Missing or incorrect information on unclaimed property reports can cause a host of problems, including delays, over-escheatment, confusion, potential auditing and erosion of relationships with understaffed state offices. Unclaimed property personnel can become understandably irritated when reports are not completed correctly, because it causes them extra work. Many states have the right to impose penalties or interest assessments for incorrect reporting.
Avoiding the return of unclaimed property reports begins with taking the reporting date seriously and completing reports as accurately and completely as possible — on time.
Four Common Reasons for Returned Unclaimed Property Reports
In our experience, there are four most-common reasons state administrators return reports. To avoid returned unclaimed property reports, simply avoid making these mistakes.
Returned-Report Reason # 1: Missing Information
Holders must keep up with data field requirements of each state to which the company reports. Many states require the same data points (e.g., name, address, starting transaction date or check date, property type, etc.). However, some jurisdictions are stricter than others, depending on the property type. For example, California, Delaware and Florida require a Social Security number for payroll records. Reports will be rejected if data requirements aren’t followed. To avoid this mistake, establish record-keeping protocols specifically for unclaimed property, and create policies and procedures to ensure accurate, up-to-date transfer of information to unclaimed property reports. Property type codes can be found on the website of the National Association of Unclaimed Property Administrators (NAUPA).
Returned-Report Reason #2: Missing or Incorrect Coversheet
An accurate coversheet must accompany reporting files and funds. This document is also referred to as a facesheet, a UFS-1 and other names. Some states provide specific cover sheets holders must use with every report. Other states accept generic cover sheets. In either case, every state has specific guidelines for properly completing them. Look for instructions within state handbooks.
Returned-Report Reason #3: Incorrect File Format
Before technology was as prevalent as it is now, holders often could choose the file format they used to report unclaimed property. Today, because technology has become more standardized, states require a standard file format for submitting unclaimed property information. The standard is a format designated by NAUPA. It allows states to easily load reporting information from hundreds or thousands of holders into their systems. The NAUPA standard format can be found here.
Returned-Report Reason #4: Improper Method of Delivery
If you imagine unclaimed property report processing from the state administrators’ point of view, it’s easy to understand why each state requires holders to deliver reports using the specific mediums they are prepared to process. Any state’s required method of delivery is based on that particular office’s technology capabilities, staffing and other aspects of processing, with an objective of efficiency and accuracy. Some states now require electronic uploading of reports and no longer accept files on computer disks or other media. Whether reports are delivered physically or electronically, holders must be very meticulous about following state instructions. This includes the delivery of funds. States vary on requirements for checks and wires. Because delivery requirements vary, holders must obtain instructions from state handbooks or contact state administrators.
Additional Unclaimed Property Reporting Tips
These general tips can add to the likelihood that unclaimed property reports are accepted without incident:
Remember, state requirements can and many do change frequently. This means unclaimed property personnel must stay on top of statutes for every state to which the company reports, which can be time-consuming, and the multitude of jurisdictions easily leads to errors.
For that reason, many holders depend on professional unclaimed property specialists to stay up to date with statutes and provide this information. Their years of practice and knowledge of reporting quirks of all jurisdictions can be invaluable. Better yet, many holders turn over the actual reporting legwork to professionals for peace of mind that reporting is being completed correctly.
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