California Introduces Bill for Voluntary Compliance

The State of California recently introduced Bill (AB 2773) that, if passed, would create a Holder friendly Voluntary Compliance Program. This Program would allow Holders to report and remit past due property to the State without the threat of interest and penalties being assessed. If the Bill is passed, Holders not fully compliant with California’s unclaimed property regulations would have the opportunity to get compliant with a reduced look-back period and without the threat of interest or penalties being charged for past due property,

It has been almost twenty years (2001) since California last offer a similar amnesty reporting program. This Program was initially offered for one year, but it was so lucrative for the State, they extended it another year through 2002. The State took in millions of dollars as Holders chose to take advantage of it.

As an incentive for Holder compliance, most States currently offer either a formal or informal voluntary compliance program, normally known as a VDA (“Voluntary Disclosure Agreement”).

However, California currently is one State that will automatically assess at 12% per annum interest penalty on all past due property from the date it should have been reported. A Holder may request to appeal this 12% interest penalty, but it must be requested individually after the assessment. However, this request for abatement must be for good cause.

If AB 2773 is passed, it would allow the State to waive interest and penalties for Holders accepted into the Program and participating in good faith. The Program would be open to all Holders who aren’t currently under audit or have been selected for audit by the State or one of their agents. Once accepted into the Program, another benefit is a shortened look-back period of ten previous report years from the date the Holder is accepted into the Program. Currently, audits may go back to the Holder’s inception.

Bill AB 2773 was referred to California’s Judiciary Committee on March 20, 2018. If passed, a Holder would have through January 1, 2024, to enter and participate in this formal VDA amnesty program.

If enacted, this Bill would benefit any Holder conducting business in California, incorporated there, has a large amount of property due to the State or has historically under-reported. The Bill has gained major support from the Holder community and organizations throughout the Country.

PEACC will continue to monitor the progress of AB 2773 and hopefully the passing of it.

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