Small Business Taxes & ManagementTM--Copyright 2004, A/N Group, Inc.
What happens if a customer fails to cash a refund check? Or a supplier doesn't cash your payment? Or a former employee doesn't cash his paycheck? You may think you've got a windfall--but you don't. Most states have substantially adopted the Uniform Disposition of Unclaimed Property Act. You may have heard of it as escheat, unclaimed property, abandoned property, etc. You probably know that if you've got a dormant bank account, it's turned over to the state. While the rules vary from state to state, that generally applies to all property--tangible and intangible. Failure to report the unclaimed property to the state can result in penalties.
Generally, unclaimed or abandoned property arises if the owner has not generated any activity in the account or contacted you regarding the status of the account for the specified time. Different states have different requirements. It's generally 3 or 5 years, but the rules vary widely for individual items. For example, the dormancy period for wages is often shorter, sometimes as short as 1 year. Insolvency distributions, liquidations of businesses, dividends, certain deposits, etc. can also have a short period. Special rules often apply to financial institutions such as banks and insurance companies.
The rules vary by state, but you generally must make a good faith effort to locate the owner of the property. That may be as rudimentary as sending a first-class letter to the last known address. You may have to file reports in more than one state. Some states require you to report abandoned property to that state if the owner's last known address was in that state. For example, you do business in Indiana but your customer's address was in Michigan. You may have to report an unclaimed refund in Michigan.
While such laws have been around for some time, some states are just now becoming more aggressive and are planning audits. You could be assessed penalties for failure to file reports and deliver any abandoned property to the state.
We've included below a general list of the requirements for each state, including the holding period, report date, and the agency to whom you report the abandoned property. Please keep in mind that there are many exceptions to the general rule. Check the rules with the reporting agency and your accountant or attorney. And check the record retention period. It can be much longer than that for your tax returns.
State Period Report Date State Agency AL 3 unclaimed 10-31 State Treasurer AK 3 unclaimed 11-1 Dept. of Revenue AZ 5 abandoned 10-31 Dept. of Revenue AR 5 abandoned 11-1 State Auditor CA 3 abandoned 10-31 State Comptroller CO 5 unclaimed State Treasurer CT 3 abandoned 4-1 State Treasurer DE 5 abandoned 3-1 Secretary of Finance D.C. 3 unclaimed 10-31 Office of Tax & Revenue FL 5 unclaimed 5-1 Banking & Finance Dept. GA 5 abandoned 11-1 Commissioner of Revenue HI 5 abandoned 10-31 Director of Finance ID 5 abandoned 11-1 State Tax Commissioner IL 5 unclaimed 10-31 State Treasurer IN 5 unclaimed 11-1 Attorney General IA 3 unclaimed 10-31 State Treasurer KS 5 unclaimed 10-31 State Treasurer KY 3 abandoned 11-1 Dept. of Revenue LA 5 abandoned 10-31 State Treasurer ME 3 abandoned 10-31 State Treasurer MD 3 abandoned 10-31 State Comptroller MA 3 abandoned 5-1 State Treasurer MI 5 abandoned 11-1 Dept. of Treasury MN 3 abandoned 10-31 Dept. of Commerce MS 5 abandoned 10-31 State Treasurer MO 5 abandoned 11-1 State Treasurer MT 5 abandoned 10-31 Dept. of Revenue NE 5 abandoned 10-31 State Treasurer NV 3 abandoned 10-31 State Treasurer NH 5 abandoned 10-31 State Treasurer NJ 5 abandoned 11-1 State Treasurer NM 5 abandoned 10-31 Director of Revenue & Taxation NY 5 abandoned 3-10 State Comptroller NC 5 abandoned 10-31 State Treasurer (or Commissioner of Insurance) ND 3 abandoned 11-1 Admr. State Abandoned Property OH 3 unclaimed 10-31 Director of Commerce OK 5 abandoned 10-31 State Tax Commissioner OR 5 abandoned 10-31 Dept. of State Lands PA 5 abandoned 4-15 State Treasurer RI 3 abandoned 10-31 Treasury Dept. SC 5 abandoned 11-1 Dept. of Revenue SD 5 abandoned 10-31 State Treasurer TN 5 abandoned 5-1 State Treasurer TX 3 abandoned 11-1 State Treasurer UT 5 abandoned 4-30 State Treasurer VT 5 abandoned 4-30 State Treasurer VA 5 abandoned 10-31 State Treasurer WA 3 abandoned 10-31 Dept. of Revenue WV 5 abandoned 11-1 State Treasurer WI 5 abandoned 5-1 State Treasurer WY 5 abandoned 11-1 State Treasurer
Copyright 2005 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject.--ISSN 1089-1536
--Last Update 08/23/05