California Decides Against Amnesty

The California State Controller’s Office (“SCO”) has been researching options for increasing Holder compliance to their unclaimed property reporting requirements for about a year. One of the options was to offer Holders an Amnesty Period that would waive any interest or penalties on any property reported past due. Numerous years ago the State offered the same type of Amnesty Period and it produced a major windfall of property revenue for the State.

However, upon completion of their research, and for some strange reason, the State decided NOT to offer an Amnesty Period because it was deemed “an ineffective solution to address noncompliance”. Additionally, the SCO also decided that implementing an Amnesty Program would “perpetuate inconsistent compliance” by the Holders which would lead to additional costs for the State due the number of unclaimed property reports that would potentially be received and processed.

The SCO’s reporting laws and guidelines do allow for Holders to report property late and, for any penalties and/or interest assessed, the Holders can request these penalties be abated if they can prove “reasonable cause”. This process essentially acts as a one-time amnesty program for the Holder.

Keep in mind the “reasonable cause” claimed by the Holder must be accepted by the State in order for any penalties to be waived. This acceptance process may take up to 9 months for the State to decide.

This SCO’s decision not to offer a Amnesty Period is a definite set back for the Holder Community. For further information on this recent decision and the best way to report unclaimed property to California or any other State(s), please feel free to contact PEACC to discuss all the options.