Due Diligence is the act of sending letters to lost owners or publishing their names in newspapers. Almost every state and every jurisdiction within a state requires companies to perform due diligence.
Benefits
Due diligence not only benefits owners of unclaimed property, it can also benefit your business.
Many of your lost owners are customers whose business you wish to keep. Send a round of customer service letters to those owners as soon as you can. Customer service letters are not required by law, but they do significantly increase your chances of retaining customers. The sooner you reach out to them, the better your chances of keeping their business. And by following due diligence requirements, you could greatly decrease the amount of property you have to report in the future. And fewer reports means a decreased risk of penalties.
Penalties
There are many benefits to following due diligence requirements. And there are many consequences to ignoring them. Today, many states have a sworn affidavit on their cover sheets stating that due diligence has been performed. There can be massive penalties if an officer from your company signs off on something you did not do.
States have proven strategies for auditing due diligence. And many times, it is quite obvious when your business fails to comply. If a state finds a large percentage of the owners you could not find, your due diligence will come into question.
Requirements
The most common unclaimed property due diligence requirement is to send due diligence letters to lost owners 60 or 120 days before the filing is due. Additionally, some states require that you publish lost owners’ names in newspapers.
A few states require due diligence letters to be sent as certified mail. Below are the requirements for those states:
- New Jersey: Certified letters must be sent to all lost owners with properties valued at $50 or more. A return receipt is also requested.
- New York: Certified letters must be sent to lost owners with properties valued at $1,000 or more. If the property has multiple owners, you must ensure that each owner receives their own certified letter. However, the state of New York does allow holders to deduct the cost of certified mailing from each record included in the mailing.
- Ohio: Certified letters must be sent to lost owners with properties valued at $1,000 or more. A return receipt is requested and there must be a self-addressed stamped envelope (SASE) included. Holders can deduct up to $20 of the cost for each property that requires the certified mailing.
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