The state of California’s dual reporting requirement is different from every other state. Also called “bifurcated reporting,” this state rule exists in part due to past lawsuits directed toward the state, claiming the abandoned and unclaimed property program was being operated unconstitutionally. In response to the court actions, the state’s controller made the decision to return to the two-step process many states had required in past years.
The two-step reporting process requires extra due diligence—both by the holder and by the state administrator. Once the steps are understood, it’s not as difficult as it might at first seem. This white paper lays out the steps of California due diligence and reporting to clarify the holder’s responsibility. Use the document as a reference to help your unclaimed property team integrate California reporting into your organization’s abandoned and unclaimed property routine. It also may be useful when training new personnel. MarketSphere can perform any of these steps for you—or you can assign them internally, if you have the resources.
Step-by-Step Bifurcated Unclaimed Property Reporting in California
In many regards, California reporting is not that much different from general reporting requirements in other states. The difference lies within two aspects of the California law: 1) there are two reports required (a Holder Notice Report and a Holder Remit Report); and 2) in addition to the holder conducting their due diligence, the state of California conducts its own due diligence process.
Step 1: Document Dormant Abandoned and Unclaimed Property
Examine all departments, divisions and affiliates of your organization to identify dormant property of all types. Don’t forget to remove and rule out accounting errors. When possible, contact owners early to keep property from becoming dormant and reportable.