Unclaimed property often lands on the desk of a frontline office worker with a thump, like a big unexpected boulder, obscuring more important work and increasing stress by the pound. The big rock of unclaimed property brings with it complicated challenges: statutes in 54 different jurisdictions, record keeping needs unserved by existing computer systems, puzzling property types, unknown terminology, and serious worries about penalties for the holder (that’s your organization—the one that holds unclaimed property).
More often than not, a person who has been newly inducted as the company’s “instant unclaimed property guru” hasn’t got a clue where to begin.
To make things worse, many companies assign only one person to manage unclaimed property, with no continuity plan to assist with turnovers. Numerous companies have shoved aside this secondary business function to manage more important business functions, hoping the company will not be audited. Some companies have reported improperly without knowing it or have ignored unclaimed property altogether for years. The longer it’s ignored, the higher the liability can be, and the growing liability creates even more hesitation to solve the problem.
Enter professional unclaimed property advisors.
We love to educate and guide those who have felt the shock of the rock falling onto their desks. All the materials on this website help us help our clients—even those who aren’t clients but are simply visiting our website to gather information. We recently uploaded a new whitepaper called “What is Unclaimed Property?” It’s a great place to begin for those who are so new to unclaimed property they are not even sure where the big rock came from.
The basics of unclaimed property
You can read more in the e-book mentioned above, but below are a few basics to get you started managing the big rock of unclaimed property:
- What is unclaimed property? Unclaimed property is ANY property or value in your company that officially belongs to your customers, vendors or employees. When you can’t find the owner of a property or there’s no contact or activity for a designated amount of time, it becomes unclaimed property. By law, holders must turn over the property to the appropriate state or states for safekeeping on behalf of owners.
- What laws govern unclaimed property? The Uniform Law Commission periodically makes official recommendations, but each state passes and enforces its own unclaimed property laws. They are amended often, especially in this era when many questions of fairness and specific types of property are being settled for the first time. It takes time and determination to keep up with laws in 54 different jurisdictions.
- Where is our unclaimed property? There are many types of unclaimed property, and you have to know proper codes to report them correctly. The codes can be complicated to assign, and it can be a challenge to find unclaimed property in the first place. Credit balances get overlooked and are unlawfully returned to the general ledger as income. Accounting mistakes make it look like there’s unclaimed property when there isn’t.
- What are dormancy and due diligence? The moment a company has held inactive property longer than the law allows, the property becomes dormant. This triggers a requirement in most states that the holder engage in due diligence efforts to find the owners. Due diligence rules can be very exacting and time consuming.
- Establish policies and procedures. This is a key piece to successfully managing unclaimed property. Your processes affect everything from the ability to discover all of your dormant property to providing evidence during an audit.
- Just-right compliance. The line between reporting too much unclaimed property and not reporting enough can be difficult to determine. Exemptions are allowed and should be taken to ensure your company is not paying too much to the states.
- What is unclaimed property outsourcing? Because management of unclaimed property is so complex and time consuming, outsourcing some or all of it can be cheaper and more accurate than doing it in-house. If your company is audited—much more common these days than it used to be—working with a professional advocate is as important as going to court with a lawyer.
If you are the person whose desk has been taken over by the big rock of unclaimed property, don’t despair. With a little time and some help from those who have gone before, you will figure this thing out and clear your desk for more important work.