Is your company prepared?
Is your company or one of your subsidiaries, affiliates, or related entities registered to conduct business in New York? If yes, one or more entities may have recently received a self-audit notice from the State of New York.
Specifically, the State’s unclaimed property Voluntary Compliance Unit has been cross-referencing business registration data with its database of companies that are filing (or have filed) unclaimed property reports. Companies that are registered in New York with little or no filing history have been targeted for this self-audit notification.
What the New York Self-Audit Notice Means
The State’s notification requires companies to review their books and records to determine if they are holding property subject to reporting under New York’s unclaimed property law. The State also provides a self-audit checklist for companies to complete and submit to the State, regardless of whether the self-review identifies compliance or lack of compliance with the law.
Why This Matters
The good news is that if a company has unclaimed property reportable to New York, completing and returning the checklist will automatically serve as the company’s application to the State’s Self-Direct Compliance Program (SDCP), which allows for the waiver of applicable interests and penalties.
The bad news is that the failure to perform the self-review and provide the checklist could result in the entity being selected for audit. The self-review notifications are generally sent to the CFO, Controller or CEO so check with the C-Suite to determine if a notice was received and begin the review process to identify your risk and to complete and submit the checklist.
What Is Unclaimed Property?
Unclaimed property consist generally of obligations owed by a company to a 3rd party such as an employee, vendor, customer or shareholder and can include: (i) uncashed checks relating to payroll, accounts payable and accounts receivable/customer refunds; (ii) returned payroll direct deposits or returned accounts payable electronic payments such as ACHs and Wires; (iii) credits balances including unapplied or unidentified payments; and (iv) unredeemed gift cards to name a few.
While companies have a limited period to keep potential unclaimed property on their books, once there has been no contact with the owners for a prescribed period of time (the dormancy period), the property is required to be reported and remitted to the applicable state(s). Property reportable to New York includes amounts owed to residents of the state with New York addresses or any amounts with no owner information, if the company holding the funds is incorporated in the State.
Need Help Navigating New York’s Unclaimed Property Self-Audit?
For help with the New York self-review, completing the checklists, or any unclaimed property issues, Contact Clarus Partners or reach out directly to:
Sonia Walwyn, Partner at swalwyn@claruspartners.com, (630) 216-9954.
Sonia is ready to share her over 30 years of UP experience with you and, together with our expert team, can assist with risk assessment, effectively managing the UP risk, and finding effective ways to ensure timely and accurate compliance.