Many aspects of unclaimed property can seem out of control, requiring you to deal with issues such as irate owners who don’t understand you are returning money to them and aggressive third-party auditors intent on digging for every last dollar. We launched the “How to Tame a Wild…” content series to offer tips for taming these wild things and helping your company return to calmer unclaimed property processes. Today’s blog involves personnel who must deal with "wild" demands upon their time and talents.
Here's a typical scenario: A woman who heads up the Tax Department of a national retailer discovers the company is not reporting unclaimed property as it should. She receives approval to allocate time and money toward the management of unclaimed property only after she shows her CEO examples of what's at stake. Penalties, interest and person hours can quickly add up when unclaimed property isn't managed and reported correctly.
She puts a team on the project. Suddenly, on top of their already heavy responsibilities, they must add many new tasks: research and continual monitoring of laws in 54 jurisdictions, assessment and remediation of potential liability, location of unclaimed property throughout the company, modification of records retention rules, prevention of audit, management of audits, and a million other details you can read about in the MarketSphere Knowledge Vault. [link to vault]
It's enough to DRIVE THEM A LITTLE WILD!
Top 3 Unclaimed Property Stresses
It's common for unclaimed property personnel to put on a brave face, but then panic when no one is looking. Sometimes they are tempted to pretend they know what they are doing to reassure their supervisors, but then suffer in silence as they desperately seek answers to help them learn the job.
In general, there are three core problems that make unclaimed property personnel feel a bit wild:
- Most unclaimed property personnel don't specialize in unclaimed property. This tends to be one of many jobs they are responsible for, and it's difficult to keep up with changes and dedicate the time necessary to fully understand intricacies of the field. Unclaimed property is not a tax and it's much more than an accounting function. States' views and laws vary massively on issues such as exemptions, reporting periods, deductions and application of business relationships. Substantial amounts of time and extensive experience are the only remedies, unless responsibility for unclaimed property is outsourced to unclaimed property professionals who do nothing but unclaimed property all day long.
- Unclaimed property tends to be the 101st item on a list of 100 things to do. Unclaimed property isn't a lower priority than other business functions in terms of potential liability, but it's not understood as well as other functions, such as taxes, fraud and daily accounting. This "dumbing down" of unclaimed property applies to the entire range of company personnel who touch it, from frontline "doers" and their supervisors to department heads and senior leaders. The only solution is to educate all stakeholders in the potential impacts of unclaimed property noncompliance.
- Senior leaders don't understand the potential impact of noncompliance. CFOs and CEOs have numerous concerns and, for many, unclaimed property has been of secondary importance. They don't always realize it can quickly become a multi-million-dollar liability that requires a restating of financials. To improve senior leaders' support of unclaimed property efforts, present clear calculations of potential financial liabilities and share case studies of companies that neglected it.
How can a company tame wild unclaimed property professionals?
It's very simple. Training, time, tools and money. No company would allow its tax accountants to do the taxes without making sure they fully understand reporting requirements and have the tools they need to do their jobs. It should be the same with unclaimed property.
Some companies hire employees with unclaimed property experience. The only other alternative (and we happen to think it's the best one) is to hire a professional unclaimed property advisory firm to help a company excel at compliance.
Professional advisors live and breathe unclaimed property, can draw on experiences with many different companies, and have fought side-by-side with their clients through difficult audits. Their expertise not only keeps unclaimed property holders from making serious mistakes, but helps them uncover efficiencies that substantially reduce the financial liabilities of unclaimed property.
At the very least, hiring outside unclaimed property professionals tames the wild stresses of a company's staff and frees them to focus on the company's core business.