Corporate Asset Recovery – Tax Refunds

It is not well known, but government agencies of all sizes, from municipalities to even the federal level, are holding significant refunds owed to companies. These are not escheated funds held in a state unclaimed property database, but rather financial liabilities owed directly to companies by a government agency. This information is often not made available via public websites and can be difficult to obtain.

Most of these unclaimed funds relate to outstanding tax refunds caused by duplicate payments, over-payments, and reassessments. By our estimate, there are billions of dollars of outstanding tax refunds being held by government agencies.

Why Is This a Problem?

A common reason these refunds go unclaimed is due to relationships with third parties. While companies trust third parties to ensure complete, timely, and accurate tax filings, any related refunds that could be obtained are often just an afterthought. Below are three common scenarios which lead to tax refunds going unclaimed:

1. You may not believe you are owed a refund because it never was sent to your company. Often tax refunds are mailed to the third party that assisted with the filing. They may not have been expecting the refund, did not know what it related to, or simply forgot to forward it along to the company that was rightfully owed the funds.
2. You may have received the refund but did not know what it related to. Often there is no notice given as to what the refund relates to and thus your accounting team may not know where to apply the funds. Also, when asking your third party, they may not know either because by their records the filing was completed accurately without any imbalances.
3. You may have thought the refund could be applied to next year’s filing. A common thought is that any tax credits can just be applied to next year’s filing. This however is a myth and, all too often, the sentiment of companies that utilize third parties. Each government agency has their own policies and procedures. Some government agencies have strict policies against holding funds owed to companies. If any imbalance is created, a refund check may automatically be processed, again without any indication given to the company or third party regarding the reason for the refund check.

It is important to be vigilant when it comes to monitoring tax refunds. In some instances, these refunds are only available by request and only claimable for a certain period of time before your right to the funds is forfeited. In as little as 6 months, your refund may come and go without you even knowing!

What Is The Solution?

Think your company may be owed money? Corporate Asset Recovery is the solution and a great way to drive revenue for your company. Partnering with a Corporate Asset Recovery firm can stop your refunds from going unclaimed or even worse, expiring. In a complex industry full of constant changes, utilizing a Corporate Asset Recovery partner is vital.

Interested in checking to see if there are any unclaimed funds owed to your organization? Contact Us and we would be happy to do a free search.  If you need more resources to help answer your escheat compliance challenges, visit the Knowledge Vault where you will find Ebooks, white papers and other documents to help you navigate the complexities of unclaimed property compliance.