Q: What are Unclaimed Funds?
A: Unclaimed property can be tangible (safe deposit box contents) or intangible property (securities-related property or general ledger property) that is due and owing to the owner.
Q: What is the dormancy period?
A: The dormancy period is the specific period of time set by law that the owner has held onto the property without taking any action on it.. Once that period ends, the company is required to attempt to make contact with the owner prior to escheatment.
Q: What is “escheatment”?
A: Escheatment is the process of reporting and remitting unclaimed property to the states. Once this occurs, you must contact the state where the funds were sent by the company to claim your funds.
Q: What kind of companies have to report unclaimed funds?
A: Nearly every company has the potential to generate unclaimed property through its standard business operations (e.g., accounts payable, accounts receivable through customer overpayments, and payroll for example). In addition, other types of property such as securities, certain retirement accounts, life insurance payments, stored value (gift) cards for retailers, customer rebates for manufacturers, or mineral proceeds for oil and gas companies may also create unclaimed property risk. If a company has unclaimed property, they must report and remit the property on an annual basis.
Q: Can companies get help with compliance?
A: Yes, Assistance may come in many forms, including : assisting with the set-up of unclaimed property policies and procedures, reviewing the company’s books for potential risk, defending the company should it receive an audit notice or other type of enforcement letter, understanding unclaimed property risk in advance of a merger or acquisition, or providing general consultation for a newly launched product or service. Some companies also assist with some, or all, aspects of the annual unclaimed property reporting process, including mailing and collecting due diligence letters and responses, reissuing checks and reporting and remitting property and funds to the states.
Q: What if a company doesn’t report unclaimed property to the state?
A: If a company does not report, or its reporting appears inconsistent to the states, it runs the risk of being audited and assessed penalties and interest on any past due property identified. All states have statutes that allow for enforcement activities and the ability to assess penalties and/or interest.
Q: Do unclaimed funds accrue interest during the dormancy period?
A: Some states will include interest earned on the property while it is in the state’s custody until the time that it is claimed by the owner. .
Q: Is there a federal database of unclaimed funds, or do I have to check state by state?
A: While there is no federal database, individuals and companies can search for property held by the states either by going to the respective state’s unclaimed property website, or by searching = www.unclaimed.org or www.missingmoney.com.
Q: Is unclaimed property escheated to the state where I live or the state where the company is located?
A: Unclaimed property is escheated to the owner’s state of last known address based upon the company’s books and records. If there is no address in the company’s books and records, the unclaimed property is escheated the company’s state of incorporation/domicile.
—Luke A. Sims, CPA
Partner at MarketSphere Consulting, LLC. MarketSphere Consulting, LLC is not an accounting or a law firm, and the information herein is not intended to be, and shall not be, construed as accounting or legal advice.
