Many US states offer corporations holding assets the chance to comply with unclaimed property laws via Voluntary Disclosure Programs (“VDP’s”), encouraging holders to proactively cooperate on their own rather than undergo the potentially more daunting reactive process of a state-driven audit. Companies who proactively enroll in their state’s VDP are better off since they can conduct their own self-audit and potentially avoid some interest and penalties for non-compliance, which can be significant.
The following are some considerations for holders entering into VDPs:
• Review your state VDP documentation thoroughly. Note that the rules vary slightly by state.
• Understand how historical exposure will be calculated. If historical records can’t be provided, estimation may be necessary for some states.
• Make sure your company qualifies. Typically, your company can’t already be under audit.
• Once conducting the self-audit, initial scoping and gathering should be documented clearly so as to back up the integrity of your procedure.
• Understand what the state expects to receive and expect resistance if those expectations are not met.