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Frequently Asked Questions

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Abandoned or Unclaimed Property

What is Abandoned or Unclaimed Property?

An  obligation held, issued or owed in the course of business (known as the “Holder”) that is due and owing to individuals or other companies (known as “Owners”). The property becomes abandoned or unclaimed property once there has been inactivity or no contact between the Holder and the Owner. This period of inactivity is known as the dormancy period. Once dormant, the property should be remitted to the appropriate state.

What is a Dormancy Period?

The Dormancy Period is the length of time a Holder has an item of property without any owner contact before it needs to be reported to the appropriate state.

The duration of the dormancy period varies depending on the type of property in question, but the vast majority of property types in Delaware have a five year dormancy period.

Who has Abandoned or Unclaimed Property laws?

All 50 states and the District of Columbia have enacted laws that require Holders to report and remit abandoned or unclaimed property to the state. Delaware’s Abandoned or Unclaimed Property Law is codified in Chapter 11 of Title 12 of the Delaware Code (the “Abandoned or Unclaimed Property Law”). Each state’s laws are different.

What are examples of Abandoned or Unclaimed Property?

Abandoned or unclaimed property subject to being reported and remitted to Delaware pursuant to the Abandoned or Unclaimed Property Law includes tangible property described in 12 Del. C. § 1134 or a fixed and certain interest in intangible property held, issued, or owed in the course of a Holder’s business or by a government, governmental subdivision, agency, or instrumentality. The term includes, but is not limited to, the following:

  1. Money, interest, dividend, a check, draft, or deposit.
  2. A credit balance, customer’s overpayment, gift card, stored-value card, security deposit, refund, credit memorandum, unpaid wage, unused ticket for which the issuer has an obligation to provide a refund, pari-mutuel ticket, mineral proceeds, or unidentified remittance.
  3. A security, bond, debenture, note, or other evidence of indebtedness.
  4. Money deposited to redeem a security, make a distribution, or pay a dividend.
  5. An amount due and payable under the terms of an annuity contract or insurance policy.
  6. An amount distributable from a trust or custodial fund established under a plan to provide health, welfare, pension, vacation, severance, retirement, death, stock purchase, profit-sharing, employee-savings, supplemental-unemployment insurance, or similar benefits.

Note: This list represents the most common examples of general ledger related to abandoned or unclaimed property and does not address securities, equity or insurance related property types.

Where does a Holder report Abandoned or Unclaimed Property?

After the dormancy period has been satisfied, the Holder is obligated to report and remit the abandoned or unclaimed property to the state of last known address of the apparent Owner. If the address is foreign or unknown, the property is remitted to the state of incorporation of the Holder, see Texas v. New Jersey, 379 U.S. 674 (1965).

What happens to the property once it is reported?

The State of Delaware (“State”) takes custody of the property and is required to publish a list of property being held by the State in an attempt to reunite the property with its rightful Owner.

Pursuant to 12 Del. C. §1153(c), if abandoned or unclaimed property is remitted to the State in good faith, the State will defend the Holder against any claims to such property and indemnify the Holder against any liability on the claim—this applies with respect to claims by Owners or by other states.

SOS Voluntary Disclosure Agreement Program

What is the purpose of the SOS VDA Program?

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 examinations.

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 enter, 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 for the three post VDA report periods are protected against an unclaimed property examination for historic liabilities for the property types and entities reviewed as part of the SOS VDA.

Who is eligible to Enroll in the SOS VDA Program?

The State of Delaware’s Abandoned or Unclaimed Property Law is found in Chapter 11, Title 12 of the Delaware Code.  Under 12 Del. C. §1173, the Secretary of State is permitted to settle abandoned or unclaimed property voluntary disclosure agreements with Holders. Subject to the exceptions noted in 12 Del. C. § 1173(e), the SOS VDA Program is available to any Holder as defined by 12 Del. C. § 1130(9) that has possession, custody or control of abandoned or unclaimed property on its books and records which may be reportable to the State of Delaware.

The following are not eligible to enroll in the SOS VDA Program:

  • Holders that are currently completing a VDA with the Department of Finance, although a Holder that enrolled in the Department of Finance VDA program may transfer into the SOS VDA Program with the consent of the Secretary of State and Secretary of Finance.
  • Holders that received an examination notice from the Department of Finance after July 22, 2015.
  • Holders previously enrolled and who withdrew from the SOS VDA Program.
  • Holders that have been removed from the SOS VDA Program by the Secretary of State for failure to work in good faith to complete the SOS VDA.
Why have Holders enrolled in the SOS VDA Program?

Holders have enrolled in the SOS VDA Program for the following reasons, among others:

  • A Holder has never before reported and remitted unclaimed property to the State of Delaware.
  • A Holder with a prior filing history neglected to report certain abandoned or unclaimed property through inadvertence or mistake.
  • A Holder with a prior filing history wishes to come forward to conduct a review of its books and records to determine whether it may have neglected to report certain abandoned or unclaimed property and to avoid an examination.
  • A Holder acquired the abandoned or unclaimed property liability of another entity in a merger or acquisition.
  • A Holder completed a prior VDA and has had a lapse in annual reporting or may have filed incomplete annual reports since the completion of its prior VDA.
  • A Holder has completed a prior abandoned or unclaimed property examination and has had a lapse in annual reporting or may have filed incomplete annual reports since.
  • A Holder is a trust or other entity holding property due to another.
  • A Holder has received an invitation and would like to avoid an unclaimed property exam. Invitees have 90 days to enroll, or they will be referred to the State Escheator for an audit.
What are the benefits of the SOS VDA Program?

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

  • The SOS VDA program was designed to be a more business friendly and efficient means of coming into compliance with a company’s unclaimed property reporting obligations. Unlike an examination, Holders and the State work together to reach agreement upon a quantification methodology and amount which will be reported by the Holder.
  • The SOS VDA program is faster and less expensive than an examination. Unlike an examination, the Holder manages the SOS VDA Process by conducting a detailed self-review of the entities and property types the Holder determines to be in scope. In addition, all penalties and interest are waived by the Secretary of State for Holders completing the SOS VDA Program in good faith.
  • The SOS VDA program provides certainty for Holders that complete the process. As part of final settlement, the State will release and discharge the Holder from any and all liability related to that property. If another state or person shall make a claim on the property reported in the VDA program, the State will defend the Holder against the claim and indemnify the Holder against any liability on the claim. Unlike most other state VDA programs, for Holder’s that complete the SOS VDA program, the State waives its right to examine the Holder related to the entities, years, and property types included in the SOS VDA. This waiver is effective as long as the Holder fulfills its future annual reporting requirements for the three subsequent reporting cycles after the completion of the SOS VDA.
How does my organization get enrolled?

A Holder enrolls in the SOS VDA Program by executing Form VDA-1 – Notice of Intent to Voluntarily Comply with Abandoned or Unclaimed Property Law (hereinafter referred to as “Form VDA-1”). Form VDA-1 must be signed by an authorized person, entity representative, or officer of the company. Advocate information and Attachment A are optional and do not need to be filled out upon enrollment.

Form VDA-1 may be submitted electronically to  sos.vda@delaware.gov.

A copy of the Form VDA-1 can be found on this website on the Steps to VDA page or on the Forms and Guidelines page.

Upon receipt of Form VDA-1, DOS will confirm the applicant’s eligibility to enroll in the SOS VDA Program. Once eligibility is confirmed, the Secretary of State shall indicate acceptance of the Holder into the SOS VDA Program by signing and returning the Form VDA-1 to the Holder. Thereafter, the Holder will be contacted to commence the SOS VDA process.

What is involved? What is required of the Holder?

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 examination, 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 examination where the auditor performs the analysis and assesses a liability based on the auditor’s review.

How long do I have to submit my report and materials once I have entered the SOS VDA Program?

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.

If my company is incorporated or formed in Delaware, but does not have any operations, vendors or customers in Delaware, why would I have any unclaimed property reportable to Delaware?

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.

If I received a request from the Delaware Secretary of State to enter into the SOS VDA Program, what should I do?

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 90 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 90 days after the request to enter was mailed, then the company will be referred to the State Escheator for examination.

If my company previously received a letter from the Secretary of State (as early as 2013) inviting my company into the SOS VDA Program, is my company eligible to be audited, or must we receive another request to participate in the SOS VDA Program?

Pursuant to legislation that was enacted effective July 22, 2015, the State of Delaware will no longer initiate new unclaimed property examinations 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 examined under this new statutory provision. The legislation was drafted specifically to allow the State to immediately examine 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 examination letter being mailed, companies may still enroll in the SOS VDA Program by completing and submitting Form VDA-1.

How long is the look-back period?

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.

How does estimation work?

The Secretary of State expects every VDA enrollee with Delaware domicile entities 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 SOS VDA Program Guidelines for information related to estimation.

What records should be submitted with my Final Report?

When the SOS VDA is presented to the State, each submission will undergo a due diligence/validation process as outlined in the SOS VDA Regulations and SOS VDA Program Guidelines. 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 reports, remediation support and any applicable reporting history.

How can I be assured that the information provided will be kept confidential?

Pursuant to 12 Del. C. § 1189, financial information obtained during the course of voluntary self-disclosure agreements is confidential.

What if a settlement cannot be reached?

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 State Escheator for examination.

If I am working with a Advocate/Service Provider can the State can communicate directly with my Advocate/Service Provider?

Yes, the State or its designees can communicate directly with the Holder Advocate if permission has been granted by the Holder.

When completing 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 SOS 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).