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 for 2025. 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 Dates for the Delaware VDA Invitations:
- Invitation Mailings: The Secretary of State will send out these VDA invitations on April 11th and August 15th.
- 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. Once the form is complete, 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 can avoid the hefty penalties and interest that standard audits typically assess by engaging in the VDA process.
- Audit Protection: Completing the VDA offers protection from state audits for the review period, provided there is no evidence of fraud.
- Focused Review: The VDA process limits the review to Delaware-held property, streamlining compliance efforts.
What to Expect During the Voluntary Disclosure Agreement (VDA) Process
- Enrollment: Submit the VDA-1 form within 90 days of receiving the invitation. If you are using a 3rd party representative, such as an unclaimed property compliance consulting firm, identify them on the form. This allows the Administrator to communicate directly with your designated advocate.
- Self-Review: Conduct a thorough internal review of books and records to identify unclaimed property liable to escheatment.
- Disclosure and Remittance: Submit a final report and remit any due property to the state.
- Settlement: Enter into a formal agreement with the state, finalizing the disclosure.
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.
Enlisting a 3rd Party Advocate
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.