According to state estimates, only 10-12% of companies nationwide are in compliance with state unclaimed property provisions. In an effort to increase voluntary compliance rates, states are increasingly reaching out to companies that they believe may have potential unclaimed property exposure to seek an understanding of their potential exposures and invite them to come into compliance through their Voluntary Disclosure Agreement (“VDA”) programs The goal of these invitations is to encourage non-compliant companies (or holders) to come into compliance with unclaimed property regulations without having to face the associated interest and penalties, or worse yet, audits. If your company receives such an outreach or invitation, it is extremely important to respond timely with complete and accurate feedback.
Keane also encourages companies to use this opportunity to come into compliance with ALL states, not just the one for whom you received the outreach. Much of the information that companies diligently gather and organize as required for one states’ VDA can easily be expanded for others. For example, the majority of states impose a look back period of 10 years plus dormancy. If you are researching outstanding disbursements or credit balances that may be considered potentially escheatable for one state, why not look at the entire population to identify those properties that may be reportable to other states at the same time? While this effort may be a bit more time consuming up front, in the long run, it will save time and resources by truncating everything into a single event. Ultimately, participating in multi-state VDA’s can decrease a company’s overall exposure and liability while allowing the company to come into full compliance with multiple states.
Currently, 96% (50 of 52) of states have some sort of VDA program available for unclaimed property reporting. With so many states offering VDA’s and sending out VDA invitations, it makes sense to come into compliance voluntarily and avoid a potential audit and potential interest and penalties. The proactive solution is to prepare for and utilize this solution in as many states as possible relative to your company. For more information on VDA’s, how to prepare for them, or what to do if you find your company receives a VDA invitation, click here.