Being Partially Compliant is Better Than Not Being Compliant At All
Every single company is required to not only file unclaimed property reports to the state, but also follow the law when it comes to conducting due diligence in attempting to locate lost owners, documenting those attempts, and not reporting the property as unclaimed until the due date has arrived for that property type. Even if you only have one uncashed check, you must fulfill all necessary requirements and file a report. Some states even require companies to file negative reports meaning they did not have any unclaimed property but still must notify the state they had none.
Many companies believe they only need to comply with the laws of their state of incorporation and only file reports to that state. This notion is false, as stated above, you have to report to every state you have a last known address in. This is a common misconception and often is the main reason companies are not compliant. You must follow all rules of all 55 jurisdictions or the jurisdictions that are relevant to your unclaimed property.
I Sent My Reports to the State, I Have Nothing Left to Do
There is plenty more to do! Were due diligence letters sent at the appropriate time in an attempt to locate the lost owner before the property was due to be reported? Are you tracking those due diligence efforts with an audit trail that can be easily reviewed in case of an audit? Merely filing the reports to the state(s) is not enough and it certainly doesn’t mean your company is in compliance. Additionally, the submitted reports have to be in a specific format that each state varies on.
Without knowing each state law intimately, there is no way to know if you are in full compliance. One state could have a 3-year dormancy on a property type, whereas another might have a 5-year dormancy on the same property type. Failing to understand all of the property types, their dormancy periods, and following each state law accordingly, means compliance has not been met and there is much to do my friend.
Conclusion
There are many rules and regulations that must be followed when it comes with unclaimed property compliance. It is important to understand the various state laws in order to be in total compliance, avoiding stiff penalties and fines. Fortunately, there are several resources available to assist with the process, as well as industry experts who can help identify whether or not you are in total compliance.
Take Action
Get in touch with a Sovos unclaimed property expert to learn more about managing your unclaimed property compliance processes.
