Incorporated in Delaware? An unclaimed property verified report request may be coming your way

Most businesses have uncashed payroll checks, uncashed vendor payments or accounts receivable net credit balances. This unclaimed property is subject to various state-specific statutes and reporting programs which states tend to update on a regular basis. With over a million companies incorporated in Delaware, any change to Delaware’s unclaimed property program can have an impact on businesses across the country.

The Delaware Department of Finance recently began issuing notices to companies alerting them that they have been selected to complete an unclaimed property verified report for the 2022 compliance year. Delaware’s verified report program allows the state to conduct a limited review of a company’s most recent annual unclaimed property filing with the state.

The program has strict timelines and failure to respond to the notice or to provide the requested information by the deadlines will result in the company being referred to the Secretary of State’s Voluntary Disclosure Program or other enforcement actions, as well as the assessment of interest and penalties. Unfortunately, the state has indicated that it will not allow for any extension beyond the initial timeframe.

To complete the verified report process, companies must provide the following:

1. A notarized verified report for the 2022 report year signed by a corporate officer of the company.
2. A list of legal entities that were included in the 2022 report.
3. A statement regarding whether the company has written unclaimed property compliance policies and procedures (P&Ps) in place and, if yes, a copy of the P&Ps.

Companies receiving a verified report notice must acknowledge receipt of the letter within 30 days and confirm when the information requested will be provided. Because a verified report must be completed within one year, the state requires that companies must provide the requested information no later than 180 days from the date of the notification to allow the state time to complete their review which may be assigned to a third-party (often the same third-party contractors that conduct unclaimed property examination for Delaware).

Prior to June 2022, a verified report notice could only be sent to companies that did not file an unclaimed property report or filed a report the state believed was inaccurate or incomplete. However, now even companies with long and complete filing histories are at risk for receiving a verified report notice.