KeepUP™ Blog

2/13/15 6:42 PM

Unclaimed Property through the Eyes of a State Administrator

by Greg VerMulm

Because state unclaimed property administrators are charged with enforcing unclaimed property statutes in each state, they sometimes seem like “the bad guys.” Just as Internal Revenue Service personnel must sometimes put pressure on taxpayers to achieve compliance, so must unclaimed property administrators put pressure on holders to comply with the law. Do state administrators think of themselves as “bad guys?” What does unclaimed property look like through their eyes?

thru-the-eyes-of-a-up-state-auditorIn spite of what you might hear, the ultimate objective of a state unclaimed property office is not to make holders’ lives miserable and penalize many companies to swell state coffers. Their goal is to protect consumers (your customers) and make it possible for property owners to regain lost property, as well as to take over the liability of holding unclaimed property from businesses after it has been turned over in an unclaimed property report.

When all goes well, state personnel simply manage repeated reporting cycles, manage software to organize and reconcile data, accept escheatment of property, field calls from claimants, post records to websites and work hard to find proper owners. If states could be sure all holders would always comply with the law and properly report unclaimed property, this would be all state unclaimed property administrators had to do.

However, just as with taxes and taxpayers, some unclaimed property holders do not report unclaimed property properly. For that reason, state administrators have a lot of extra tasks to do: identifying those who aren’t complying, communicating that it’s not okay NOT to comply, making it easier to comply, working with legislators to modify laws fairly and effectively, encouraging communication among all stakeholders, reaching out to both holders and property owners to clarify issues, coordinating outside auditors, handling media inquiries and more. Not to mention doing more with less, as pretty much everyone in every industry is expected to do these days.

Qualifications of a state abandoned and unclaimed property administrator

State administrators of unclaimed property are not simply government clerks. They must qualify for their jobs at a level similar to the levels at which professional holder personnel must qualify to manage unclaimed property and other financial and business functions within a corporation.

A recent unclaimed property administrator job description included these preferred requirements:

“Bachelor’s degree in business administration, public administration, communications or related field. Five or more years of progressive experience working with unclaimed property, three (3) or more years working with state statutes, rules and regulations and three (3) or more years of management experience.”

Just as in a department that administers unclaimed property within a holder organization, a state unclaimed property office includes personnel who handle leadership, planning, standards, development and recruitment, as well as those who handle day-to-day legwork.

The sticking point: assessing penalties for noncompliance

If there is any issue around which negative impressions of state unclaimed property administrators centers, it is probably their ability to assess penalties when holders do not comply with the law. Holders might feel forced to comply. Some holders and advocates believe certain states have overstepped the law. Others feel the states that engage third-party auditors to help them with the workload have become unfairly aggressive.

Holders and state administrators probably won’t ever completely agree on how strict compliance should be and how stiff penalties should be—just as IRS personnel and taxpayers probably will not always agree.

However, we can gain advantages on both sides if we stay focused on the fact that state administrators are working on behalf of the law and property owners it protects. It’s not right for holders to simply keep unclaimed property.

Introduce yourself and become a part of the unclaimed property consumer advocacy team

Unless your organization is purposefully attempting to avoid reporting unclaimed property, you effectively are on the same side as state administrators. Could you be helping to dispel the myth that state officials are the “bad guys?”

We suggest holders establish efficient, transparent unclaimed property policies and processes, take advantage of Voluntary Disclosure Agreements (VDAs), and cooperate appropriately with state and third-party audits (without overcomplying—we can help you with that).

If you attend a conference where state administrators are available in person, take time to introduce yourself, so you will be familiar to them.

As time progresses, as laws are modified for clarity and fairness, and as holders become more agile and efficient at handling unclaimed property, it will become clearer that we are all on the same team on behalf of consumers/customers.

Topics: Audit