Delaware verified report – A five step guide

Many companies will be filing their State of Delaware unclaimed property (UP) reports by March 1, 2025, which will likely usher in another wave of Delaware verified report (DE VR) notice distributions to the UP-holder community. These notices are not issued directly by the State of Delaware but rather by experienced third-party audit firms (Auditors) that will be carefully evaluating responses to ascertain if a company is a good candidate for future enforcement. Therefore, while responding to the DE VR seems straightforward, responses must be thoughtful, thorough, complete and accurate.

Whether a company files a report with an amount due, a negative report (if required in special circumstances), or no report at all to Delaware, it is still possible to receive a DE VR Notice in 2025, even if one was already received for a prior year filing. Our recent article, Delaware targets companies: VDA invitations and verified report requests, provides a brief overview of the DE VR process. However, if a company receives a DE VR Notice, we have prepared a five step guide to assist in developing a timely and thorough response.

1. Verified report - Attestation of reporting form: It’s important to respond timely to the DE VR Notice. A company has a total of 180 days from the date of the notice to fully respond to the DE VR Notice and provide the requested documentation. The attestation indicates that financial statements and related records of the company and its subsidiaries and affiliates (listed in Attachment A - see below) have been reviewed to determine if there are reportable liabilities. Before selecting an attestation option and signing the form, a more thorough review of the legal entities listed in Attachment A is sometimes warranted to ensure that all properties were reported. If a review leads to the discovery of unreported liabilities, the company can file a supplemental report within the 180-day period allowed to meet the DE VR response deadline. For a complete listing of reportable liabilities, see the Delaware Code online.
2. Attachment A: List of legal entities included in the verified report: This list can be a blueprint for a future inquiry and, along with other documents submitted, will be thoroughly examined by the Auditors. Therefore, it should only include legal entities that are covered under the company’s specified report year under review. Be sure to complete all columns, and note that any legal entities not included in the specified report year should not be listed on Attachment A. Note that completing Attachment A may prompt a discussion with the company’s legal counsel, tax executives and/or CFO.
3. Proof of filing: If a report was uploaded to the Delaware secure online reporting portal, proof of filing will need to be submitted, even if a negative report was uploaded. It is not necessary to send a copy of the electronic report that was filed unless it is specifically requested. If nothing was filed because a negative report was not required, indicate so on the Verified Report Attestation page by selecting the appropriate option.
4. Third-party filings on the company’s behalf: When third parties such as transfer agents, payroll agents, rebate program administrators or others perform additional filings on behalf of the company, it is also required to upload a copy of the report. Additionally, a company must obtain confirmation of the amount reported from the third party and include it with your submission. It can take time to gather from the various parties, so start this review as soon as possible. Any amount reported on behalf of any specified legal entity should be included on the appropriate row of Attachment A under the “Reported Liability” column.
5. UP policies and procedures (P&P): This is a standard request by most state and third-party auditors, and a “no” response can be a red flag. Having adequate P&Ps that specifically address UP is an important safety net. Note that adequate UP P&Ps do not need to address every possible aspect of UP, but it does need to contain some basic critical elements of UP reporting such as an explanation of property types, performance of statutory due diligence, reporting procedures and similar topics. If a UP P&P does not exist, now is a good to prepare one.

Need help?

If you receive a DE VR Notice and would like help with any aspect of your response, Baker Tilly unclaimed property specialists are ready to help. If you would like more information about or have questions about how UP compliance impacts your business, please feel free to reach out.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.