Last week we blogged about how some of the states are beefing up their unclaimed property audit programs to continue aggressively targeting companies who are not complying with unclaimed property laws.
Adding its name to the list of states hiring or renewing auditors, Texas has just announced it has awarded two contracts for providing professional unclaimed property audit services.
Verus Financial has been hired for a contract term of November 9, 2010 through August 31, 2011 with the option for two additional one-year renewals. ACS State & Local Solutions, Inc. has been hired for a contract term of December 16, 2010 through August 31, 2011 with the option for two additional one-year renewals.
A Distinct Trend In State Unclaimed Property Audit Programs
The hiring of these two abandoned property auditing firms highlights the states’ overarching goal of maintaining and/or increasing the intensity of escheat audits for companies not complying with the laws. Though Texas will continue to conduct audits, the state is working to return unclaimed property to its rightful owners. While the state is currently holding more than $2.2 billion in unclaimed property, in 2010, it returned more than $163 million to the rightful owners.
Companies that neglect the responsibility of unclaimed property compliance are subject to payment of overdue liability and significant penalties. Typically 12 percent interest of the underreported or overdue liability is charged whether the company reported the property on their own or through an audit.
Additionally, under certain state unclaimed property audit programs, the timeframe for compliance may be expanded, creating the need to estimate a liability for historical years, which can increase the known liability by three to eight times, translating into millions of dollars.
Is your company facing an abandoned property audit? See our latest report, “Audit Risk Red Flags: The Inside Story” for help. It lays out 17 factors that heavily influence the likelihood and gravity of an audit.