Holders know that they must follow jurisdictional requirements when submitting unclaimed property reports. States require, where available, standard property owner information such as owner name, address, type of property, property amount and so on. However, there are a handful of states that also require Non-Public Personal Information (NPPI), specifically Social Security Numbers (SSN’s), be included in the report.
Holders know the sensitive nature of SSN’s and may be reluctant to include them as part of the escheat report. The most common reason holders give for their concern is that it is against company policy to send SSN’s (NPPI) externally.
This is a very valid concern; however, it’s important to note that most states now have upload capabilities and all meet security standards to manage and protect SSN’s provided to them. Capturing SSN’s should be a part of the organization’s onboarding of personnel and accounts. If this isn’t part of your current policies and procedures, you may want to consider revisiting and updating them to ensure proper recordkeeping in the future to meet unclaimed property requirements.
There are some very important reasons why the states are requesting that SSN’s be included in the reports. Here are a few of them:
- The SSN helps identify the owner. A SSN can prove definitively who the owner of the property is, even if there is a lack of address.
- The SSN can be used to match tax records/locate owners. The states may be able to locate a better address by matching tax records, which enhances their “UP return rate. In addition, it may allow them to apply these monies to unpaid taxes or other amounts due the state.
- Providing the SSN helps prevent fraudulent claims. By including the SSN, the states can simply ask the claimant to provide proof of who they are when a claim is being made.
- The SSN will allow for the next of kin to tie their name to the owner more easily. The second most common reason for unclaimed property is the owner is deceased (change of address is #1). Without the SSN, it is sometimes challenging matching the rightful heir(s) to the reported asset.
What if a holder can’t or won’t comply with providing SSN’s on state reports?
States that require SSN’s as part of their reporting process monitor the reports and will reject the report, requiring the holder to resubmit with the SSN’s included. Holders can provide a reasonable explanation as to why SSN’s are not available or can’t be included in the report. The state will make a case-by-case decision and advise holders how to proceed.
It seems likely that in the future, more states will require NPPI as part of the reporting process for the reasons noted above. If you are unsure about your requirement to include NPPI as part of your escheat reports, contact MarketSphere Unclaimed Property Specialists for guidance about this and other unclaimed property challenges you’re seeking to overcome.