Unveiling the Benefits of a Voluntary Disclosure Agreement (VDA) – Have you ever misplaced something valuable, only to discover it later, hidden in plain sight? For businesses, unclaimed property can be like that lost treasure – forgotten accounts, uncashed checks, or even deposits owed to customers. But unlike a misplaced belonging, unclaimed property can lead to hefty fines and penalties if left unaddressed.
This is where a Voluntary Disclosure Agreement (VDA) steps in, offering businesses a proactive approach to dealing with unclaimed property liabilities. A VDA is a formal agreement between a company and the state that holds the unclaimed funds. By voluntarily disclosing these oversights, businesses gain significant advantages over waiting for the state to come knocking.
Here’s a closer look at the top 5 benefits a VDA offers:
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Financial Savings: The biggest perk is potentially avoiding significant penalties and interest charges that accrue on late reported property. A VDA can significantly reduce these costs, putting recovered funds back into your business’s pocket.
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Reduced Look-Back Period: Typically, states have a look-back period, ranging up to 10 years, during which they can audit your unclaimed property records. A VDA can often shorten this window, limiting the scope of the review and the potential liabilities unearthed.
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Enhanced Control: A VDA allows your company to take charge of the disclosure process. You work collaboratively with state officials, providing documentation and facilitating the audit. This proactive approach fosters better communication and potentially influences the outcome.
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Opportunity for Correction: Discovering unclaimed property can be an opportunity to identify and rectify any underlying issues in your record-keeping practices. A VDA provides a chance to address these discrepancies before they snowball into bigger problems.
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Fair Consideration: During a VDA, your company’s specific circumstances are taken into account. This means factors like the nature of the oversight and your efforts towards compliance can be considered when determining the final outcome.
By taking advantage of a VDA, businesses can transform unclaimed property liabilities from a potential financial burden into a chance for positive change. It’s a chance to gain control, minimize costs, and ensure future compliance. So, if you suspect your company might have unclaimed property, don’t wait – explore the benefits of a VDA and take a proactive step towards financial peace of mind.
Contact PEACC.com for VDA guidance.