Debunking Unclaimed Property Reporting Notions

Sherry Hale
November 6, 2018

We have found that many companies who think they are in compliance when it comes to unclaimed property laws and regulations are not fully compliant. It isn’t until they are audited and fined that they find out what they determined to be compliance, wasn’t full compliance in the eyes of the law.

The following notions that many organizations have that just aren’t true and could lead to some serious penalties and fines.

Merely Having Policies & Procedures Does Not Equal Compliance

Having policies and procedures around unclaimed property processes is a great start, but it’s definitely not enough. Unclaimed property laws are constantly changing, which means that you need a system in place that notifies you immediately of these changes, as well as adjusts all of your existing unclaimed property in the same manner. In order for a company to fully comply with unclaimed property laws, they need a comprehensive unclaimed management system that is constantly monitoring their data and making any applicable changes that happen automatically.

Reporting Unclaimed Property is a Courtesy, Not a Requirement

Reporting unclaimed property is not a courtesy, it’s the law. All companies in the U.S., Puerto  Rico, U.S. Virgin Islands, Guam, Northern Mariana Islands, and some Canadian provinces, must file unclaimed property according to those jurisdiction laws.

Trying to manage the laws and regulations in all states, on top of due dates for both due diligence and unclaimed property reports, could not only be a headache but also a huge liability, if you’re not familiar with every, states unclaimed property laws. Individual states determine their own criteria when determining deadlines and due dates for the various property types. When organizations fail to manage the reporting process properly, they open themselves up to fines and penalties should they ever be audited. Should an audit occur, it’s a very tedious process that involves a lot of time and could be costly to an organization that doesn’t have all of their t’s crossed and i’s dotted when it comes to adhering to unclaimed property laws.

It’s So Much Easier to Report ALL of Our Unclaimed Property to One State

The act of remitting all of your unclaimed property to one state, even if the property originated from another state, is called reciprocal filing. Not only do we not recommend reciprocal filing, it’s also not a good practice for your company. If one of your prior clients knew that you did everything in your power to return their unclaimed property to them, they would be more likely to do business with your company again in the future. When you file reciprocally, you are relying on another state to determine which state gets what payment. It’s much cleaner and client-friendly if you submit the unclaimed property to the state of the owner’s last known address. It’s the right thing to do and some states, like California don’t even allow reciprocal reporting.

Stay tuned for our next blog post where we will debunk additional unclaimed property notions that you may not have thought about.

Take Action

Get in touch with a Sovos unclaimed property expert to learn more about managing your unclaimed property compliance processes.

 

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Sherry Hale

Sherry Hale assists in managing sales and marketing initiatives. Sherry has a degree in Marketing, Business Management, and HR Management from Mount Mercy University in Cedar Rapids, Iowa. In her free time, she loves spending time with family, volunteering with animal rescue, playing with her own rescue pets, and riding her Harley.
Share this post

North America Tax Information Reporting
March 22, 2024
Market Conduct Annual Statement Reminders and More

On the second Wednesday of each month, Sovos experts host a 30-minute webinar, Water Cooler Wednesday, to share the latest updates on statutory filings. In March, Sarah Stubbs shared information about the many filings due after March 1, from Market Conduct Annual Statements to health supplements for P&C and life insurers writing A&H businesses and […]

North America ShipCompliant
March 21, 2024
How Producers Can Build a DtC Shipping Market

Direct-to-consumer (DtC) shipping has become one of the leading sales models for businesses of all sizes and in all markets. The idea of connecting directly with consumers is notably attractive, as it helps brands develop a personal relationship and avoid costly distribution chains. Yet, for all its popularity, DtC is often a hard concept to […]

North America ShipCompliant
March 20, 2024
Key Findings from the 2024 DtC Beer Shipping Report

This March, Sovos ShipCompliant released the fourth annual Direct-to-Consumer Beer Shipping Report in partnership with the Brewers Association. The DtC beer shipping report features exclusive insights on the regulatory state of the direct-to-consumer (DtC) channel, Brewers Association’s perspective and key data from a consumer preferences survey. Let’s take a deeper dive into some of the […]

March 20, 2024
As the World Gets Smaller, Think Bigger About Global Tax Compliance

For the past few weeks back, my colleagues and I have been talking a lot about the importance of a global strategy when it comes to addressing today’s modern tax environments. On the heels of Sovos introducing the Sovos Compliance Cloud, many in our company’s leadership team have blogged about related topics and the critical […]

North America ShipCompliant
March 12, 2024
Florida HR 583 Set to Uncork Larger Format Wine Bottles

Florida wine lovers could soon enjoy a bigger selection of bottles based on a recent bill passed by the state’s legislature (HR 583) that would remove the existing cap on wine bottle sizes. What is Florida’s HR 583 bill? Currently, Florida law prohibits the sale of wine in bottles larger than one gallon (a little […]