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Delaware SOS VDA Outreach Update

By: Cathleen A. Bucholtz Jim Sadik Steven Swaigenbaum Robert M. Tucci Troy R. Wangen |

In our blog post on February 21, 2020, we announced that the Delaware VDA Administrator had sent an email to True Partners Consulting and other holder advocates stating that the Delaware Secretary of State’s (“SOS”) Office would be mailing over 100 letters to various companies that have been identified as likely being out of compliance with Delaware’s unclaimed property statutes.

Beginning on February 22, 2020, outreach letters were sent stating that if a company declined to enter into the SOS’ Unclaimed Property Voluntary Disclosure Agreement Program (“SOS VDA Program”) the Delaware Department of Finance would issue an audit notice 60 days after the date the letter was mailed to the company.  Delaware’s laws provide that the Department of Finance cannot initiate new unclaimed property audits unless the SOS first notifies a company in writing that it has the option to enter into the SOS’ VDA Program.  As a result, the notices were both invitations to the SOS VDA Program as well as the “first step” of the audit process.

Impact of COVID-19

After the outbreak of COVID-19, an alert was posted on the State of Delaware’s website stating that “(d)ue to the current state of emergency declared by Governor John Carney as well as many other declarations made across the country and the world, the SOS, in consultation with the Department of Finance and the State Escheator, realizes that many companies have not had full access to their mail or the proper time to route the invitation to the appropriate individual(s).  As a result, holders who received an invitation from the SOS to join the VDA Program during February 2020 will be allowed to join the SOS VDA Program through May 22, 2020.”

Following the alert, on June 22, 2020, additional notices were sent by the SOS warning companies that had received the outreach letters that if they failed to respond to the invitation to enter into the SOS VDA Program by July 18, 2020, they will forward companies to Delaware Department of Finance for audit.  Since that time, there have been no new updates from the SOS indicating that the deadline to respond to the outreach letters has, or will, be extended again.

If your company has received an SOS VDA Program invitation:

  1. TAKE THE DELAWARE NOTIFICATIONS SERIOUSLY. We believe that only the unprecedented events of the last few months have led to the repeated extensions that were offered by the SOS.  If unanswered, the invitations to participate in the SOS VDA Program will likely lead to an audit notice.
  2. ASSESS YOUR SITUATION. With personnel working remotely due to COVID-19, your company may have missed the deadline to respond to correspondence relating to the SOS VDA Program that may have been sent to your company’s headquarters.  If so, carefully review your company’s facts to determine whether it may be in your best interests to attempt to join the SOS VDA Program before an audit notice is issued.
  3. REVIEW YOUR OPTIONS. If you received an invitation, assess your options carefully.  Most companies will benefit by entering into the SOS VDA Program, but each company’s facts and circumstances are unique.  In most cases, a company will benefit from speaking to counsel or holder advocates familiar with unclaimed property.
  4. RESPOND PROMPTLY. If you have determined that the SOS VDA Program is right for your company, make sure to respond as soon as possible to ensure its right to participate.  Although the official extension period has passed, your company may still be able to enter into the SOS VDA Program if an audit notice has not yet been issued.  Even if your company’s reply crosses in the mail with an audit notice from the Delaware Department of Finance, you may be able to argue that your company should still able to participate in the SOS VDA Program because it replied before receiving the audit notice.

We at True Partners Consulting have helped hundreds of organizations determine the right thing to do when presented with these options and stand ready to discuss all of your options with you at any time.  Please reach out to any member of the True Partners Unclaimed Property Management Team if you have any questions about this or any other developments likely to impact your company.