Unclaimed property voluntary disclosure agreements
What unclaimed property VDAs are and what you need to know before you sign one.
Jan. 28, 2026
Jan. 28, 2026
Tim McDonald
Market and Business Development Senior Manager
Kodiak Solutions
“Get out of jail free” cards sound great. But they all come with at least some strings attached. Unclaimed property voluntary disclosure agreements are no different.
VDAs sound great for companies that may be out of compliance with their respective states’ unclaimed property reporting laws. But signing one can come with at least some significant terms and conditions and risks.
In this article, we’ll explain what unclaimed property VDAs are, the potential benefits of entering them, and the things you absolutely need to know before you venture too far.
State unclaimed property reporting laws
All 50 states, the District of Columbia, and three U.S. jurisdictions (Guam, Puerto Rico, and the Virgin Islands) have unclaimed property laws designed to reunite unclaimed property with its owners. Unclaimed property can take many forms with the most common being assets in dormant accounts, aged customer credits/balances, and various types of uncashed checks. However, every industry has its own unique types of unclaimed property, depending on the products and services provided in that industry, such as unused gift cards, escrow balances, layaways and deposits, rebates, merchandise credits, and insurance proceeds.
Unclaimed property laws require holders to try to return that property to its rightful owners and report unclaimed property to the state One of the biggest challenges companies face is the lack of uniformity across state requirements. Each state has its own set of unclaimed property rules, dormancy periods, due diligence standards, and reporting deadlines. As a result, organizations often find themselves researching 50+ different sets of regulations just to understand what they are responsible for. This complexity can be overwhelming, especially for companies that have never filed unclaimed property reports before.
If you’ve never filed and are concerned about how states may view past‑due property, you’re not alone. Many organizations worry about potential penalties, interest, or even triggering an audit. The good news is there are options available. Most states offer mechanisms such as voluntary disclosure agreements that allow companies to come forward proactively, become compliant, and often avoid penalties. The key is knowing what steps to take and taking them before a state contacts you first.
State unclaimed property voluntary disclosure programs
Most states have unclaimed property voluntary disclosure programs or voluntary compliance programs. These programs allow eligible companies to voluntarily report previously unreported unclaimed property to comply with that state’s laws. When an eligible company does, it enters into what’s referred to as a voluntary disclosure agreement, or VDA, or voluntary compliance program, or VCP.
Delaware has one of the country’s most comprehensive state unclaimed property voluntary disclosure agreement programs, known as the SOS VDA (Secretary of State Voluntary Disclosure Agreement). The comprehensiveness of the SOS VDA reflects the fact that many multistate companies are incorporated in Delaware, making the SOS VDA a robust if not stringent VDA program that other states try to model.
Under an unclaimed property VDA or VCP, companies voluntarily disclose to the state the previously unreported unclaimed property in exchange for certain terms and conditions from the state. At the top of that list is the state waiving or reducing penalties and interest that would otherwise be assessed against previously unreported property had the company simply filed such property or if the state uncovered it through a routine or targeted audit.
The penalties and interest can be substantial. California, for example, assesses a 12% per annum interest charge on previously unreported unclaimed property. California is one of the states with a formal VCP.
Common conditions of unclaimed property voluntary disclosure agreements
States with unclaimed property VDA or VCP programs that encourage companies to take part in those programs effectively are offering an olive branch to those that have never filed or believe themselves to be out of compliance with state law.
The question is whether that olive branch has any thorns and, if so, how many and how sharp?
Below are some common terms and conditions of unclaimed property VDAs that eligible entities should be aware of as they consider signing one with their respective state agency:
- Waivers of penalties and interest. As mentioned, a VDA typically reduces or eliminates penalties and interest on previously unreported unclaimed property.
- Mitigation of a state audit. Entering a VDA can insulate the company from a state unclaimed property audit, which is typically a lengthy and costly process.
- Release of liability. The VDA may release the company from unclaimed property liability for the types of unclaimed property and the period covered by the VDA.
- Look-back period. The VDA should cover previously unreported unclaimed property going back a specific period of time. In most states with unclaimed property VDA or VCP programs, the programs have shorter look-back periods than audits, which typically look back for 15 years.
- Audit triggers. In some states, like Delaware, companies that are offered a VDA but forgo the chance are automatically subject to an involuntary state audit.
- Compliance training and education requirements. Most VDAs will require eligible entities to complete unclaimed property reporting compliance training and education requirements.
As with any compliance agreement with a governmental agency, companies should carefully review the terms and conditions of an unclaimed property VDA or VCP with their finance team, legal counsel, and, ideally, a firm like Kodiak that specializes in unclaimed property compliance and reporting.
That comprehensive review should identify the potential risks to a company of entering into an unclaimed property VDA. Those risks include:
- Scope expansion. VDAs may start narrowly but often grow to include additional entities, older years, or new property types if scope is not tightly defined up front.
- Estimation exposure. When historical records are incomplete, estimation is often required. Poorly structured assumptions can overstate liability and are difficult to change once accepted.
- Significant internal effort. VDAs still require substantial time and data from multiple departments, often involving legacy systems and extended timelines.
- Reduced flexibility. Once a VDA begins, withdrawal options are limited. Newly identified issues can expand exposure and reduce strategic leverage.
- State‑by‑state complexity. VDA requirements vary widely by state, making multistate participation challenging without a coordinated strategy.
All things being equal, navigating an unclaimed property VDA or VCP is preferrable to a targeted unclaimed property audit, bringing the organization into compliance far sooner and generally more economically.
Benefits of signing an unclaimed property voluntary disclosure agreement
Assuming the terms and conditions of an unclaimed property VDA are acceptable, and often far more favorable than undergoing an audit, entering into a VDA can provide several significant benefits to eligible companies, including:
- Avenue for compliance. Signing an unclaimed property VDA helps establish a company’s baseline compliance with the state. Once the VDA is completed, the expectation is that the company will continue to file annual reports on time and maintain ongoing unclaimed property compliance moving forward, demonstrating its commitment to being a good corporate citizen.
- Identification of all unclaimed property assets. In some states, entering an unclaimed property VDA or VCP requires the signer to identify all unreported unclaimed property assets from all related entities and corporate affiliates of the signer, even if those assets reside in another state. After identifying and creating a master inventory of all unreported unclaimed property assets, it’s easier for the signer to enter into unclaimed property VDAs or VCPs in other states.
- Due diligence advantage. Signers of unclaimed property VDAs or VCPs essentially rid themselves of the liability for unreported unclaimed property and any penalties or interest that come with it. If the signer is considering a merger, acquisition, partnership, or divestiture, having a potential liability off the books rather than discovering it during due diligence is an advantage.
- Prevention is the best medicine. Proactively resolving previously unreported unclaimed property liabilities through a VDA or VCP significantly reduces the likelihood of an audit in that state, but it can also help prevent audits in other states. Why? A state audit may uncover unreported unclaimed property in another state if the subject of the audit does business in other states. It’s common for one state to share that information with another state. One state audit is time-consuming and expensive. Forty simultaneous state unclaimed property audits can bury a company. VDAs allow companies to have a fresh start, find high ground with their compliance, and focus on staying there into the future with history behind them.
Don’t go it alone: Get help with unclaimed property VDAs
On the surface, unclaimed property VDA offers from a state may seem like a “get out of jail free” card for corporations and organizations with unreported unclaimed property assets. But as outlined above, entering a VDA is a strategic decision that requires careful evaluation. Each program comes with specific terms, timelines, and ongoing compliance expectations, and companies should fully understand these requirements, as well as the potential risks and benefits before moving forward.
The dedicated unclaimed property team at Kodiak can partner with your corporation or organization and help you make the right decision for you. We work with corporations and organizations in all industries and with unclaimed reporting statutes, regulations, and rules in every state. We have you covered.
Learn more about Kodiak’s unclaimed property solutions.
Learn more about unclaimed property and voluntary disclosure agreements by reading these recent Insights articles written by Kodiak’s unclaimed property specialists:
