Unclaimed Property Reporting – Is Your Business at Risk?

Many businesses are not aware of the liability exposure they may have in failing to meet unclaimed property state reporting requirements. As businesses expand their customer base into multiple states and/or do business over the internet, receiving revenue for sales or services from customers located in other states, they may be subject to unclaimed property reporting requirements in those states as well. This may be true even if the businesses do not have income tax or sales tax nexus in those states.

Unclaimed property is property that has not been claimed by its rightful owner and has reached specified dormancy thresholds under state law. Generally, states require businesses to review their records annually, file a detailed report of any unclaimed property, and transfer the unclaimed property to the state. The unclaimed property report is typically required to be filed with the state of the last known address of the payee or rightful owner. Depending on state law, abandoned property may include items such as:

  • Uncashed Checks
  • Wages
  • Gift Certificates
  • Refundable Deposits
  • Refunds
  • Royalties

States are stepping up their audits of businesses to assess their compliance with unclaimed property reporting requirements. There are substantial penalties that can apply for failure to report unclaimed property, and failure to deliver unclaimed property to a state.

Click on the links below to view charts from Thomson Reuters RIA Checkpoint, that show when selected unclaimed property items are considered to be abandoned under state law for MD, DC, VA, NY and CA, and the penalties that can apply in these states for failure to report, and failure to deliver unclaimed property to the states.

Unclaimed property reports for businesses other than insurance companies are generally due by October 31 each year in MD, DC, VA and CA. Different due dates apply for insurance companies. In New York, the due dates vary depending on the type of property.

To minimize liability exposure, businesses need to have good record retention policies in place, and they need to know and comply with reporting requirements for states in which they are subject to unclaimed property rules. If you have questions regarding unclaimed property reporting and how it may impact your business, please contact Lorraine Sexton via Email or by calling 301-652-6700.