Your Unclaimed Property Audit or Voluntary Disclosure Agreement is Over: What Comes Next?

As the upcoming unclaimed property compliance reporting deadlines approach, you may be wondering how to best prepare. If you can answer the following questions, you are well on your way to being compliant. If not, we have some recommendations to help move you in the right direction.

Have Formal Unclaimed Property Policies and Procedures Been Put in Place Since the Completion of the Audit/VDA?

• Make sure documentation and record retention policies accommodate unclaimed property reporting standards.
• Designate and educate coordinator(s) in each applicable department to ensure the policies and procedures are followed.
• Create a schedule to ensure that all departments within the company are aware of the various state deadlines. Helpful hint: familiarize yourself with the states’ extension process and deadlines should you need it.
• Develop best practices that work for your company, such as:

   

  • Assigning a coordinator to be the point of contact for the states and to address owner inquiries;
  • Creating a separate unclaimed property general ledger account; and
  • Sending courtesy letters that notify customers/vendors well before property becomes dormant and escheatable.

How Does the Company Plan to Resolve the Unclaimed Property Obligation Identified in the States That Were Not Apart of the Audit or VDA?

By law, the company is required to report this property to the state of its last known address or the company’s state of incorporation. The company should analyze the remaining liability and decide whether to begin reporting on an annual basis going forward or possibly file additional VDA’s. Factors that should help determine which direction to go are possible penalties and interest by state, potential exemptions and deductions and internal resource availability.

How Does the Company Plan on Becoming Compliant With Its Reporting Obligations?

The business must decide between training internal resources on the various state reporting rules or outsourcing to a knowledgeable firm. If internal, we recommend looking into a software system to assist in managing the data, keeping track of the due dates and dormancy periods, tracking due diligence responses, and generating state reports and the National Association of Unclaimed Property Administrators (NAUPA) formatted files. The states’ unclaimed property rules are ever-changing and software companies should keep their systems updated with such changes.

Additional Points to Consider if the Reporting Process Should Remain In-house

• Create and maintain a schedule for dormancy dates and report due dates

   

  • Be sure to consider the “cutoff date” for each state—the date by which the item must be dormant “as of.”
• Mail due diligence letters to all owners with property deemed dormant in the appropriate time frames, as law requires (typically 30 to 60 days).
• Determine how to best track responses to due diligence and reunite owners with their property.
• File reports and remittance on time and retain completed filings and proof of remittance.
• Don’t forget to include unclaimed properties from recently acquired entities!

As evident above, unclaimed property reporting is a multifaceted and extensive process. If considering an outsourced partner, it is generally a best practice to consider a firm that is experienced in managing the intricacies involved with reporting unclaimed property. With little uniformity in laws amongst the states, compliance is all about juggling various due diligence mailing dates and dollar thresholds as well as opposing electronic and paper filing and payment requirements.

The Duff & Phelps Unclaimed Property team invites you to learn more about our cost-saving unclaimed property reporting services. Our clients enjoy comprehensive unclaimed property support from our expert team in Addison, Texas. All services are scalable, allowing clients to retain certain tasks if desired. However, most leverage our full capabilities, including:

• Data extracting and parsing
• Maintained subledger
• Real-time online access to data and metrics reporting via our new proprietary tool Unclaimed Property LINK or UPLINK
• Dormancy and due diligence eligibility analysis with exemption review
• Due diligence mailing and response management
• Report preparation with signature
• Filing and payment remittance

When coupled with our advisory services, Duff & Phelps' unclaimed property reporting specialists help ensure clients mitigate risk and stay compliant.