Over the years, we have hosted numerous webinars and events around unclaimed property. Throughout these events, we’ve received many excellent questions from attendees. We combed through and provided some of the most frequently asked questions and their answers from our unclaimed property experts.
Due Diligence
If we have property where due diligence needs to be sent in August, can we contact the owner via email/phone prior to August?
You can certainly contact owners before the required due diligence date by mail, email or phone. This is considered a best practice to contact clients whose property is at risk of escheatment via all means available. If you don’t hear back from the owner, then you will have to perform the statutorily required due diligence outreach.
How should letters returned by the post office be handled? Especially when the returned letter is VERY late?
If due diligence mail was returned by the post office as Return to Sender/RPO then it needs to be reported and escheated to the appropriate state. If this delay from the post office caused an unclaimed property reporting delay, make sure you retain information and copies of the returned mail for your records.
Are there states that require both email and written due diligence letters be sent out?
Yes, multiple states require email due diligence. For example, Nevada stipulates that if the apparent owner has previously agreed in writing to receive communications via email, the holder must send due diligence notification both by U.S. mail and email, unless the holder believes an email address is invalid.
What are best practices for ensuring timely due diligence and reporting?
There are many best practices in relation to due diligence and reporting, such as: staying up to date on state changes, having policies and procedures in place, ensuring policies and procedures are followed, ensuring your system accurately tracks date of last activity and more. Another best practice of course is to use a provider, like Sovos, that stays on top of the state legislative and industry changes on your behalf.
Does the dormancy period start from the check issue date or the last activity date?
90% of the time, check issuance date is used to trigger and age outstanding checks. There are certain situations where date of last contact (DOLC) can trump the trigger date, for example the new TX guidance that allows for the usage of DOLC rather than check date or if a state exempts them based on ongoing business relationships. Another example would be if an organization contacts the payee and they request the check to be reissued. In that situation the dormancy clock would be restarted with the issuance of the new check.
What do you do for due diligence and reporting when you do not have a name and/or address for property of a check or money order?
If you do not have a name or address for a client, then the property is remitted to the company/holder’s state of incorporation.
Should due diligence letters be mailed to account holders with bad addresses?
Every effort should be made to find the correct address for the customer for due diligence mailings. At least one state requires that if you do not have a “good” address you must still send the due diligence letter to the address that you have on file.
Reporting
What is a negative report?
A negative report indicates to the state that the holder (company) has performed analysis and has no property to report to the state that year.
For negative reporting, do you only have to report to the state if you reported this last year or all previous years?
If you have a reporting history at all with a state, it’s best practice to continue performing negative reporting unless the state specifically states that they do not want to receive negative reports.
Is 30 to 60 days early acceptable to file the report?
It’s best practice to file state reports as close to the due date as possible. Some states require special approval for early reporting. Also, when you can report depends on when your due diligence letters were sent and if your clients have had at least 30 days to send in responses. Typically, after those 30 days have passed you can report early. However, as mentioned some states require permission to report early so it’s best practice to report on or near the state mandated due date.
Do we list all authorized signers on the template when listing a business account or do we list the business only? We have an account with multiple authorized signers, and only two of them are beneficial owners.
The rule of thumb to use is, if that owner came to the state, would they be entitled to the funds? Therefore, all beneficial owners would need to be listed.
How long does an owner have to claim the funds from a state?
If you send in funds to the state and the funds remain unclaimed for years, what happens to the funds?
For most states, owners can claim property from the state indefinitely.
Is the unclaimed property filed in the state the company is operating out of or with the state the recipient is in?
Based on the rules of priority, unclaimed property is filed to the client/recipient’s state of last known address. If the address or other information is not available, then the property is filed to the holder’s state of incorporation.
Is there a minimum dollar amount? For example, if a customer leaves a credit on an account for less than $10, do we have to send that to the state?
This depends on the state’s individual rules and regulations as different states have different minimums for filing.
If you are a U.S.-based company, and have unclaimed property (customer credit balances) for customers who are located overseas, how do you report those balances?
If overseas customers do not respond to due diligence notices, then their unclaimed property is reported to the holder/company state of incorporation.
Can you file with the state after the filing reporting period has passed?
Yes. However, some states apply penalties and interest for late unclaimed property reporting. If you have past due property in a state, we recommend potentially entering into a voluntary disclosure agreement (VDA) with the state, if the state has a VDA program, to avoid penalties and interest. You can also request an extension on the reporting due date.
Consulting
What is a VDA?
A voluntary disclosure agreement (VDA) is a legal means for companies to self-report owed unclaimed property to the state. VDA programs are designed to be a business friendly and efficient means of coming into compliance with unclaimed property reporting obligations. Some states, like Delaware, send out letters inviting holders into their VDA program where holders go through a process of sharing information to make sure that they are in compliance.
How long should a holder retain unclaimed property records and returned mail? What is the retention period for unclaimed property records?
It depends on the state, but it is typically recommended to retain documentation for 10 years, plus the dormancy period. Most property types have a five-year or less dormancy period, so it’s typically a best practice to retain this information for at least 15 years.
Reach out to us if you have further questions not included in this article!
