With Spring reporting due dates around the corner, holders are busy reviewing due diligence responses, and updating and reconciling their files. But what if a holder is already aware that they will not be ready to file timely reports to the states? While businesses continue to feel the strain of the pandemic, in the form of staffing shortages and postal service disruptions, holders may also experience other business interruptions that could lead to reporting delays, including implementing new accounting systems, changes to transfer agents or other personnel changes, or undergoing a merger or acquisition. In these cases, it is worthwhile to consider whether a reporting extension is available.Most states are amenable to extending the reporting due date, but as is the case with most of the unclaimed property requirements, whether an extension is available and any conditions that may attach to a request that is granted varies among the states. Texas, for example, does not accept extension requests. Other states, like Vermont, will automatically grant a 30-day extension if the holder makes the request in writing (at least 30 days prior to the report due date). Holders should include the reason for the request and whether additional time is needed (not to exceed 60 days).
In many cases, there are variations in when the extension request must be submitted by, the amount of time that may be granted, the criteria used to determine whether to grant a holder’s request, and even whether the holder must include an estimated payment should the extension be granted.
Extension request forms are typically available on the state’s unclaimed property holder reporting website. Typically, holders must submit the request form (or a written request if a form is not required) to the state, explaining the reason for the request and the amount of time needed to submit the report. In some states, the failure to perform due diligence is not an acceptable reason for a state to grant an extension request, such as in Connecticut. In other states, such as New York, extensions may be granted for reporting dates, proof of publication affidavits or for due diligence. States also vary as to when the holder must submit the request. In Delaware and Illinois, requests must be submitted at least 15 days prior to the reporting due date. In other states, 30 days is the norm, such as in New York.
States may consider several factors when determining whether to grant the extension request, including a holder’s past reporting history, whether reports were timely filed, prior extension requests, and if the holder was audited in the past.
It is important to note that if an extension is granted, in some states the extension serves only to extend the report due date but does not extend the payment due date. For example, in New York, if the extension is granted, the holder must either pay 75% of the report’s expected value or the previous year’s report value by the original report due date, to avoid penalty and interest payments on late reported property. In Delaware, holders may pay the estimated amount, which will terminate the accrual of interest on the amount paid. Otherwise, interest will accrue at .5% on outstanding unpaid amounts (not to exceed 50% of the amount required to be paid).
Finally, if an extension is granted, note that states may prohibit the holder from requesting another extension for some period of time. Florida, for example, permits an extension for one reporting period within a three-year timeframe, while Pennsylvania will not grant extensions for two consecutive years.
As a reminder, extension request requirements vary among the states are also subject to change. Be sure to monitor changes to the reporting requirements to ensure holder compliance. Holders may want to consider engaging an unclaimed property professional who can provide guidance to ensure you are on the right track of managing escheat compliance.
*Content contained in this article is considered accurate as of the publish date.