Scott Regan Quoted in Ignites: Fund Shops Caught in Delaware Unclaimed Property Dragnet

Scott Regan, Director in the Unclaimed Property and Tax Risk Advisory practice at Duff & Phelps, was quoted in Ignites during the firm’s recent unclaimed property compliance webcast on how some fund shops have been swept up in Delaware’s aggressive initiative to root out companies hanging on to abandoned client accounts and may be required to turn them over to the state. Since October 2018, Delaware has sent letters to about 300 companies asking them to participate in its unclaimed property voluntary disclosure agreement program.

“Delaware unclaimed property audits are one of the most invasive examinations a company will endure,” notes Regan.

Delaware relies on third-party auditors to conduct unclaimed property reviews. These companies’ fees are typically contingent on the amount of unclaimed property they collect on behalf of the state. Further, the auditors often also work for other states, so “a Delaware audit almost always becomes a multi-state audit,” he adds.

Audits typically last years. And unlike with the voluntary self-audits, penalties and interest on any unreported unclaimed property uncovered by these third parties tend not to be waived. Even if firms are willing to undergo the voluntary audit, which Duff & Phelps advises, “they must be careful not to miss the state letter offering the option”, said Regan.

If the letter was sent to the CFO’s office, they might not catch it, he said, or it could simply get lost in the mailroom. “Duff & Phelps recommends putting the CFO’s office and others on notice that they may receive such a letter”, he added.

The full article is available to subscribers on the Ignites website.

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