduled for February 18, 2022

The Delaware Secretary of State (SOS)  indicated its intent to mail the latest round of VDA invitations on or about February, 18, 2022. 

Under Delaware law, the state cannot initiate an unclaimed property examination (audit) unless a company has first been notified in writing by the SOS that it may enter into the SOS VDA Program. Holders who do not enroll in the VDA Program within the 90-day notice period set forth in the letter will be referred to the Department of Finance for an unclaimed property audit.

As VDA invitations may be addressed to senior corporate executives, they often do not reach the person or group responsible for unclaimed property compliance in time to meet the 90-day deadline to prevent an audit.

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Topics: Delaware, Audit, Best Practices, Voluntary Disclosure Agreements

11/30/21 10:25 AM

Unclaimed Property Advocates - Essential for Audit Defense Strategy

Regardless of prior escheat compliance history, an audit can be a disruptive and costly event for any organization. As states continue to increase their outreach and enforcement efforts, the number of companies subjected to audits continues to rise. Oftentimes the outcome of the audit is less about a company’s past compliance history and more about their ability to understand and defend themselves.

Companies face several issues when under audit. Many of these revolve around the varied protocols used by the states and/or their third-party auditors when conducting the audit, including individual jurisdictional auditing guidelines, varied and extensive lookback periods, and the assessment of interest and penalties.

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Topics: Compliance, Audit, Best Practices

7/14/21 8:48 AM

Unclaimed Property Legislative Alert: A Deep Dive Into DE SB 104

Delaware incorporated or domiciled entities should be cognizant of a newly enacted Delaware unclaimed property statute that may significantly impact their unclaimed property situations.

Delaware SB 104, enacted on June 30, 2021, has an effective date of August 1, 2021, though specific provisions related to claims, audits, and pending litigation as of the effective date will apply retroactively. Though the intent of the bill is to provide clarification for holders, confirm current examination practices, and address recent litigation, some of the provisions appear to expand the state’s enforcement capabilities, while others contract the protections afforded to holders under the current law.

A summary of the relevant changes made to the Delaware unclaimed property law as a result of DE S 104 follows:

  • Revised VDA and Audit Provisions
    • Response Time to VDA Invite Extended. The timing to respond to a VDA invitation is increased from 60 to 90 days. Holders who receive an invitation may enter the VDA program or request to enter the expedited audit program (see below).
    • Audit Records Scope. The State Escheator can examine the records of the holder or a subsidiary or affiliate of the holder to verify the completeness and accuracy of the records, even if the records may not identify property reportable to Delaware. The state is under no obligation to provide a reason or justification for the examination of records, other than that it relates to determining compliance.
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Topics: Delaware, Compliance, Audit, Best Practices

5/27/21 7:51 AM

Target Date for Delaware's Next Round of VDA Invitations: May 28, 2021

Unclaimed property holders need to stay vigilant about checking the mail. The DE Secretary of State (SOS) has indicated its intent to send out the latest round of VDA invitations on or about May 28, 2021. VDA invitations are sent several times per year to companies that are identified by the state as “likely being out of compliance” with Delaware’s unclaimed property law. 

Under Delaware law, the state cannot initiate an unclaimed property examination (audit) unless a company has first been notified in writing by the SOS that it may enter into the SOS VDA Program. Holders who do not enroll in the VDA Program within the 60-day notice period set forth in the letter will be referred to the Department of Finance for an unclaimed property audit.

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Topics: Delaware, Audit, Best Practices, Voluntary Disclosure Agreements

4/13/21 10:30 AM

Check Your Mail: Unclaimed Property Outreach From Maine & Massachusetts

We recently posted about the importance of checking the mail for letters inviting holders to participate in the Delaware Secretary of State’s Voluntary Disclosure Agreement (VDA) program. Delaware is scheduled to mail a new round of VDA invitations on May 14th. More states are beginning to join this outreach trend. Maine and Massachusetts appear to be joining states like Nevada and Washington in mailing targeted outreach to holders regarding their compliance with the unclaimed property laws, which can take the form of self-audit questionnaires or invitations to self-audit books and records, and often disclose that they will be assisted by a third-party auditor in the process.

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Topics: Compliance, Audit, Voluntary Disclosure Agreements, Massachusetts

12/15/20 8:17 AM

Dec. 2020 Delaware Mails Unclaimed Property Audit Notices

MarketSphere Unclaimed Property Specialists has learned that the state of Delaware’s Department of Finance recently mailed unclaimed property audit notices to US corporations incorporated in Delaware. The audit notices target those holders who did not enroll in the Delaware Secretary of State’s Voluntary Disclosure Agreement (VDA) Program within the 60 days of receiving an invitation letter to participate. The invitation letters put the holder on notice that the state believes the holder to be out of compliance with Delaware’s unclaimed property law and invites them to participate in the VDA Program to bring them into compliance. If the holder does not enroll in the VDA Program within 60 days, they are referred for audit.

Corporations both large and small, public, or private can receive a VDA invitation. Under Delaware law, the state cannot initiate a new unclaimed property examination (audit) without first notifying the company that it may enter into the VDA Program (12 De. C. Ch. 11, section §1172). The invitations put the company on notice that if the holder does not enroll in the VDA program within 60 days of the date of the letter, the company will be referred for audit. The Secretary of State mailed approximately 200 invitations in August. Companies who did not enroll in the VDA Program within the 60-day period, may already have, or will soon receive audit notices from the Department of Finance.

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Topics: Delaware, Audit, Voluntary Disclosure Agreements

12/1/20 7:52 AM

Unclaimed Property Invitations, Audit Notices, and Self-Audit Letters

States often send official communications to companies regarding unclaimed property. While some of these mailings are mere filing reminders, other types of communications, such as VDA invitations, audit letters, and self-audit letters, urge holders to take affirmative steps to comply or demonstrate compliance with the unclaimed property laws. We will discuss some, but not all of these types of communications, to assist companies in understanding what each one means, and what holders should consider upon receipt of such a communication.  

Delaware – VDA Invitations and Audit Notices:

We recently posted that the Delaware Department of Finance is expected to send new unclaimed property audit notices in the near future to businesses who did not enroll in the state’s Voluntary Disclosure program (VDA program) in response to the Secretary of State’s invitation to participate in the program. Under Delaware law, businesses who do not enroll within the 90-day notice period in the letter will be referred to the Department of Finance for an unclaimed property audit.

Indiana, Pennsylvania, Utah and Washington: The Self-Audit Letter

Indiana, Pennsylvania, Utah and Washington have recently started mailing holders letters on official state letterhead that advise holders of their obligation to comply with the unclaimed property laws. Further, the letter proclaims that based on the state’s records, the holder “has never” or “only rarely” reported unclaimed property to the state.

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Topics: Compliance, Audit, Best Practices, Voluntary Disclosure Agreements

11/16/20 7:27 AM

Holder Alert: Delaware Expected to Mail Unclaimed Property Audit Notices in the Near Future

MarketSphere Unclaimed Property Specialists has learned that the state of Delaware will soon be mailing unclaimed property audit notices to those companies who did not respond to the latest round of invitations sent by the state on August 21, 2020 to enroll in the Secretary of State’s Unclaimed Property Voluntary Disclosure Program (VDA program). Approximately 200 holders received these letters, which notify the holder that it is “likely out of compliance” with Delaware’s unclaimed property law and inviting them to participate in the VDA program. Any company can receive a VDA invitation, including public or private corporations, large Fortune 500 companies and smaller companies.

In accordance with Delaware law, the state cannot initiate a new unclaimed property examination (audit) without first notifying the company that it may enter into the Secretary of State’s VDA program (12 Del. C. Ch. 11, section §1172).   These letters put the company on notice that if the holder does not enroll in the VDA program, the Secretary of State’s Office will refer the company to the Delaware Department of Finance, who will issue an unclaimed property audit notice upon the expiration of the 60-day notice period.

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Topics: Delaware, Audit, Best Practices, Voluntary Disclosure Agreements