It sounds simple enough to follow the states’ rules and turn in the reports, but unclaimed property reporting can be more complex than expected. Over the years, in our work with hundreds of unclaimed property holders in a multitude of reporting situations, we have gleaned a go-to list of primary tips we give our clients to help them through the reporting process.
Below, we’ve shared the cream of the crop — the best reporting tips that can help you and your unclaimed property staff get through reporting cycles quicker, more compliantly, and with less stress.
- Ensure you are following the correct statutes. This can be difficult without continually monitoring statutes in every state to which you must report, and the statutes and administrative rules change constantly. Over the last 10 years, there have been a total of more than 20,000 changes in state unclaimed property statutes across the board. The most common solution to this challenge is to work with an unclaimed property advisory company that spreads the cost of monitoring statutes across the accounts of multiple client.
- Set up a recordkeeping system that takes unclaimed property into consideration. At the very least, this means isolating unclaimed property files, so they can be quickly accessed. It also means capturing complete information from new account owners and updating records for owners regularly. Complete records can help prevent property from becoming unclaimed in the first place, because you have the information you need to find the owner. In the event the property does become unclaimed, having property information at your fingertips will make the reporting process go faster and improve accuracy. Since recordkeeping is often a substantial part of corporate policies and procedures, we recommend creating specific unclaimed property policies and procedures as a part of your overall policy control environment.
- Use proper relationship and property codes. It can be confusing to choose correct codes. MarketSphere published a blog on property type codes to help holders determine which codes to use. Here's a link to the National Association of Unclaimed Property Administrators (NAUPA) Reporting Manual codes. If in doubt, holders can contact the states to which they are reporting and ask questions about reporting codes. However, sometimes the states can give confusing or incomplete answers due to their lack of knowledge of a particular holder’s situation. Especially if the situation is complicated, it’s advisable to consult with professional unclaimed property specialists.
- Share the work. Because the unclaimed property reporting process causes a defined temporary increase in unclaimed-property-related labor, it’s important to plan ahead and delegate tasks to a variety of people. To help organize the effort, create an unclaimed property timeline and work plan that clearly defines tasks and assigns responsibilities.
- Assign a reporting lead to take responsibility for moving the project along and drawing it to a timely close. The reporting lead should take responsibility for managing all unclaimed property personnel and activity using the timeline and work plan created as per the previous tip. Centralizing responsibility with one person can help ensure that nothing falls through the cracks. Make sure everyone knows your leadership supports the assignment of this responsibility.
- Consolidate reporting across subsidiaries. This is a business decision based on the organizational facts and circumstances. For example, there may be contractual separations between entities and should not be consolidated. For others, if the payment process is centralized in a shared services environment, it may be a good idea to consolidate. Consolidation of reporting is only a good idea if all entities are in compliance. If this is the case, it may be worth the effort to bring everything together to save time and headaches. Be sure to understand and follow the laws in all applicable states, especially the priority rules designating which states to report to. When consolidating reporting, it’s important to ensure that unclaimed property data captured is consistent across all entities. If in doubt whether this is a good fit for your company, consult with your professional unclaimed property specialists.
- Avoid return of reports. If unclaimed property reports are submitted to states incorrectly, a return of the report at the very least delays processing, and at the most can jeopardize compliance. Some of the most common reasons for report return include: 1) using the wrong reporting method, 2) coversheet mistakes, 3) encryption on electronic formats that states can’t load, 4) incorrect owner information, such as Social Security numbers and names. 5) holder’s submit an incorrect form of payment. This can sometimes result in penalties and/or interest, so be sure to check before submitting the report.
Each of these tips contributes to the improved accuracy and timeliness of an unclaimed property holder’s reporting efforts. Think carefully about the way each of the tips applies to your company’s specific situation. You may realize additional best practices as you move forward through the next few reporting cycles. Be sure to capture your own best practices in a list for ongoing improvement of your unclaimed property reporting process.