Fall is the crunch-time season for unclaimed property reporting and escheatment. The states with approaching deadlines are almost as numerous as the leaves falling this time of year. The majority of them are either October 31 or November 1.
In fact, it’s simpler to tell you which states and U.S. territories don’t have an Oct. 31 or Nov. 1 deadline:
- California (June 1-15, December 1-15 for life insurance companies)
- Connecticut (Unclaimed property holder reports are due to the Office of the Treasurer within 90 days after the presumption of abandonment. Property in Connecticut is presumed abandoned as of December 31 of each year)
- Delaware (March 1, December 20 for insurance companies. Heads up: Banking organizations have a Nov. 10 deadline)
- Florida (May 1)
- Guam (December)
- Michigan (first business day of July)
- New York (The Empire State has an industry-specific schedule. Note that banking organizations have a Nov. 10 deadline)
- Pennsylvania (April 15)
- Puerto Rico (June 30)
- Texas (first business day of July), and
- Vermont (May 1).
Among the unclaimed property payments that need to be reported, and turned over to state authorities for safekeeping, include unpaid accounts payable, unclaimed wages (which many payroll departments fail to report), unrefunded overcharges, refunds, unclaimed workers’ compensation benefits and securities. Depending on state law, it can also include gift card/certificate balances.
Compliance is crucial, since issues with unclaimed property can lead to time-consuming audits (which can go back 10 years or more) and pricey penalties subject to interest and late fees. And the kicker is you don’t need to have nexus in a state to be subjected to its unclaimed property rules.
Unclaimed property strategy
It’s key for Finance pros to have a clear strategy for managing unclaimed property. The objective is accurate reporting each year with minimal hassles.
For example, what are your policies and procedures for negative reporting? Some states require you to submit a report even if you’re not holding any unclaimed property.
If you received an annual compliance reminder from a state with a Nov. 1 deadline, this is a good timeline to keep:
- On or before July 31, review accounting records, tax returns, HR records, financial reports, legal records and information systems records for anything that may be reportable as unclaimed property. Don’t forget to check your contracts with any third-party administrators.
- On or before August 15, prepare and mail due diligence letters to the rightful property owner’s last-known address (or the last-known email address, if state law allows it).
- On or before September 15, identify all property owners who have not responded to due diligence (e.g., returned mail, no response, etc.), and
- On or before October 1, begin preparing the annual unclaimed property report.
Your schedule also needs to budget time for:
- coordinating with other departments outside of Finance to identify any reportable unclaimed property
- applying the relevant state law dormancy period, which can vary significantly by state and by property type
- checking if there are any updates to the requirements for each state in which you are reporting, and
- reviewing each state’s criteria for reporting and escheatment, including the correct format and methods for remittance.