Attention MA Businesses: Unclaimed Property Could Cost YouJanuary 17, 2017
Massachusetts businesses—the Department of Revenue has contracted with a third party, Kelmar, to conduct unclaimed property audits—which could cost you....
Massachusetts businesses take heed—unclaimed property might end up costing you.
What is unclaimed property?
By definition, unclaimed property is any financial asset being held for a person or entity that cannot be found. It does not include real estate, abandoned or lost personal property.
Every U.S. state has unclaimed property programs that actively find owners of lost or forgotten assets. The unclaimed property statutes in each state protect your funds from reverting back to the payor company if you have lost contact with them. The laws instruct companies to turn forgotten funds over to the state who will attempt to find you or your heirs.
What is an unclaimed property audit?
Since there is a general lack of compliance with state unclaimed property laws, state authorities across the U.S. have become proactive in carrying out unclaimed property audits, with look-back periods extending as far back as 25 years in some states. Organizations found to be noncompliant with these laws could be subject to stiff penalties and interest charges.
Common forms of unclaimed property include....
- Savings or checking accounts
- Uncashed dividends
- Payroll checks
- Traveler’s checks
- Trust distributions
- Unredeemed money orders or gift certificates
- Insurance payments or refunds and life insurance policies
What’s going on in MA?
First, MA DOR has contracted with a third party contractor to conduct unclaimed property audits. MA is not the first state to do this, but it is something we will likely see more of, even for collection of various taxes at the federal level.
Since companies are dealing with hired contractors rather than agents who are subject to some regulation and oversight, these audits could be tougher to work through than the normal regulatory process.
The other troubling aspect here is the potential for company information being released once it is provided to a contractor.
There are a couple of takeaways that need to be considered.
- Urgency of planning now- It would be valuable for businesses to review their compliance on unclaimed property reporting.
- Updating systems- Many companies are not in compliance and do not have adequate systems or knowledge to even monitor this area.
Questions? Contact any member of our Tax Services Team.