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Does Your Company Have Unclaimed Property?

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As a company, are you holding money that may not have been claimed? If so, you may be legally liable to file with the IndianaUnclaimed.gov website. Unclaimed property is any financial asset with no activity by its owner for an extended period of time. This includes unclaimed wages or commissions, savings and checking accounts, stock dividends, insurance proceeds, underlying shares, customer deposits or over-payments (stale checks), certificates of deposit, credit balances, refunds, money orders and safe deposit box contents. The annual reporting period for most businesses that are not life insurance companies is November 1st of each year.

Negative (Zero) Reports

“Negative” or “Zero” annual reports reflecting no unclaimed property is held by the holder or business enterprise are not statutorily required. However, submission of such reports is strongly encouraged and deemed to be a best governance practice by most corporate legal and accounting advisors. Filing an annual “zero report” demonstrates an entity’s awareness of the legal requirements of the unclaimed property act and compels a recurring annual book and records review to assure that the reporting entity maintains good standing with the State; and appropriate properties or accounts are reported and turned over to the Unclaimed Property Division when appropriate. Click here to submit a zero report.

When Do I Report

Property is reported based on its dormancy or abandonment period. States are generally known as three (3-), five (5-) or seven (7-) year states. Indiana is considered a three (3-) year state. After property goes unclaimed for the requisite number of years it is eligible for reporting. Within a given state, there can be different dormancy periods depending on the property type. For example, Indiana requires payroll checks be reported after a one (1-) year dormancy.

Which States Do I report to

In 1954, the U.S. Supreme Court ruled in Texas v. New Jersey that the last known address of the owner determines the state to which unclaimed property is reportable. Furthermore, where the owner address is missing or incomplete, the asset is reportable to the state of incorporation of the holder. In addition, if the last known address is in a foreign country, the asset is reportable to the state of incorporation of the holder. Based on these rules, the addresses contained in a holder’s database of dormant property determine which states should receive a filing. In addition, this requires a zero report even if there is nothing to report. The practical effect of these rules is that property can be reportable to many more states than those in which the company has a presence or does business.

Click here to access your state’s unclaimed property website: https://www.unclaimed.org/reporting/. Contact your Somerset advisor or get in touch with us at info@somersetcpas.com if you have any questions.