Delaware Department of Finance Sends Unclaimed Property Audit Notices to Corporations

The Unclaimed Property and Tax Risk Advisory team at Duff & Phelps has learned that the Delaware Department of Finance mailed a round of unclaimed property audit notices to U.S. Corporations on January 3, 2019. These notices are consistent with the statutory provision that authorizes the State to issue audit notices to any company that failed to accept the State’s invitation to participate in its voluntary compliance program, through the execution of a Voluntary Disclosure Agreement (“VDA”). As customary with Delaware audits, the January 3 audits were delegated to several Delaware contingent fee third-party audit vendors.

On October 3, 2018, Duff & Phelps reported that Delaware’s Department of State sent approximately 100 letters to companies inviting them to participate in the State’s VDA program. These letters required recipient companies to respond to these notices within 60 days or be referred to the Delaware Department of Finance for audit.

As expected, companies that did not respond to those notifications, or elected to participate in the VDA program, have been notified of audit. In an interesting twist, some audit notices appear to stem from earlier Delaware voluntary disclosure invitations that were mailed in prior years but not previously referred to the Delaware Department of Finance for audit.

It is anticipated that both the Delaware Department of State and the Department of Finance will be extremely active with unclaimed property enforcement in 2019. Duff & Phelps has also learned that several hundred voluntary disclosure notices may be mailed in the first quarter of 2019, with similar numbers expected throughout the year.

Any corporation that receives a notice from either the Delaware Department of State or the Delaware Department of Finance is encouraged to contact the Duff & Phelps Unclaimed Property and Tax Risk Advisory team for a free consultation. The receipt of either a VDA invitation or an audit notice are highly significant occurrences and could have a material P&L impact. Our team is highly experienced at guiding our clients through VDAs and unclaimed property audits.