Delaware Mailing Notices Requesting Verified Reports

In June 2022, Delaware expanded its enforcement powers by enacting Senate Bill 281, which permits the State Escheator to request a verified report or compliance review from a holder for any reason.  Prior to the law change, the State Escheator needed a “reason to believe” that a holder had failed to file a report, or had filed an inaccurate, incomplete, or false report.

Delaware is presently sending notices requesting Verified Reports of unclaimed property, even to holders that had previously and timely filed a report or that did not file a report because they did not have any unclaimed property to report for that year (and negative reports are not required in Delaware).

Per the Notice Requesting a Verified Report for Year 2022, holders must submit the following to the Delaware Department of Finance within 30 days of receipt of the notice:

• A Verified Report for the report year in question;
• A list of legal entities included in the Verified Report; and
• A response as to whether the holder has written unclaimed property compliance policies and procedures in place, and a copy of such policies and procedures if they exist.

The Frequently Asked Questions accompanying the Notice states that a holder’s response within 30 days is necessary to confirm that such information will be provided.   And while holders have one year to complete the Verified Report Process, the FAQs note that the information should be provided “as soon as possible, but no later than 180 days from the date of the Notice, to allow for the review and completion.”

The Notice also states that the failure to complete the Verified Report Process within the deadline will result in the referral to the state’s Voluntary Disclosure Agreement Program or further enforcement action (i.e., audit).  Per the FAQs, Delaware’s current administrative policy is to waive penalties and interest for property that is voluntarily filed during the Verified Report Process, even late-filed property.  If a holder enrolls in the VDA program after receiving a Notice requesting a Verified Report, the Verified Report Process will be terminated.

It is important to note that under Delaware’s unclaimed property law, the State Escheator can examine (audit) a holder who has not completed or responded to a verified report or compliance review.  Thus, again, timing is of the essence.

Other states also actively enforce their unclaimed property laws, often by requiring holders to complete a self-audit via an online questionnaire.  As with many of those states, third-party audit firms are also assisting in managing Delaware’s Verified Report Process.

If you or your company has received a Notice Requesting a Verified Report or compliance review, or any other type of communication from Delaware, or any other state, we recommend reaching out to an experienced professional that can assist you in determining your next steps to ensure you are up to date with your unclaimed property compliance and reporting obligations.   

*Content contained in this article is considered accurate as of the publish date.