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.
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