This blog was last updated on August 29, 2024
Delaware recently released the second round of Verified Report requests by mail addressed to the Tax/Escheat Departments with the subject line Notice Requesting Verified Reports for Report Year 2023*. All companies should be on the lookout for the Notice, even if your organization was audited by Delaware or completed the Voluntary Disclosure program in the past. Once again, the process is being handled by four third-party audit firms (Kelmar, Specialty Audit Services, Discovery Audit Services and Escheatment Experts Consulting Services) to perform the review functions related to the Verified Report process.
What are the details of Delaware’s Verified Report Requests?
Responding in a timely manner is key. Per the recent Notice, companies have 30 days from the date of the letter to respond. If your organization needs additional time, we highly recommend contacting the firm that is administering your Verified Report Request to acknowledge receipt and request additional time. Per the FAQs posted to the Delaware Department of Finance’s website, companies should provide the requested information no later than 180 days from the date of the Notice to allow for review and completion. Failure to complete the Verified Report Process within the deadline will result in referral to the Secretary of State’s Voluntary Disclosure Agreement Program, under 12 Del. C. § 1173, or for further enforcement action under 12 Del. C. § 1172(d)(4).
To fulfill the requirements of the Verified Report process, companies must complete the following:
- The ‘Verified Report for Report Year 2023’* form – All holders and business associations other than banking organizations and insurance companies require reports to be filed to Delaware by March 1, 2024, for properties meeting dormancy as of December 31, 2023 (see other industry notes below). Per the Report, a company officer must attest under oath via notarized signature, that the Verified Report and enclosures, if any, are true, correct, and complete.
a)Insurance industry: The Verified Report will be requested for Report Year 2022, as those in the insurance industry should have reported by December 20, 2023, for properties meeting dormancy as of December 31, 2022. - Banking industry: Reports are due on November 10 for properties meeting dormancy as of June 30, 2023.Attachment A – List of Legal Entities included with the Verified Report for Report Year 2023* – Attachment A should include all subsidiaries and related entities that were included in the 2023 Report (or 2022, if Insurance). If a company files a consolidated report, remember to include all entities that were captured under the entity that filed the report.
- A response regarding the existence of written policies and procedures – If policies and procedures exist, Delaware requests the company include a copy for their review and recommendations.
Completion of the Verified Report includes a certification to one of the following:
- The company did not have any property to report to Delaware.
Note: Delaware modified the 2023* form to include a line that will enable the company to document if a negative** or $0 report was filed and on which date. - The date the company submitted a report that included property along with a copy of ‘Holder Summary Demonstrating Report Successfully Submitted for Processing’*** and proof of payment.
- The company reported property to Delaware for the period but identified additional property to report. The submission date must be identified.
- The company did not report property to Delaware for the period but has property to report and provide the date when the report will be filed.
Another addition to the Verified Report Request is the inclusion of the following statement on the cover letter: Please note that this includes any property, including equity related property, reported on behalf of the holder by a transfer agent or third party. Due to the limited nature of information that can be included with the Verified Report, Sovos contacted the Department of Finance to learn how Delaware would like companies to include this information. This could present a challenge for most publicly traded companies since many transfer agents will include all reportable property on a consolidated report to Delaware. Sovos will keep you informed about what we learn.
Due to the confidential nature of the information being provided, companies may also want to consider the establishment of a non-disclosure agreement between the company and the third-party audit firm assigned to your case. While personally identifiable information does not have to be provided (as noted above in b.), Attachment A and the Policies and Procedures could include information not considered public.
Going forward, Delaware will conduct the Verified Report process annually, with notices going out each summer. Companies that receive a notice can expect another Verified Report request 4 – 5 years after the first notice. It is extremely important to maintain ongoing compliance every year. It is equally important to document policies and procedures related to the identification, tracking and reporting of unclaimed property to help ensure that compliance efforts continue in the event of company changes such as a change in personnel. If you need help developing policies and procedures, Sovos’ team of unclaimed property experts can help.
*Depending on the company’s industry, the form may reference 2022 or 2023.
**While negative reports are not required, Sovos recommends submitting a negative report if the company reviewed its records and determined nothing is due for the period under review to demonstrate ongoing compliance with Delaware’s requirements.
***Sovos recommends including the Holder Summary and Proof of Payment rather than the detail report to protect property owner information.
