I once had the task of tackling a previous employer’s unclaimed property schedule. For years it hadn’t been properly worked and the credits were piling up. What that organization didn’t know was that they were unknowingly setting the stage for an unclaimed property audit. Unclaimed property, is considered any financial asset, tangible or intangible, that has been abandoned by the rightful owner. Every state has laws surrounding unclaimed property and can include items such as uncashed payroll checks, security deposits, insurance payments, and a host of other assets. Many states are trending toward using the penalties and interest levied from an unclaimed property audit as a new revenue stream. So, how do nonprofits, small businesses and corporations avoid excessive fines and painful audits? Knowing the laws for your state and having processes in place to ensure timely and accurate remitting of funds to the appropriate state treasurer's office is a great starting point.
What are the Laws?
For every state, the unclaimed property statutes are different, but all states are governed by similar consumer protection laws that require every company and corporation make a good faith effort to locate the owner and file an annual unclaimed property report. After the applicable period has passed, companies are required to turn over the funds to the state. In Virginia most items should be reported after five years of abandonment. For Maryland and the District of Columbia, most items should be reported after three years.
Plan of Action:
- Maintain clean, accurate records.
- Simplify reporting.
- Boost productivity.
With the upsurge in regulation surrounding unclaimed property, it is imperative that consideration is given to creating or implementing a policy for your organization to ensure compliance with the states and the unclaimed property laws. Just a few simple steps of research, planning, and organizing can help your business avoid unnecessary fines and penalties.
For more information regarding reporting requirements and resources when it comes to unclaimed property, please submit your question/comment below.
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About the Author
Donica Johns is a Staff Accountant II at Halt, Buzas & Powell, Ltd.. She has more than six years of experience in public accounting and has served clients in both corporate entities and nonprofit organizations. Donica received her B.S. in Business Administration - Accounting from the University of Baltimore and is actively pursuing her CPA. She is a member of the Maryland Association of Certified Public Accountants (MACPA) and the American Institute of Certified Public Accountants (AICPA). Outside of work, Donica enjoys activities such as travelling, volunteering for local organizations, attending live concerts, listening to music, and spending time with her family and friends.
About Halt, Buzas & Powell, Ltd.
Founded in 1969, Halt, Buzas & Powell, Ltd. (www.cpas4you.com) is a full-service public accounting firm with more than 40 years’ expertise providing accounting, auditing, taxation, management systems, outsourced accounting, and managed IT services to the region's nonprofits, businesses, and individuals. Headquartered in Alexandria, VA, Halt, Buzas & Powell has grown steadily over the years to become a leading public accounting firm in the Washington, DC metropolitan region. Our devotion to exceptional service, quality and value has led to our ranking by the Washingtonian magazine as one of the top 25 CPA firms for quality service, and listing in the Washington Business Journal as one of the Top 50 Accounting Firms by size. Halt, Buzas & Powell, Ltd. also has an office in Crofton, MD.