When are unclaimed property reports due? This is a fairly common question asked by holders that are new to the escheat reporting process, or not as well versed in the intricacies of escheatment reporting. Fortunately, Keane has provided answers to some of the most frequently asked escheat reporting questions (and a running clock) to help your organization survive the upcoming fall reporting season.
Q: When are unclaimed property reports due?
A: Each state has its own deadline. The majority of states have a deadline that falls on either October 31st / November 1st—collectively known as the fall season.
How long until the Fall Escheat Reporting Deadline (October 31st)?
A smaller set of states have a spring reporting season, with reports due between March and May. Certain states go one step further by designating different due dates for specific property types. And as if that wasn’t confusing enough, California utilizes its own unique process that is entirely different than any other jurisdiction.
These deadlines are generally for General Ledger property, such as accounts payable, accounts receivable, and payroll. Many states have varying reporting deadlines for specific industries, such as banking and insurance.
Q: Who must file unclaimed property reports?
A: The simple answer is that any business, public or private, for-profit or non-profit, in possession of unclaimed property (assets left dormant and owed to another) must file annual escheat reports. No matter the industry, any holder of abandoned assets has a responsibility to file the required annual unclaimed property reports.
Q: What are common types of unclaimed property?
A: The property types associated with each industry vary, but there are some common types that are found in most organizations. These include payroll, accounts payable, accounts receivable credits, and other general ledger property types. In the financial services industry, there is a wide variety of property types, such as bank accounts, shares of stock, dividend checks, brokerage accounts, life insurance benefits, and other investment properties.
Q: Which states require due diligence mailings for unclaimed property?
A: All states require due diligence letters to be sent to owners of unclaimed property. Due diligence requirements vary by state in terms of value thresholds, specific language, and mailing dates – however there are common elements that should appear in all due diligence letters.
Q: Is there a reporting threshold for holders under a certain amount?
A: No, with the exception of a few states with conditional exemptions for amounts below certain thresholds (i.e. under $25). Within the complexities of unclaimed property, this could be the one topic most jurisdictions agree upon. There is generally no minimum amount in the law. In Lieu of a limited exemption, all unclaimed property must be reported to the state of the holders’ last known address.
Q: Can I file unclaimed property reports early?
A: Yes, to an extent. Some states have defining criteria that affect early reporting filing. For example, some require prior consent as well as a due-diligence effort to contact and make an attempt to locate owners. If no subsequent information on the owner’s whereabouts is collected, some states allow you submit their files early.
Q: Can I submit unclaimed property reports late?
A: Yes, to an extent. Some states will grant you a reporting extension IF you request an extension prior to the reporting deadline. For example, in the state of Washington you can request a reporting extension prior to the November 1st deadline by faxing or emailing your request with the following information: Your Holder Numbers, how much additional time you need, and the reason for your extension. If you do not receive a reporting extension and submit reports late many states impose fines and penalties for late reporting.
Q: Are there fines for reporting property late?
A: All states have provisions allowing them to issue fines, penalties and/or interest on past due property. If you’re a holder of past due unclaimed property, you might want to consider requesting a voluntary disclosure agreement to mitigate your risk of penalties, interest or fines.
Q: What are Negative Unclaimed Property Reports?
Negative unclaimed property reports are reports that indicate the holder has no property to report to that particular jurisdiction in the given reporting cycle. Many states encourage the practice of submitting negative reports but do not officially require that they are submitted.
As a best practice, be consistent in your filing. If you consistently report to a particular jurisdiction and have no property due in a given year – submit a negative report.
Q: How long should I retain my unclaimed property reports?
A: Keane’s National Consulting and Advisory Team recommends holding copies of your unclaimed property reports for a minimum of ten years after you file them. Ten years is the typical look-back period for states and third-party auditors to determine potential unclaimed property liabilities. If your organization happens to be faced with an unclaimed property audit in the future, there is no better defense than a complete and accurate reporting history with access to the last ten years’ worth of reports.
Q: How do I account for reporting properties in multiple states?
A: Depending on the quantity of dormant assets and values associated with them, some states permit you to report another state’s properties with your state of domicile unclaimed property reporting. This is known as reciprocal reporting, but it is generally not considered a practice on which to rely. In most instances, you are required, and as a best practice are recommended, to report individually to the each of the states to which you owe unclaimed property.
Q: Is there a unique way the state wants me to remit my payment?
A: Depending on the state where the property is due, holders of unclaimed property are generally required to submit reports and remit funds in a specified manner. Some states require holders to submit via electronic funds transfer. Other states may require ACH transfers or checks until funds reach a specified amount.
Q: Can I submit unclaimed property reports electronically?
A: Yes and no. There is no “one size fits all” when it comes to the submittal of unclaimed property reports. Each state has its own requirements for holders. Some states require only traditional paper report filing while other states accept electronic filing (and some accept both).
If you still have additional unclaimed property reporting questions, we encourage you to contact one of Keane’s escheat reporting specialists for a complimentary consultation. Our proven processes, expertise, and technology provide a cost effective means of ensuring compliance with all state requirements.
Q: What do states do with the money that they receive from unclaimed property?
The money is typically placed in the state’s general fund, with a reserve set aside to pay claims and administer the program. Some states do appropriate a portion of the funds for other purposes such as infrastructure and education. It is important to remember that the state maintains a custodial role regarding escheated funds, in that they are “stepping into the shoes” of the rightful owner until they, their heir, or beneficiary comes forward to claim the property.
Editors Note: This post was originally published in May 2015 and has been updated as unclaimed property legislation and guidance changes.