Preparing and filing unclaimed property can be a horrifying and confusing task for some individuals. It requires attention to detail with each jurisdiction’s dormancy calculation and reporting requirements. So, is there an easy way to compile and submit all your unclaimed property to only one state for the year? The answer is no.
There is much confusion around reciprocity and whether someone should file reciprocally. Reciprocal filing is an agreement between two states in which unclaimed property is collected by one state and exchanged with the other state. Most states that accept reciprocal filing today, limit it to “incidental property only” which is defined as a limit of 10 out-of-state records totaling $1,000 or less. Keep in mind that not all states allow reciprocal filing.
There are also risks to consider when filing reciprocally. The property to report must be reported according to the dormancy periods determined by each state. For example, if you need to report to a spring filing state, such as Florida, and you report reciprocally to a fall state in the fall, the Florida report would be considered late. States are increasing their efforts in charging late fees, interest charges, and penalties for these records. This may also subject you to future audits.
Therefore, we encourage businesses to shy away from reciprocal filing. It seems like less work in the beginning; however, you can have peace of mind knowing you filed accurately. UPEnterprise and other software programs make the process seamless and will save you a considerable amount of time and money should you ever be audited.
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Get in touch with a Sovos unclaimed property expert to learn more about managing your unclaimed property compliance processes.
