Sometimes it does not pay to be a shrinking violet.
It’s tempting to be timid and minimalistic in management of abandoned and unclaimed property, because holders often believe it’s more advantageous to stay “under the radar” with states and auditors. There’s no doubt, that’s one important tactic for holders in certain circumstances. Unclaimed property efforts are most successful when they result in minimal impact on your holder company.
However, at times, there’s more to be gained from being assertive—even aggressive—in management and defense of your unclaimed property situation.
Your professional unclaimed property advisor can help you determine confidently when you should minimalize efforts and when you should spring forward aggressively. In the meantime, think about the following general areas in which you could find yourself facing a need to be aggressive.
Hire the big guns.
Engage the services of highly-experienced professional unclaimed property advisors. When you’re a kid in the schoolyard, it benefits you to be friends with one of the bigger kids who can protect you from the bullies. Unclaimed property, when it causes issues, can “beat up” a holder company with demands on time and budgets—and even erode a company’s reputation. With a professional advisor intently dedicated to bringing you into compliance and keeping you there, you can more easily identify risks, avoid mistakes, and take advantage of opportunities to improve your unclaimed property policies and processes, ultimately reducing the impact of abandoned and unclaimed property on your company.
Add software that can automatically identify stale-dated records, organize accounts, manage reporting, and more. Automation software that is specifically designed for managing unclaimed property removes some of the burden on staff by helping you process records and reports faster. However, one of the most advantageous aspects of automation is that it reduces mistakes. Flagging stale-dated accounts and duplications, for example, leads to identification of issues human records researchers might miss. Because automation results in more reliable records, it also can help you more confidently converse with leaders when you appeal for funds and resources.
Revamp records systems.
If your records infrastructure leaves something to be desired, now might be the time to make a wholesale change. Not every holder needs to undertake complete restructuring of records. However, in many cases, unclaimed property is a precipitating factor making it clear an old system is unreliable. As you and your advisors work with records, you will uncover issues that are probably affecting the entire organization. Look for ways you can streamline processes, automate, ensure accuracy and more easily export data. If you do undertake a complete change, use it to prove you are making efforts to comply properly.
Proactively pursue VDAs.
Before your company is identified as the subject of an unclaimed property audit, reach out to show willingness to cooperate. It’s tempting to wait and see if a state or third-party auditor will discover you haven’t reported, but costs can be high. Instead of waiting to see what happens, get help from unclaimed property professionals to pursue voluntary disclosure agreements (VDAs) in states that offer them. This not only can reduce potential penalties, but often reduces future escheatment calculations because the VDA process tightens up compliance efforts and helps you land on “just-right” compliance policies.
Fight audit results.
This aggressive action is best saved for situations where you can clearly prove your position. Get help and fight decisively. On rare occasions, overzealous states or auditors make demands unsupported by the law and it can cause undue burden upon holders. They might ask for more records than the law requires, which costs you in processing time—not to mention potentially opening up other aspects of your business for scrutiny. Auditors might apply compliance demands or calculations differently for companies in the same industry. We recommend not launching into aggressive action without a great deal of thought and backup from professional advisors. When a question arises, begin in a compliant, collaborative tone. If you still are pressed and confident your position is legally supported, then it’s time to aggressively defend your company.