KeepUP™ Blog

8/13/15 10:30 AM

Preventing Fall Unclaimed Property Reporting Missteps

by Greg VerMulm

Although there are basically two reporting seasons for unclaimed property, fall reporting tends to be the most intense. It's not unusual for overworked staff to overlook unclaimed property reporting details during this time.

What's different about fall unclaimed property reporting?

fall-reporting-tipsIn general, fall reporting can be more intense than spring reporting because the majority of state jurisdictions have a deadline of either 10/31 or 11/1. This provides a less hectic timeline than spring reporting, but because more jurisdictions require reports, the workload is substantially larger. Also, if requirements are not carefully studied for all of these states, the wide variance of rules can cause confusion.

To make matters worse, companies that report to California are sometimes confused by that state's two-stage (bifurcated) unclaimed property reporting process, in which the preliminary report (not the final report) is due in the fall.

Below, we've outlined a few of the potential mistakes holders make during fall unclaimed property reporting—especially when working with a reporting agent such as MarketSphere. Any of these mistakes can lead to penalties and other costs.

Common mistakes in fall unclaimed property reporting
and how to overcome them

Mistake 1: Incorrect reporting methods

It's tempting to stick to the reporting format you know, and believe it's still valid from one reporting cycle to the next. However, state rules governing reporting methods change frequently to reflect new technology and state preferences.

If you are reporting in-house, do the research every cycle to determine whether reporting format rules have changed. Better yet, allow your unclaimed property service providers to do what they do best and take responsibility for your reporting. Professional advisory firms have systems in place to efficiently monitor requirements, analyze your specific situation, and submit highly-compliant reports.

Mistake 2: Holder data doesn't match format requested

When files exported from holder to reporting agent don't match the agent's format, it can take hours to scrub the data, which adds substantially to reporting costs.

Ask your unclaimed property reporting agent to provide a template you can follow to expedite data input. Scrub data as efficiently as possible as you load information into the template. For the next reporting cycle, look for ways to align your unclaimed property data to match your provider's formats.

Mistake 3: Reporting duplicate or previously escheated properties

When a reporting agent sends the holder a reconciliation file after performing due diligence services or after submitting reports on behalf of the holder, the holder must reconcile the file with the company's data. If this isn't done, records can accidentally end up in the reportable property files for the next cycle.

Establish processes to ensure careful handling of reconciliation files. Make changes to your own data when you receive a file and verify that balances match. 

Mistake 4: Incorrect property codes and other data in the report

It can be overwhelming to keep track of all the nuances of state unclaimed property laws. It's not uncommon for unclaimed property personnel to feel the fatigue of monitoring these laws and then make mistakes. Sometimes report fields are inadvertently ignored entirely.

To avoid these problems, pay closer attention to codes being selected and establish a clear research process. Communicate with states to verify they will accept codes you are using, and make sure they don't require additional information. If reporting a property type for the first time, work with your unclaimed property service provider to determine codes.

Mistake 5: Overfunding fall remittance to agent's bank account

Unclaimed property holders sometimes move too quickly or become confused about which file to use to determine the funding amount for disbursement.

Take time to clearly verify the funding amount in the latest correspondence between holder personnel and the reporting agent.

Mistake 6: Reporting unclaimed property too early

It can be confusing which property is affected by the states' June 30th dormancy cutoff.

Only property abandoned for the exact designated time is reportable in the current year. Here is an example: If there is a dormancy requirement of three years before a property is defined as unclaimed property, subtract three years from the current year cutoff to determine which items to report. Let's say the current year cutoff is June 30, 2015. Checks issued on or before June 30, 2012, are reportable this year. Checks issued after June 30, 2012, are not reportable until next year.

Topics: Reporting