The Four Phases of the Unclaimed Property Audit Process include:
PHASE I ~ Entity & property types scoping – Public information review/10k – Tax Return review – Analysis of general ledgers & Review of all legal entities
PHASE II ~ Quantification of Any Potential Unclaimed Property – Bank Accounts detail (aged trial balances review) – Transaction level detail (aged outstanding check listings, Accounts Receivables credit write-offs, etc.)
PHASE III ~ Research Analysis, Remediation & Due Diligence Adjustments – Individual Property type & Entity exposure provided to Holder. – Research, Remediation and due diligence results included in final findings.
PHASE IV ~ Unclaimed Property agreed upon final report and remittance sent in to State.
Unclaimed property in the corporate world typically refers to intangible property and are funds owed to another party that have remained unclaimed or uncashed for a specific time period. Normally a period of one, three or five years, known as the dormancy period. After this dormancy period expires, the property is required to be reported and remitted to the Owner’s State of last know address or State of Incorporation if the address is unknown. – The property must be fixed and under certain legal obligations. – The States take custody of these unclaimed funds and hold the property until the rightful Owner comes forward to claim them. – All States have reporting requirements including D C , Guam, Puerto Rico & the Virgin Islands. – Unclaimed Property Reporting is NOT a tax – traditional NEXUS does not apply.
How States are increasing enforcement and compliance with the State Unclaimed Property laws and regulations.
1) Mailing out of Compliance Reminder Notification letters. – Reminding Holders who do business in their State of their State reporting obligations – Mailing out Reminder letters of their reporting deadlines/due dates.
2) Mailing out Self-Audit or Voluntary Disclosure Agreement (“VDA”) Invitation notices. – Prior to initiating an unclaimed property audit, the State will mail the Holder an invitation to enter into a self audit or VDA program.
3) More States are establishing Voluntary Disclosure Programs (VDP’s) – Prior to starting an Audit, States will invite the Holder to Voluntary participate in a Self-Audit program or review.
4) Establishment of State Voluntary Disclosure Programs/Agreements – Many States have developed Voluntary Disclosure Programs for Holders as an incentive to come into compliance with State laws without the threat of interest or penalties.
5) The Dreaded State Unclaimed Property Audit – A State may use State employees to conduct Unclaimed Property Audits on the State’s behalf. – Most States will use a third-party auditing firm, compensated on a agreed upon contingency fee. Although this contingency fee arrangement is currently frowned upon within the industry.
For further information regarding reports or unclaimed property compliance issues, please contact the professionals at PEACC by calling 410.303.5510 or email us at info@peacc.com
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How States are increasing enforcement and compliance with the State Unclaimed Property laws and regulations January 23rd, 2025peaccadmin
States that have a unique report due date for Holders:
REPORT DUE DATE
STATE
March 1
Delaware
March 10
New York
March 31
Connecticut
April 15
Pennsylvania
April 30
Florida
May 1
Illinois
May 1
Vermont
July 1
Michigan
July 1
Texas
A Holder may or may not have unclaimed property due to any of the above mentioned States. But it’s a good idea to check and see. Note: most of the dormancy periods for the above mentioned States are going to be 3 or 5 years, depending on the type of property and State. For all other States, the report due date is either in the Fall or Spring, depending on the Holder & Property type. For further information regarding reports or unclaimed property compliance issues, please contact the professionals at PEACC by calling 410.303.5510 or email us at info@peacc.com
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Unique Unclaimed Property Report Due Dates January 23rd, 2025peaccadmin
Now that your fall unclaimed property reporting is complete, your PEACC Team of Advisors would like to announce Delaware is schedule to send out the next round of VDA invitations on November 15, 2024. The State last sent invitation letters out in February 2024.
If your organization receives a VDA (Voluntary Disclosure Agreement) invitation Letter from Delaware and fails to timely respond, you will become eligible for the dreaded, unclaimed property audit. Contact the professionals at PEACC to discuss your options, along with the process, at 410.303.5510.
When performing any unclaimed property self-audits or reviews, please keep two important givens in mind to alleviate troubles down the road:
1) Most companies will under estimate their true unclaimed property exposure if and when audited by the State(s).
2) A State will put the burden of proof on the Holder to prove they’re wrong. A State will presume a Holder is guilty unless they can be proven wrong.
For help in developing and implementing an annual unclaimed property reporting process or any questions regarding this process, please reach out to one of the Professionals at PEACC by calling 410.303.5510 or email us at info@peacc.com
Call PEACC for Compliance
Unclaimed Property Self-Audits: Two things to always keep in mind January 23rd, 2025peaccadmin
Been given the option to perform a self-audit or review vs a state or state sponsored 3rd-party unclaimed property audit?
Here’s what to expect during your self-audit/review.
– The States allow less time to complete a self-audit/review vs a full fledged State sponsored audit to be completed. – The States expect a thorough review of the company’s books & records for the entire lookback period. Normally 10 years plus the dormancy period. – The State will utilize a State sponsored 3rd-party auditing firm to assist is gathering information and reviewing it. – State report submission is normally done through a State webpage portal in a specific, State approved, format. – If, after adequate testing and reviews are completed, Self-Audits can be completed fairly quick and without too many headaches.
For help with self-audits or any questions regarding this process, please reach out to one of the Professionals at PEACC by calling 410.303.5510 or email us at info@peacc.com
What to Expect during your self-audit January 16th, 2025peaccadmin
Been Assessed for Unclaimed Property Exposure by a State? Here are some key takeaways to be aware of: – Most State assessments for unclaimed property exposure are only estimates because the Holder lacks records to support their findings. – Keeping the right support documention can prove invaluable during an unclaimed property review or audit. – A company’s/Holder’s understanding of what unclaimed property is and the actual finding may be totally different. – Being proactive is always a better approach than being reactive whenever it comes to unclaimed property related issues and determining exposure.
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Unclaimed Property Assessment Key Takeaways January 16th, 2025peaccadmin
Consequences for Not Having a Yearly Unclaimed Property Compliance Process in Place. There are harsh implications for Holders who do not have a annual unclaimed property compliance program including:
– For Holders who do not submit annual unclaimed property reports – For Holders who file inconsistent, inaccurate or non-compliant annual reports – Not reporting all property types in reports – Filing annual unclaimed property reports late – Holders run the risk of being audited which could lead to hefty fines/interest rates and penalties
As you can see, identifying, monitoring, reporting and complying with all State unclaimed property reporting laws & requirements are very important functions to have implemented within your organization.
For help in developing and implementing an annual unclaimed property reporting process or any questions regarding this process, please reach out to one of the Professionals at PEACC by calling 410.303.5510 or email us at info@peacc.com
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Consequences for Not Having a Unclaimed Property Program January 16th, 2025peaccadmin
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