New York Unclaimed Property Self-Directed Compliance Program

Continuing the trend in 2021, New York unclaimed property recently introduced the NY Self-Directed Compliance Program  geared towards identifying both non-reporters and companies that reported in 2021, but failed to report property types expected to be seen. Due to 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.

Check Your Mail

Encourage your company’s unclaimed property contacts, mail room and upper management to be on the lookout for letters from the state. Oftentimes, 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 due to COVID-19, it is imperative that this letter does not go unnoticed.

The State of New York Office of the State Comptroller sent out letters to holders encouraging them to review their records for any unclaimed property that may be subject to reporting. The letter goes on to detail steps to come into compliance with New York unclaimed property law. 

Self-Directed Compliance Program (SDCP)

The first step outlined is completing their Self-Audit Checklist administered through an online survey. It is noted in the letter that the survey is to be completed even if the holder does not have any additional information or unclaimed property to report. Specific ramifications for not completing the survey are not outlined in the letter. In other states, such as Delaware, holders that do not respond to the invitation letters such as this are referred to a State Escheator for audit examination. As this is a new process for New York, it is still unknown if a failure to respond will result in an audit.

Results from the survey will help to identify if the holder could have additional unclaimed funds reportable to the state. If a company discovers additional unclaimed property through the survey, they are immediately referred to the Self-Directed Compliance Program. The SDCP program is not an audit and provides an opportunity to reduce or eliminate potential interest and penalties related to past due properties

New York Unclaimed Property Audits

As states and third-party auditors continue to expand their compliance efforts, there is a growing concern that initiatives such as New York’s Self-Directed Compliance Program are forerunners to increased audit activity. Sovos’ experts expect to see an increasing trend in audits due to the budget shortfalls many states are experiencing from the COVID-19 pandemic.