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Chimes the Fall Unclaimed Property Compliance Clock
Time is quickly counting down for companies to meet the Fall 2022 unclaimed property compliance deadline. All States, the District of Columbia, Guam and the U.S Virgin Islands (“States”) have unclaimed property laws. These laws require companies to annually file and remit unclaimed property. Several states also require companies to file zero or negative reports. If no amounts are found to be reportable for the specific reporting cycle.
Understanding Unclaimed Property
What is unclaimed property you may ask? Any liability owed by a company to its customers, vendors, employees or shareholders that is not returned to the owners within a specific number of years, commonly known as the “dormancy period”. The “dormancy period” is the number of years a company can retain possession of property before it is required to be reported. States have different dormancy periods and dormancy periods also vary by property types such as uncashed payroll, vendor checks, customer overpayments or unredeemed gift cards/certificates.
Reporting Cycles and Requirements
There are generally 2 reporting cycles, Fall and Spring. The majority of States require unclaimed property compliance (both the reporting and remittance) to be completed on or about October 31st. The time frame for the 2022 Fall reports covers the period July 1, 2021, through June 30, 2022.
Due Diligence and State Custodianship
Before companies file or remit property to a State, due diligence mailings are required. These mailings are sent to the property owners based on the addresses on the company’s books. This is to ensure that the owners are:
- (i) not lost
- (ii) have an opportunity to claim their property before it is turned over to the State.
he ultimate purpose of the unclaimed property laws is for the states to serve as the custodian for property where the owners are lost. It is then the State’s responsibility to find the lost owners and return the funds to them.
Priority Rules for State Jurisdiction
How does a company determine which State has the right to receive unclaimed property? There are rules, known as the “priority rules”. These were established by the United States Supreme Court. The first priority rule gives jurisdiction to the State of the owners last known address. The second priority rule grants jurisdiction to the company’s state of incorporation. This only happens if no address is known or available for the owner from the company’s records.
Ensure Compliance
While the Fall 2022 compliance clock continues to count down, there is still time to determine whether your company has unclaimed property risks that would require compliance. For more information on identifying whether your company has unclaimed property risk for non-compliance, paths to achieve compliance, to discuss the pitfalls of non-compliance or to ask any unclaimed property compliance questions, contact Sonia Walwyn at [email protected]. Remember, unclaimed property compliance is the law! TICK TOCK! TICK TOCK! TICK TOCK!
Have questions about the Fall 2022 Unclaimed Property Compliance Deadline or other salex tax questions, contact our team today
Sonia Wallwyn, Partner, CPA and Attorney, has more than 30 years’ experience specializing in Unclaimed Property matters. A renowned speaker on the subject, she’s considered one of the nation’s foremost experts on all issues pertaining to Unclaimed Property. She’s successfully represented businesses of all sizes from solopreneurs to Fortune 20 Companies in their Unclaimed Property compliance needs.