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KeepUP™ Blog

8/3/17 8:00 AM

Preventing Mistakes When Filing Your Fall Unclaimed Property Reports

by Greg VerMulm

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Although there are three reporting seasons for unclaimed property, fall reporting tends to be more intense than spring and summer reporting because the majority of state jurisdictions have a deadline of either 10/31 or 11/1. This leads to a substantially larger workload and the need for an understanding of the wide variations in “Fall” state requirements.

Below, we've outlined a few of the potential mistakes holders make during fall unclaimed property reporting. 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: Using non-standard report formats and codes

Most states require the use of the NAUPA II Standard Electronic File Format.  In addition, they require a property type and a relationship code for reported items, which are contained within the NAUPA II file format.

However, the states frequently change, customize or add codes to reflect new technology and state preferences.  Consequently, keeping updated about formats and codes is of the upmost importance to ensure your reporting is accurate.

 Mistake 2: Filing incorrect report media

Most states require reports to be submitted on CD or via an electronic upload.  For states requiring electronic upload, a holder usually must first contact the state and register for this process.  .

In addition to the actual reports, certain states require a cover sheet.  States that utilize online uploads tend to provide this cover sheet as part of the upload process or within their holder reporting manuals.  States that utilize CD’s typically require the cover sheet to be included with the CD.  

Finally, certain states require the report to include a state-provided “holder number”.  This allows the state to identify whether a report has been received and the date of the receipt, to ensure timely filing.

If holders don’t use the correct media and don’t provide the required additional information, they could be subject to having their reports rejected.

 Mistake 3: Utilizing improper remittance methods

States typically have accepted checks or electronic funds transfers (EFT) when holders remit their unclaimed property reports.  However, more and more states now require EFT or ACH transfers.  For example, if a holder report to California indicates a remittance that exceeds $20,000, the payment must be made by EFT in accordance with California’s specific requirements.  Failure to follow California’s requirements, subjects the holder to a penalty of 2% of the remittance.

Holders should ensure that they are following each state’s remittance requirements or they could be subject to penalties.

 Mistake 4: Missing reporting deadlines

In general, for most non-financial, non-insurance holders, Fall reports are due either by 10/31 or 11/1.  If a holder believes it will not be able to meet the reporting deadline, they should contact the state(s) in question and request an extension in writing.  States may grant extensions to these deadlines for good cause.  However, States normally do not consider a holder’s failure to perform timely due diligence as good cause. 

Most states will grant a 30 day extension.  If a holder seeks a longer extension, this may require more detailed explanation and may not be granted.  In certain states, even if an extension is granted, there is a requirement that the holder make an estimated remittance by the filing deadline.

If a holder misses a report/extension deadline, they may be subject to interest and/or penalties for late filing.  

Once a report and remittance is made to a state, it is imperative that the holder retain appropriate documentation supporting the timely delivery of the report and the remittance.  The holder should use a supportable delivery method for physical reports and maintain upload receipt documentation for on-line/uploaded reports. 

 Mistake 5: Failing to file negative reports

Some states require a report, even if a holder has no property to deliver to a state.  As these “negative” reports are not required by all states, holders should ensure they understand each state’s “negative reporting” requirements.

States that require negative reports, generally have a specific form that must be completed and filed.  For states that require paper filings, these forms/reports can generally be found online at the states’ websites.  However, some states allow for negative reporting online.

 Wrapping Up

Filing unclaimed property reports can be a complex and time-consuming task.  The variation in state statutes and regulations, creates an unclaimed property jungle filled with pitfalls and traps for the unsuspecting holder.

If you are reporting in-house, perform research every cycle to determine whether reporting rules and regulations have changed.  Better yet, allow your unclaimed property service provider 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 compliant reports.

Topics: Compliance, Reporting, Best Practices