This blog was last updated on January 6, 2025
Learn how to respond to California’s unclaimed property notices. Avoid audits, penalties, and interest with timely actions and the Voluntary Compliance Program.
Be aware! California is ramping up its enforcement of unclaimed property law, and businesses are in the crosshairs. Recently, the State Controller’s Office (SCO) began issuing letters through its Outreach and Compliance Unit. These notices require companies to file unclaimed property notice reports within 60 days. Whether your business has unclaimed property to report or not, here’s everything you need to know to stay on the right side of the law.
How to Respond to an Unclaimed Property Notice Letter
A notice letter from the SCO is not a request to be ignored. If your business receives one, the clock has already started ticking. It is extremely important that all companies respond within 60 days of the date of the notice.
- If no property is due: Send an email to UPDHolderOutreach@sco.ca.gov, acknowledging the notice and stating that no property is owed. While California law does not require the filing of a nil (negative) report, California can administratively compel a company to file one and has done so through the new program.
- If there is property due in the next reporting cycle: Inform the state that although nothing is currently due, the company has plans to file property due in the next cycle. Property must then be reported by the next filing deadline as required by California law.
- If past-due property is found: Respond by stating your intention to join the California Voluntary Compliance Program (VCP). The California VCP is a lifeline for businesses that have fallen behind on their unclaimed property obligations. By voluntarily reporting past-due property, companies are rewarded with fewer penalties, waived interest, and reduce the likelihood of being audited.
It’s equally important for businesses to alert the SCO about notice letters sent to entities that are no longer in operation. If a company has been dissolved, merged, or otherwise ceased operations, this information must be conveyed to the SCO to avoid unnecessary follow-up or referral for enforcement action.
What to Know About Enrolling in the California VCP
Participation in the VCP is simple but requires follow-through. Businesses can either respond to a notice letter expressing their intention to join or reach out directly to the SCO to apply. However, failure to complete the VCP application after declaring intent can lead to a referral for audit, so it’s essential to see the process through.
It is worth noting that Sovos received confirmation that the various departments within the California Unclaimed Property Division communicate with one another to ensure seamless coordination. Specifically, when a company enrolls in the Voluntary Compliance Program (VCP), the VCP team takes the initiative to notify the Outreach and Compliance Unit of the company’s participation.
This coordination provides reassurance to companies entering the VCP that their efforts will not go unnoticed or create conflicting requirements. For example, if a business has responded to a notice letter by informing the Outreach and Compliance Unit of its intent to join the VCP, the follow-up actions within the VCP team will align with the Outreach Unit’s records. This reduces the risk of redundant follow-ups or misunderstandings regarding a company’s compliance status.
The Consequences of Non-Compliance
Ignoring these letters altogether is the costliest mistake a business can make. The absence of communication increases the likelihood of unclaimed property audits, interest assessments, and penalties. The SCO works closely with the Franchise Tax Board (FTB) to conduct thorough investigations, which can be both time-consuming and costly.
Once flagged for audit, businesses face a deep dive into their financial records often spanning several years. This process disrupts daily operations while also putting companies at risk of accruing additional penalties and interest.
Take action today to avoid complications tomorrow—the cost of ignoring California’s unclaimed property laws is far too high.
