Maryland Unclaimed Property Audit Notices

This blog was last updated on September 15, 2021

It has recently come to our attention that the state of Maryland has increased its audit efforts. Due to the negative economic impact resulting from COVID-19, Sovos’ consulting, reporting and regulatory teams have been preparing for increased unclaimed property compliance enforcement efforts to shore up struggling state budgets. Pursuant to Title 17, Abandoned Property Act and Regulations of Maryland, the state comptroller “administrator” may enter a holder into an audit to determine unclaimed property compliance, if there’s a reason to believe that the holder failed to report property due to the state. 

Check your mail 

Encourage your company’s unclaimed property contacts, mail room and upper management to be on the lookout for audit letters from the state. Often, when holders receive these letters they are not brought to the attention of the appropriate person or department. With many companies still working from home or hybrid schedules due to COVID-19, it is imperative that this letter does not go unnoticed.

If you receive an audit notice Sovos’ unclaimed property consulting team has extensive experience assisting organizations as a holder advocate, ensuring that all requirements of the audit are completed in an efficient and compliant manner.

Maryland unclaimed property reason to believe clause

Maryland is unique in that its state statutes include a reason to believe clause as quoted below:

An examination of records is allowed under § 17-322. (a) at reasonable times and on reasonable notice, the administrator may examine the records of any person if there is reason to believe that the person has failed to report property that should have been reported under this title. The administrator may not examine the records of any person regarding abandoned property after 5 years from the date the person filed the report with the administrator covering the period of time during which the property allegedly became abandoned, unless the administrator finds that the person acted fraudulently or with gross negligence with respect to the report.

This is an extremely important clause for companies who have a strong history of unclaimed property compliance in Maryland as this clause allows for the potential to challenge Maryland’s right to audit before the audit even has a chance to fully begin. Sovos’ consulting team has effectively utilized this clause with holder clients in the past. Sovos’ first step in this process is to determine if the holder has the unclaimed property compliance history needed to make the argument. If the holder’s compliance history is sufficient, Sovos’ consulting team then provides assistance with drafting communications and outreach to the state based upon our previous successful defenses.