There’s a lot of talk in the unclaimed property industry about increased audits across all industries. However, some industries still are being targeted more often than others. Oil and gas is one such industry. Below are primary reasons for this, along with solutions to mitigate potential financial damage from high assessments.
Mitigation: Create systems and controls to correctly account for all unclaimed property. Review them at least annually and work with expert unclaimed property specialists in this area to ensure compliance with all statutes. Make sure records accurately reflect the true nature of unclaimed amounts.
Mitigation: Keep good records and follow all mitigation steps listed here to minimize assessments in general. Order a professional oil and gas pre-audit assessment to identify potential risks in any future audit.
Mitigation: Establish appropriate procedures and control measures, with proper documentation—especially for properties you’ve deemed unreportable. In an audit, defending what you have chosen NOT to report is more urgent than defending what you have reported.
Mitigation: Come into compliance as soon as possible. Sign Voluntary Disclosure Agreements to limit initial assessments.
Mitigation: Consult with unclaimed property specialists to determine applicable rules for suspended amounts and ensure accurate coding. Resolve suspended payments as soon as possible to reduce suspense volume. Work with external experts during an audit to support fair assessments.
Mitigation: Use a professional service that makes a business of keeping up with all statutes and applying them properly.
Mitigation: Make unclaimed property analysis an official part of the acquisition and merger process.
Mitigation: Find owners early, before payments become dormant. Make sure you are legally required to report subsequent payments.
Mitigation: Seek counsel from experienced professionals to ensure you are not putting your company at risk in one state or the other.
The reporting of abandoned and unclaimed property for oil and gas companies involves many complex nuances. Not only can understanding and dealing with these challenges result in a large amount of work for holder personnel, it can greatly increase the potential for financial risk under audit. Be sure your team is prepared, and communicate with others in the industry who can share best practices.
If you received a letter or an email, please check out our FAQ section to learn more about next steps.
We offer a customized approach to fit your specific needs.