KeepUP™ Blog

Unclaimed property holders know the importance of staying up to date on legislative changes, keeping apprised of issues that could impact their compliance process and learning tips that can help them improve and maintain a successful escheat program. Every month we strive to deliver information that can help holders achieve their goals. In case you missed them, here is a rundown of articles we posted in Q2 2018.

• Corporate Asset Recovery – Tax Refunds. Government agencies of all sizes, from municipalities to even the federal level, are holding significant refunds owed to companies. Learn why these funds may be available and how to recover them.
• Financial Services: Unclaimed Property Compliance Beyond Securities. There are additional unique challenges facing the financial services industry beyond securities. The impact of unclaimed property issues on the financial services industry difficult to assess. Get started by answering two basic questions: how well do you know your organization, and how well do you know your clients?
• Modern Communication in Unclaimed Property Due Diligence. Guidelines for both contact and due diligence were primarily created before modern communication formats like email and online accounts became prevalent, making it somewhat difficult to discern whether an owner has met the statutory requirements for indicating an interest in the property.  Learn how these definitions are beginning to evolve.

Every company’s situation is different, but nearly every organization must identify potential unclaimed property risks and liabilities to avoid damage to finances, resources and reputations. It can be difficult to conduct an assessment of your processes after every reporting cycle. However, if you’re not sure when the last review was performed, or if you know it’s been more than a year or two, holders should carve out time to complete an exposure assessment.

Exposure Risks

Having an inefficient process, neglecting to keep up with, or overlooking, changing legislation and personnel that are not experts with escheat responsibilities are just a few areas where a company can open themselves up to the risks of unclaimed property exposure which can lead to:

• Lost opportunities to find and reunite owners with their property
• Increased likelihood of audit
• Increased penalties/interest when escheat requirements are not being followed
• Excessive expenditures of time and money to resolve issues
• Negative public assessments

To avoid these issues and effectively manage data and legislative requirements, organizations must establish and execute smart policies and processes. There are a number of universal action steps that holders can take to decrease their exposure and achieve an efficient process.

Many aspects of unclaimed property reporting can affect the outcome of an audit. For example, reporting property to the wrong state can lead to audit issues. One misused code can cause auditors to more closely examine every code. Preparation for an audit begins long before an audit appears on an unclaimed property holder’s radar.

Here are a few items that you should be aware of that, if not managed properly, could increase your chances of getting noticed for an escheat audit.

• Report Metrics – Some states include the collection of information regarding key corporate metrics. These metrics may be used by the state to determine corporate changes (especially acquisitions) that may have occurred. 

• Property Types Reported – New property types reported may indicate a lack of reporting over prior years or no longer reported property may indicate a lack of reporting. The lack of property types or certain types of transactions may be an indication of improperly taken exemptions. 

• Increase/Decrease in Property Reported – A significant increase is an indicator that not all property may have been reported in prior years or a decrease may suggest that not all property was reported for the year. 

• Company Comparable – How do the property types, quantity and dollars reported compare to your company’s industry and/or entities of similar size. 

• Incomplete Reports – State reporting requirements vary. Providing all required data across all states and proper authorizations, including notary if required, is important to ensure states do not flag companies for follow-up. 

• Corporate Asset Recovery – Companies that are claiming unclaimed property, but not reporting correctly, will be a stand out red flag for the states.

During the course of any business there comes a time when a problem has been brought to light and there is a need to find a fix. In this case, it’s time to find a solution to address escheat compliance.

No matter what the core issue you’re dealing with, you need to find a path toward a solution. For many companies this means engaging in a Request For Proposal (RFP) process.

The RFP can be an efficient way to gather information from several possible candidates that can solve your problem. However, the process can be daunting for both the company issuing the RFP and the responding companies. Here are a few suggestions to consider when issuing an unclaimed property RFP which can help facilitate the process and get you to your goal of finding a solution as quickly as possible.

Define The Problem

As with any good start to a relationship, communication is the key to understanding and achieving common goals. When an RFP is issued, both parties are intending to enter into a long term relationship. This is why it’s so important to clearly articulate your problem and goals.

Don’t Be Vague. Here are a few examples of vague problems that can lead to vague responses or confusion from responding vendors:

• We need an unclaimed property solution
• We are looking for an unclaimed property provider to manage our compliance program