10 Answers to Common Unclaimed Property Questions 

• Audits by states and their third-party audit firms, often covering 10-15 years
• Voluntary disclosure agreements (VDAs) or self-audits with similar lookback periods
• Compliance reminders sent by email or other outreach
• State-specific efforts such as Delaware’s verified report process, which requires officer certification of filings

Companies are more likely to face an audit if they:

• Have no filing history or inconsistent reporting
• Report amounts significantly lower than industry peers
• Recently completed a merger or acquisition or had other newsworthy activity
• Are incorporated in Delaware, which enforces its statute aggressively and often issues VDA invitations before referring companies to audit

Start by reviewing how your organization currently handles outstanding obligations, such as uncashed checks or credit balances. Key risk areas include:

• Dated or uncashed checks
• Unresolved customer credits
• Unredeemed gift card balances
• Abandoned bank accounts
• Lost shareholders

It is also important to confirm whether amounts were written off as income, as this may increase exposure. Companies should estimate potential liability by looking back 10-plus years to mirror audit or VDA review periods.

If material exposure exists, companies should:

• Conduct outreach to owners of unclaimed property to resolve amounts before reporting
• Consider entering a VDA, which often provides a waiver of penalties and interest on past-due property.

Delaware invitations: Companies that receive a VDA invitation must enroll within 90 days or face referral to audit.

Other states: VDAs often are advantageous when material exposure exists, as they typically provide a waiver of penalties and interest on past-due property.

Audit alternative: Some states, including Delaware, also offer an expedited audit program as an alternative to a traditional audit. While expedited audits generally involve shorter timelines and a more focused scope, they remain more burdensome and less favorable than VDAs for most companies.

Once a company receives an audit notice, in most states, it will be too late to enter into a VDA. VDAs generally are considered the preferred path because they are self-directed, less disruptive, and allow companies to take valid positions more easily than in an audit setting.

VDAs are self-managed, have flexible timelines, and often include a waiver of penalties and interest. Companies also have more ability to take valid positions and defend them effectively compared to an audit.

Audits typically are led by third-party firms and involve rigid data requests, longer timelines, and no guaranteed relief from penalties or interest.

Both routes usually involve a 10-year lookback reporting period covering transactions from the past 10-15 years.

• Maintain a formal written policy that applies across departments.
• Create a liability account in the general ledger to track and accrue unclaimed property obligations.
• Regularly review books and reclassify any potential items to the unclaimed property liability account, such as:
  • Uncashed payroll or vendor checks
  • Customer credit balances more than one year old
• Retain appropriate records and supporting documentation for at least 13-15 years to align with the typical lookback period used in audits and VDAs.

Due diligence letters are the final outreach to owners before property is reported to the state. Requirements vary, but generally:

• Letters are sent 60-180 days before reporting (for property above a certain dollar threshold).
• Letters must follow state-prescribed format.
• Some states now require electronic outreach (email) if a valid email address for the owner is available.
• Informal outreach (emails, phone calls, additional letters) is encouraged, but not required, prior to formal notices.
• All outreach should be documented.

Once funds are reported to the state, owners can claim them directly from the state.

Every state maintains an unclaimed property program designed to reunite owners with their funds or assets. The process varies by jurisdiction, but generally includes:

• Searching for property. Owners can search their name, business name, or other identifiers on each state’s official unclaimed property website. Because property is reported to the state of the last known address, individuals and businesses should search in every state where they have lived, operated, or been incorporated.
• Filing a claim. Once property is identified, owners must submit a claim directly through the state’s portal or by paper form, depending on the jurisdiction.
• Providing documentation. Supporting documents are typically required to verify ownership. These may include:
  • Proof of identity (e.g., driver’s license, passport)
  • Proof of address or business registration
  • Proof of entitlement to the property (e.g., bank statements, vendor records, or estate documentation)
• Receiving funds or assets. After review and approval, the state issues payment, transfers securities, or otherwise releases the property. Processing times can range from a few weeks to several months depending on the state and complexity of the claim.