Prior to a full-fledged unclaimed property audit, a state may decide to perform a basic review of a holder to see if it may be cost effective to spend the money and resources on a complete audit of a holder. State funding is low so many states are turning to holder reviews prior to an audit.
Most of these state reviews can be done over the telephone or through a letter, minimizing the expenses to the state.
Some the areas a state will ask the holder/company for information on, prior to conducting a possible unclaimed property audit are:
1) The holder’s written unclaimed property policies & procedures.
2) The unclaimed property reporting/filing history for all entities including acquisitions and divestitures. (Note: each separate entity will have its own EIN)
3) The holder’s De Minimus policies. All intangible property, no matter what the dollar amount, is required to be reported in most states.
4) The property types a state would be expecting to see on the holder types report.
5) How the holder handles outstanding checks on closed bank accounts.
As you can see, investigating any of the five areas above, in a quick letter from the state or during a telephone call may justify a state unclaimed property audit. This is why it makes it best to educate all employees in your accounting, treasury operations or the department handling your unclaimed property reporting obligations.
For further information on surviving a state review or, worse yet, the dreaded unclaimed property audit, contact a professional at PEACC today at 410.303.5510 or email info@peacc.com. We will be glad to help.
Unclaimed Property Audits
TYPES OF UNCLAIMED PROPERTY AUDITS
The states have gotten very creative when it comes to the selection process of unclaimed property audits.
State Unclaimed Property Audit Letter
“Please forward the State your company’s written unclaimed property policies & procedures for reporting your property….”
Does the above phrase make you shiver, squirm?
Unfortunately, if your company is ever selected for the dreaded unclaimed property audit, prior to commencement, the first area of audit will be the review of the company’s unclaimed property policies and procedures.
This audit request is used to determine if the company is fulfilling their obligations of turning over their unclaimed property to the appropriate State and doing it in compliance with each State’s laws and reporting regulations.
If the Holder has formal unclaimed property policies and procedures, great! You’re one step ahead of most companies.
You will most likely still be audited for your unclaimed property compliance, but the State or third-party auditing firm may not look as intensely at companies who do NOT have formal written policies and procedures in place.
If you do NOT have formal written policies and procedures in place within your organization or what you have can use a review or update(s), let the Professionals at PEACC assist with the development or revision of your unclaimed property policies and procedures.
Please contact one of the professionals today at PEACC at 410.303.5510, to hear how we can develop customize unclaimed property policies & procedures or review your current policies and procedures to ensure you are compliant with your State reporting obligations.
Act now before the States come calling!
Unclaimed Property – The “Dirty Dozen”
Ask yourself the following twelve questions to determine if your company is a candidate for the dreaded “Unclaimed Property Audit” by either a state or state sponsored (third-party) unclaimed property auditor
Unclaimed Property Audit Triggers
Ever wonder what may trigger an unclaimed property audit examination?
Stay alert to the following audit triggers:
1) The company has never filed unclaimed property reports in the past.
2) The company is not reporting all required property types.
3) The company files back-to-back negative reports stating they have no property to report.
4) The company is not reporting like a similar company/competitor is.
5) The company has spikes and dips in their annual reports.
6) The company has been the the news recently.
7) The company has acquired or merged with another company.
8) The property owners have repeatedly contacted the State to claim funds.
9) The industry has randomly been selected for audit.
10) The company does not respond to an inquiry from a State.