Joe owned a successful small business for over thirty years. He loved what he did, and while he had a lot of responsibilities, he thought he managed everything well, worrying about the important things and ignoring the unimportant. Case in point: he figured if vendors or employees never cashed their checks, that was on them, and was all the better for him.
One day, however, Joe received an unclaimed property audit notice from the State Comptroller, and his stomach dropped. The notice alerted Joe that they would be requesting records dating back ten years. He no longer had the documents for many of those years. All of a sudden, he had a lot to figure out and was going to be facing some major challenges for him and his business.
Let’s take a look at some of the major points of unclaimed property you need to know so that you as a business owner don’t end up like Joe.
What is unclaimed property? Simply put, it’s a financial asset or personal property owed to an individual or business where there’s been no owner contact for a specified period of time. Businesses must report and pay to the state any personal property they are holding that is considered abandoned or unclaimed. Below are some examples of property that can become abandoned and the length of time after which the property is considered abandoned or unclaimed:
- Payroll checks (1 year)
- Customer overpayments (3 years)
- Vendor checks (3 years)
- Stored value cards/gift cards (the earlier of the expiration date or 3 years from the issue date or last activity date)
Unclaimed property should not be reported until it has reached the required abandonment period (March 1st each year). You are required to hold the property until the appropriate abandonment period has passed. You must mail a notice to all owners of property greater than $250 that is due to be included in their annual report.
For example, let’s say you issue a check to an employee on February 1st of 2016. It is now March 1st of 2017 and that check was never cashed by the employee. Now, that check is required to be reported and paid to the state by July 1st 2017.
If you have determined that you do, in fact, have unclaimed property that you need to report to the state, the deadline for filing your report and remitting your property is July 1st of every year. Property that is due July 1st may be remitted any time after the annual cutoff date of March 1st.
Unfortunately, if a person fails to pay or deliver property on time, the Comptroller will assess interest and penalties from the date the property should have been paid until the date it is received in the Comptroller’s office. If you have determined that you do have property that should have been previously remitted, the Comptroller recommends that you file a report immediately. The Comptroller’s office will then calculate the interest and penalty.
The details of how to search for unclaimed property and how to report it can be complicated, so please contact us at 210.733.6611 or firstname.lastname@example.org if you would like further information or if you have any questions regarding the filing of unclaimed property. We are more than happy to help.