The annual escheatment and reporting process is highly complex and requires year-round attention to ensure compliance with state laws and regulations. Despite the best of intentions, many organizations fall victim to the complexities and difficulties of unclaimed property reporting.
With this in mind, how many of these unclaimed property reporting pain points is your organization experiencing?
Constantly Lags on Legislative Changes.
With 55 reporting jurisdictions, unclaimed property laws and regulations change on a constant basis. The ability to independently track and interpret each change, understand its impact, and appropriately implement changes as a result to your organization’s unclaimed property processes is a luxury that many organizations simply do not have.
Difficulty Determining Dormancy.
Dormancy is dependent upon a combination of multiple factors. Returned mail, date of last contact, property type, state and industry nuances all contribute to determining whether or not a property is potentially escheatable. Incorrectly assigning or calculating dormancy periods can have serious repercussions in the form of disgruntled owners or state administrators.
Dreadful Due Diligence.
Your final effort to notify an owner of potential escheatment is required at specific times, must include specific language, formatting, and in some cases, only applies to certain property types. And that’s before mailings go out the door… Can your organization keep up with the requirements in all jurisdictions? Learn more about the anatomy of an effective due-diligence letter.
Limited Labor for Letters.
Dedicating staff and ensuring their initial and ongoing training for the year-round escheatment process can become a strain on internal resources, leaving employees with limited time to complete other critical job functions.
Record Retention in Need of Repair.
Record retention is essential for unclaimed property compliance. Inadequate reporting history or lack of records can expose your organization to costly estimation and extrapolation practices in the event of an audit. Tracking your compliance history comprehensively with a dedicated provider can help protect your organization against overstated liabilities, fines and penalties.
Soured on Software.
As unclaimed property laws change and requirements are updated, so must your unclaimed property software – usually through patch update files arriving late in each cycle, requiring ongoing involvement from your IT teams. Software users also need to account for the training and onboarding of all team members involved in the annual compliance process as well as ongoing support from the software provider.
Stashes Unclaimed Property in Silos.
Unclaimed property is generated in all organizations, and can be found in multiple departments, divisions or business functions. In large decentralized organizations, different departments may have entirely unique policies and procedures for handling unclaimed property. Outsourcing the reporting function to a trusted partner can break down these silos, streamline the reporting process, and address compliance from a holistic and centralized perspective.
Reciprocal Reporting Risks.
At face value, it sounds like a great concept. You submit one report and remit all property to one state, and rely on the one state to distribute the property to the other states. Unfortunately, such reporting can result in compliance tracking nightmares and failure to apply each applicable state law, which in turn can add up to penalties and interest in an unclaimed property audit. An individual report should be prepared and remitted for each state in which liability exists
Compliance Update, October 2018: Idaho has indicated it will no longer accept reciprocal reports. Read the risks associated with filing reciprocal escheat reports.
Excessive Escheatment Each Year.
Many states allow for certain property to be exempt from unclaimed property reporting, such as those items generated through business to business exemptions. If your organization isn’t actively tracking and utilizing all statutory and technical exemptions – you’re likely over-reporting your obligations.
An outsourced unclaimed property solution frees your staff to concentrate on its core competencies and what it does best. After factoring in costs of training, hiring, software, and licensing – it’s often more cost-effective to employ the services of a third-party subject matter expert.
The Annual Unclaimed Property Reporting Process Doesn’t Need to be Painful
Identifying the unclaimed property reporting pain points that your organization is facing is only half the battle. Without remedying these struggles, the annual reporting process will continue to be burdensome and cause a strain on critical internal resources. Having the ability to successfully navigate the complexities of unclaimed property compliance can relieve your organization of that burden.
As the country’s leading provider of unclaimed property reporting and consulting solutions, our suite of solutions can give your organization the tools necessary to create a successful path to full compliance. For more information on how Keane can help your organization benefit from an outsourced unclaimed property solution and gain full compliance, please contact us.