Unclaimed Property – What is it and how does it affect your business?
September 25, 2020
Have you received a notice from the state of Oregon offering free consulting regarding unclaimed property? If so, Geffen Mesher is here to help.
It’s important for business owners to recognize their obligation to report and remit unclaimed property. If not managed correctly, unclaimed property noncompliance could be extremely costly for a business.
What is unclaimed property? Unclaimed property is property or accounts (such as money or intangibles) that a business owes to an individual or entity after a specific period of time (“dormancy period”). When these funds are not returned to the rightful owner, this property then becomes “unclaimed” and must be remitted to the state by law.
Some questions businesses should ask regarding unclaimed property:
- Does my business have property that may be considered unclaimed?
- What state should the property be reported to?
- What is the state’s dormancy (abandonment) period for the property?
- Have I exhausted all efforts to track down the owner, and are those efforts properly recorded?
- What is the value of the property needing to be reported?
The answers to these questions vary by specific state reporting requirements. For example, dormancy periods vary based on the state’s unclaimed property category:
- Oregon requires assets like payroll and credit memos to be remitted to the state after a three-year abandonment period.
- California requires payroll and credit memos to be reported after a one-year abandonment period.
- Washington requires payroll to be reported after a one-year abandonment period, while credit memos must be reported after a three-year period.
During these periods, businesses holding unclaimed property are required to exhaust all options to locate the property’s rightful owner through due diligence, as well as maintain detailed records. States have begun increasing their enforcement around unclaimed property, so it’s important for businesses to review their unclaimed property processes and liability to mitigate any future risk.
If you’d like additional information, our expert team of state & local tax professionals at Geffen Mesher is ready and prepared to help navigate these issues for your business.