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Abandoned or Unclaimed Property
VDA Program



SOS Voluntary Disclosure Agreement Program FAQs


The State’s goal for the SOS VDA Program is to increase the number of annual abandoned or unclaimed property compliance filings, and decrease the number of audits.

The SOS VDA Program creates an efficient and collaborative settlement process for determining the Holder’s past due unclaimed property bringing the Holder into compliance with the Abandoned or Unclaimed Property Law for prior reporting years.

The SOS VDA Program is designed to reach a final agreement on past due liabilities as quickly as possible from the day Holders enters, and no later than two years after the date of enrollment. After entering and completing the SOS VDA Program, Holders that fulfill its future annual reporting requirements are protected against an unclaimed property audit for historic liabilities for the property types and entities reviewed as part of the SOS VDA.

As detailed in 12 Del. C. § 1173, benefits for Holders that enroll in the SOS VDA Program include the following:

  • Once enrolled by completing Form VDA-1, Holder is not eligible for audit by the Department of Finance relating to abandoned or unclaimed property.
  • Penalties and interests are waived by the Secretary of State for Holders that complete the SOS VDA Program in good faith.
  • The lookback period is ten report years from the year in which the Holder enrolls in the SOS VDA Program.
  • Holder manages the VDA process and presents its findings to the State.  Holder has input to the scope of the VDA with respect for the legal entities and property types.
  • Upon completion of the VDA and after Form VDA-2 is executed, the State waives its right to audit the Holder as long as the Holder completes the SOS VDA Program in good faith and fulfills its future annual reporting requirements for the next three reporting cycles.
The SOS VDA Program is available to all entities except those that received an audit notice from the Department of Finance after July 22, 2015.

The legislation enacted in February of 2017 provides that Holders under audit which were initiated on or before July 22, 2015 may choose within 60 days following the adoption of regulations regarding estimation that are to be promulgated by the Department of Finance (expected on or before December 1, 2017) to (i) have that audit converted to a VDA or (ii) to have the audit fast-tracked to a two-year, expedited process. (See FAQ’s related to Conversion for additional information.)

Holders that have previously enrolled in the SOS VDA Program and formally withdrew, or that the Secretary of State removed for failure to work in good faith to complete the SOS VDA Program are not eligible to enroll.

Holders have enrolled for the following reasons:

  • Holders who have never filed;
  • Holders with a prior filing history that neglected to report certain unclaimed property through inadvertence or mistake;
  • Holders with a prior filing history that wish to come forward to conduct a review of its books and records to determine whether it may have neglected to report certain unclaimed property and to avoid an audit;
  • Holders who have acquired the unclaimed property liability of another entity in a stock purchase or asset purchase agreement;
  • Holders who have completed a prior VDA, and have had a lapse in annual reporting or may have filed incomplete annual reports since;
  • Holders who have completed a prior unclaimed property audit,  and have had a lapse in annual reporting or may have filed incomplete annual reports since; or
  • Trusts holding property due to another, etc.

A Holder enters into the SOS VDA Program by submitting a signed Form VDA-1. Form VDA-1 may be submitted electronically or by mail as detailed below.

Secretary of State, State of Delaware
ATTN:  SOS VDA Program
Townsend Building
401 Federal Street, Suite 3
Dover, DE 19901
 sos.vda@state.de.us
302-577-8959

A copy of the Form VDA-1 can be found on this website on the Steps to VDA page:

The “Steps to VDA” section of this website describes a typical work plan for enrolled Holders, and for Holders that choose to convert its audit under 12 Del. C. § 1772(b). There is a heavy expectation that enrolled Holders will work diligently to complete the SOS VDA Program as soon as practicable.

Since this is a VDA and not an audit, it is the Holder’s responsibility to do a self-review and present the conclusions consistent with the process outlined in the “Steps to VDA” tab. In this way, Holders have more control over the VDA process and the ability to present its conclusions to the State, as opposed to an audit where the auditor performs the analysis and assesses a liability based on the auditor’s review.

Following enrollment, the goal is to have the Holder submit its report and materials as soon as practicable. A VDA process plan will be implemented on a company by company basis. Pursuant to Delaware law, the maximum time allotted to complete the SOS VDA Program is 2 years from the date of enrollment.
It is important to understand that all Delaware legal entities are subject to the unclaimed property laws of the State, regardless of whether it conducts business in Delaware. After a dormancy period (typically five years), companies are obligated to report and remit any abandoned or unclaimed property to the state of the last known address of the apparent property Owner. However, if the property is unaddressed or has a foreign address, it should be remitted to the State of Delaware.

This order of priority is based on rules established by the seminal U.S. Supreme Court case, Texas v. New Jersey, 379 U.S. 676 (1965). Therefore, it is likely that most if not all Delaware legal entities would have some unclaimed property due and payable to the State of Delaware, even if that legal entity has no operations, vendors or customers in Delaware.

Pursuant to 12 Del. C. §1173(b), the Secretary of State is authorized to request that any company enter into the SOS VDA Program to determine whether that company has complied with the Abandoned or Unclaimed Property Law.

Under this section, companies have 60 days from the date the request was mailed to enroll in the SOS VDA Program by completing, executing and submitting a Form VDA-1 Disclosure and Notice of Intent to Voluntarily Comply with Abandoned or Unclaimed Property Law to the Secretary of State. Form VDA-1 is available on this website under “Steps to VDA”. If a company does not formally enroll in the SOS VDA Program within 60 days after the request to enter was mailed, then the company will be referred to the State Escheator for audit.

Pursuant to legislation that was enacted effective July 22, 2015, the State of Delaware will no longer initiate new unclaimed property examinations (audits) unless a company has first been notified in writing that it may enter into the SOS VDA Program. Any company that received at least one letter from the Secretary of State inviting that company into the SOS VDA Program is immediately eligible to be audited under this new statutory provision. The legislation was drafted specifically to allow the State to immediately audit companies that were directly invited to join the SOS VDA Program and come into compliance voluntarily, but chose not to do so. Prior to an audit letter being mailed, companies may still enroll in the SOS VDA Program by completing and submitting Form VDA-1.
The look-back period is 10 report years (or 15 transaction years as Delaware has a 5 year dormancy period for most property types) from the date the Holder enrolls in the VDA.

The Secretary of State expects every VDA enrollee to reasonably estimate liabilities for periods and entities where records are not available to determine a Holder’s unclaimed or abandoned property. See SOS VDA Regulations and Implementing Guidelines for information related to estimation.

When the SOS VDA is presented to the State, each submission will undergo a due diligence/validation process as outlined in the Implementing Guidelines and SOS VDA Regulations. At this time, the Holder may be asked to provide various supporting documentation such as: trial balances, general ledger detail, bank reconciliations and associated back up, voided and outstanding checklists, accounts receivable aging, and remediation support.

Pursuant to 12 Del. C. § 1189, financial information obtained during the course of voluntary self-disclosure agreements that are conducted pursuant to Title 12, Chapter 11 of the Delaware Code is deemed confidential.
If a settlement on a property type and/or entity cannot be reached, the property type or entity may be excluded from the final settlement and release agreement. Pursuant to 12 Del. C. § 1173(a)(4), any property types and/or entity excluded may be referred to the Department of Finance for audit.
Yes, the State or its designees can communicate directly with the Holder Advocate if permission has been granted by the Holder.

When completing the Form VDA-1 Disclosure and Notice of Intent to Voluntarily Comply with Abandoned or Unclaimed Property Law, the Holder has the option of assigning a Holder Advocate who will be assisting the Holder with the VDA. By noting the Holder Advocate on the form, you are providing permission for the Department of State and/or its designees to communicate with the Holder Advocate. If additional Holder Advocates are involved, changed or added, confirmation of such will be required from the Holder in writing (e.g., email confirmation).

 


Legal Disclaimer: The materials contained herein are intended to provide information in regard to the subject matter covered. The Delaware Department of State is not engaged in rendering legal, accounting, or other professional services. If legal advice or other professional assistance is required, the services of a qualified professional should be sought.

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