It is that time of year when companies (“holders”) begin to ramp up their unclaimed property reporting activities. It is good business practice to assign one person at the company who is responsible for escheat compliance, and insert this responsibility in their job description to insure continuity.
Most unclaimed property reports and remittances are due to the states on or before November 1. These are the “fall states”. A few states are due in March, April or even July.
Following the basic “R’s” will help you in your compliance efforts.
1. RESEARCH - Review your records to determine if you have any outstanding checks or unused credit memos. You should have procedures and policies in place to provide guidance on when and how, and a set materiality. Look for accounting errors. Is the owner really lost? Is the property exempt from reporting? Some states have a business to business exemption.
2. REACH OUT - Attempt to find the owner of the asset. Most states require a written notice to be mailed between 60 and 120 days prior to reporting the property. Check each state’s law regarding content and notification requirements. There are a number of other ways to look for owners using the new social media technology.
3. REPORT/REMIT - Be sure to file your report and remittance within the required timeframe, format and process. Most states accept online reports and EFT remittances. Nearly every state requires a CD, and they all require a signed verification. Be sure to follow the TX v NJ Supreme Court ruling when determining to which state the property should be remitted. The owner’s last known address of record gets the property. If there is no address, it goes to the state of the holder’s incorporation. If the state does not have a law pertaining to that type of property, it also goes to the holder’s state of incorporation.
4. RETAIN – The Uniform Unclaimed Property Act requires holders to retain their unclaimed property records for at least 10 years. This includes Verification of reversals - accounting and data errors; evidence of reporting and timely reporting; evidence of due diligence including certified mailing if it was required.
If you follow these guidelines, your chance of an audit may be minimized. At the very least, you will have good, clean records to produce in that event!