VDAs – Not Just for Delaware
By Laurie Andrews, Director of Consulting
December 19, 2019
December 19, 2019
So much attention has been placed on Delaware’s Voluntary Disclosure Program that I thought it would be a good time to remind you that other states have programs as well. A VDA, which stands for “Voluntary Disclosure Agreement,” like all things unclaimed property, varies from state to state.
There are ‘formal’ VDAs where you are essentially signing a contract with the state to come into compliance. Formal VDA States often ask you to do a variety of things such as provide them with your formal unclaimed property policy and procedures, provide a self-review plan and perhaps even a phone call with a member of the State’s audit staff. In other cases, they may ask you to submit your workpapers, a narrative describing your work efforts or just submit your report in the prescribed time frame.
Then there are states that do not have a formal program. For lack of a better term, we’ll call them the ‘informal’ VDA states. For informal states, while they don’t have a program per se, they will often accept property determined to be out of compliance with a cover letter advising them that you recognize you are out of compliance and would like to voluntarily come into compliance with their state. \Usually when I talk about VDAs, people have five questions: How long after I file the VDA is the report due? How far back do I need to review my books and records? What about penalties and interest? If I file a VDA, does that mean I won’t get audited? And, will California ever have a VDA program? Let’s break it down:
- Timing: Some states require that you submit your finalized VDA as soon as 90 days after acceptance in to their program while other states allow you six months,
or longer, to complete your review and submit your report and other required documents. Some states will provide an extension to get that work done, while others will not.
- Lookback: While it does vary, most states’ lookback period is 10 years plus dormancy. This means you are required to review the past 10 report years. For example, if you are reporting to a state that has a fiveyear dormancy, you will be reviewing 15 years’ worth of records.
- Penalties and Interest: Most states that have a formal VDA program will waive penalties and interest when coming forward voluntarily. Informal states generally waive penalties and interest in recognition of your voluntary compliance too.
- Audits: With the exception of Delaware, a VDA does not formally protect you from an audit. The states always retain the right to audit, however, in my experience, most states will not issue an audit on a holder who has submitted a VDA so long as it is complete and the agreed upon requirements are met.
- California: The State Controller is statutorily required to prepare a report on developing a one-time amnesty program or other opportunities to increase compliance in lieu of an amnesty program.
I know it’s complicated, so if you have an out of compliance situation, contact us. We can provide you with state-by-state guidance to help you get a clean slate.