Client Profile

Issue

On a recommendation from its tax counsel, a Maryland-based chemical manufacturer investigated its potential for abandoned or unclaimed property (AUP). It estimated a $50 million exposure spread across 52 filing jurisdictions, with no history of compliance with any of the jurisdictions’ AUP reporting requirements.

Solution

With the help of our abandoned and unclaimed property team, the manufacturer evaluated its exposure areas. Accounts receivable held unapplied cash and cash over short, among other sources of AUP and made up a significant portion of the manufacturer’s AUP exposure. We helped the manufacturer address these potential liabilities through internal research that involved identifying property owners and accumulating documentation to prove which items did not qualify as AUP.

Once materials were gathered, we initiated the voluntary disclosure agreement program with the applicable filing jurisdictions, which allowed the manufacturer to report its AUP with little to no penalties or interest assessed for its past noncompliance. Additionally, our professionals helped modify existing policies and create new procedures to mitigate future AUP exposures.

Outcome

The manufacturer came into full compliance with its U.S. filing jurisdictions. Through proactively addressing its previous AUP noncompliance, the manufacturer only remitted $1.5 million of the original estimated $50 million to the states in which it had generated the AUP.

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