PRACTICE AREAS

Exhausting all options to rightful ownership—before determining which state should report these assets—is a daunting process. We encourage companies to pay greater attention to their unclaimed property liability, including unclaimed assets, ensuring the company properly reflects the liability. “Unclaimed” constitutes that the check, rebate, or store credit must have remained unclaimed or un-cashed for three years.

We can implement policies and procedures to track and comply with state reporting requirements regarding record retention. Streamline works diligently with our clients to ensure these policies are in place, helping to minimize audit assessments, interest and penalties.

Regardless of industry, if a company has extensive transactions, a large temporary workforce, or large customer base, it is at substantial risk if it is non-compliant. Organizations can eliminate the likelihood of an audit with attendant interest and penalties by filing timely unclaimed property reports. Texas businesses, for example, are expected to report to the State all unclaimed amounts for vendors, customers, and employees each year.

An audit for unclaimed property started today will examine outstanding amounts for the previous ten years (the federal government requires records be kept for seven years). Often, records going back ten years are unavailable. In these cases, the auditor will typically apply a straight-line estimate based on the best available information and collect monies for the full ten-year period. This estimate can be based on unclaimed property findings at other businesses found to be similar in nature. Unclaimed property is not a tax and does not have the same remedies found in sales and use tax audits. Audited amounts due can only be challenged through the courts.

Some key points to consider:

• There is no filing for re-determination, adjudication, or dispute resolution.
• There is no statute of limitations on unclaimed property. In cases where the state feels it would be beneficial to carry the audit back further than thirteen years (ten years plus the three-year outstanding period) it is within its right to do so.
• Penalties and interest will also be assessed in the audit and given the length of the audit period; these amounts can become overwhelming very quickly.

Because of the finality of an unclaimed property audit, any company concerned about compliance should seek counsel for assistance in preparing for the impending audit.