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January 30, 2017

New York Reduces Unclaimed Property Look-Back Period for Voluntary Compliance Program (article)

Long neglected unclaimed property, also known as escheatable property, is by law required to be remitted to states. In recent years, states have become particularly aggressive in auditing companies to collect such property. These audits can lead to a significant liability for the audited company, as they use data extrapolation procedures (statistical techniques) to "identify" unclaimed property when other documentation is unavailable. The look-back period can be decades long and there may be significant penalties involved.

New York State has recently shortened the look-back period for unclaimed property holders participating in the state's Voluntary Compliance Program (VCP). Applications filed under the VCP after Jan. 1, 2017 utilize a look-back period of 10 years (reduced from 20 years) for most property types (e.g., unclaimed wages, accounts payable checks, refund checks, merchandise credits, and gift certificates). The applicable look-back period in an audit situation remains at 20 years. Additionally, participants in the VCP are less likely to be subject to the potentially heinous data extrapolation procedures, as a result of the shortened 10-year period of records involved.

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.” New York State may make an exception for companies that filed under a similar program in the past, if a particular type of property was inadvertently omitted from the prior filing and the current filing is made to voluntarily correct the error. Reports must be filed within six months from being accepted into the program in order to avoid an interest and/or penalty assessment.

In light of the above, now is a good time to talk about addressing long-neglected unclaimed property reporting in New York. If you wish to explore the implications of the new VCP, please reach out to your CBIZ team.

Copyright © 2017, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).

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