By: Keane’s Consulting Team
In times of economic downturn, unclaimed property has historically been a way for the states to fill budget gaps through various measures. Throughout the past, Keane’s seasoned consulting professionals have seen states implement the following tactics to increase state revenues and reduce costs:
- Increase enforcement efforts through third-party and self-directed audits,
- Amend state statutes to shorten statutory dormancy periods,
- Reduced the holding period required before the sale of securities held at the state; and
- Introduce current to pay provisions for mineral rights and dividends.
Thinking about the current state of the economy due to COVID-19 has left our team wondering, what’s next? Will states that currently have a five-year dormancy reduce their dormancy period to three years? Will states that either currently maintain possession of securities or have a long holding period pass legislation allowing them to liquidate securities sooner? Will states ramp up their already active third-party and self-directed audit programs?
Knowing that these possibilities increase with economic decline, what should you be doing now?
- Tighten up your policies and procedures. When was the last time they were reviewed and updated? Consider conducting a review to ensure the current process matches your current procedures.
- Review your record retention requirements. If you were audited today, would you be able to demonstrate the unclaimed property compliance efforts that were performed seven years ago or longer? Are you keeping the appropriate amount of documentation? Audit look-back periods usually cover 10 reportable years plus dormancy which means you should have access to your unclaimed property records for 10 years + dormancy. . . or about 15 years.
- Conduct a mini risk assessment. Determine if there are pockets of potential unclaimed property exposure that you haven’t reported previously. For example, are you missing certain property types that are typical for your company based on your industry, or did you acquire a company with a less than stellar unclaimed property compliance program where the liability is now on your books and records?
- Check your customer activity records. If you carry customer accounts on your books and records, make sure the activities related to the preservation of accounts are related to owner generated activity as defined by the states. Ensure these activities are reviewed on a periodic basis so that your date of last contact / activity date is updated with true customer-initiated activity.
If you find that you have property out of compliance, you may want to consider enhanced remediation efforts and/or enrolling in a state voluntary disclosure program. As always, if you need help with any of the activities described above, Keane’s consulting team is here to help.