As the state of Delaware remains committed to managing unclaimed property compliance, they are taking a proactive step forward with the announcement of its upcoming Delaware Voluntary Disclosure Agreement (VDA) invitations, scheduled for release on November 15, 2024. This initiative underscores the state’s approach to facilitating corporate responsibility in the accurate reporting and reconciliation of unclaimed assets.
The Basics: What is a Voluntary Disclosure Agreement (VDA)?
A Voluntary Disclosure Agreement (VDA) is a legal option provided by states to allow businesses to proactively report unclaimed property or correct prior misreporting without facing penalties or extensive audits. Participating in a VDA helps companies resolve outstanding liabilities and ensure compliance with state unclaimed property laws.
Key Details of the Delaware VDA Invitation:
- Important Date – November 15, 2024: The Secretary of State will send out these VDA invitations on November 15, 2024, marking a significant opportunity for companies to address their unclaimed property responsibilities.
- Response Window: Recipients of the VDA invitations will have 90 days to respond by submitting a VDA-1 application via email to the Delaware Secretary of State. This marks the beginning of the compliance process under the VDA program.
Advantages of Participating in the Delaware VDA Program:
- Penalty and Interest Waivers: Companies that engage in the VDA process can avoid the hefty penalties and interest that are typically assessed through standard audits.
- Audit Protection: Completing the VDA offers protection from state audits for the review period, provided there is no evidence of fraud.
- Focused Review: The review under the VDA is limited to the Delaware-held property, streamlining the compliance efforts.
Process and Expectations:
- Initial Audit and Data Review: Upon accepting the VDA invitation, companies are expected to undertake a thorough review of their records to ascertain the scope of unclaimed property liable to escheatment.
- Completion and Submission: The process culminates in the submission of a final report and, if applicable, the remittance of funds or properties due to the state.
Why Companies Should Act Promptly:
- Strategic Compliance: Proactively addressing unclaimed property issues before receiving an invitation can afford companies more control over the audit process and potential liabilities.
- Enhanced Financial Integrity: Engaging in the VDA process demonstrates a company’s dedication to fiscal responsibility and regulatory compliance.
Post-VDA Compliance:
Following the successful conclusion of a VDA, companies are obligated to continue filing reports with Delaware for a minimum of three years to maintain the protections afforded by the program. This includes submitting zero-dollar reports if no unclaimed property is found during the annual review.
Final Thoughts:
For businesses, particularly those navigating complex financial landscapes, the invitation to participate in Delaware’s VDA program is not just a regulatory formality – it’s an opportunity to assert control over compliance processes and align with best practices in financial reporting.
At UPCR, we specialize in helping clients effectively and accurately respond to VDA requests, ensuring that companies can meet their obligations with confidence and precision. If your organization has received a VDA invitation or is considering proactive compliance, contact us to discuss how we can support your efforts. By preparing for and participating in the Delaware VDA program, companies can not only mitigate risks but also reinforce their commitment to thorough and transparent financial practices.