Have you ever had an outstanding check that did not clear your bank account?  Or as a business, a credit that is owed to a customer but the customer hasn’t ordered from you in a long time?

            Long neglected unclaimed property, is by law required to be remitted to states.  In recent years, states have become particularly aggressive in conducting audits of companies to collect such neglected property.  In many cases, these audits can lead to significant liabilities for the audited company, as the states use extrapolation procedures, or statistical techniques, to “identify” unclaimed property when original corporate records are not available.  The look-back period can be decades long and there may be penalties associated with an audit of unclaimed funds.

            New York and New Jersey have Voluntary Compliance Programs (“VCP”), allowing unclaimed property holders to voluntarily come forward and remit any unclaimed property that is held for the prior 10 years, along with statutory interest, but avoid any penalties and be in compliance without having to go back further than 10 years, for most property types (unclaimed wages, accounts payable checks, refund checks, merchandise credits and gift certificates, etc.).  A typical look-back period for an audit is 20 years and will include penalties for non-compliance.

            Unclaimed funds are typically defined as property which has been dormant for 3 years and no contact with the owner has been made within this period.  Further, New York State requires the holder to send the owner a letter prior to making a final determination that property is unclaimed.

            An eligible participant in a VCP is a holder of unclaimed funds who has not been contacted for audit and is a “first-time reporting organization.”  Typically, filing of reports of unclaimed property and payment of the funds must be made within six months of being accepted into the program to avoid an interest and/or penalty assessment.

            If you believe you might have unclaimed funds and need assistance, or would like to discuss the VCP, please contact us.