Recently, you may have received the New York Abandoned Property Notice, which:
Inquires if the business is the holder of unclaimed property due the state of New York;
Touts the virtues of New York’s Voluntary Compliance Program (“VCP”); and
Encourages companies to complete and return a Questionnaire and Self-Audit checklist (even if an unclaimed property report is deemed unnecessary).
States have long claimed the power of escheat over abandoned property, characterizing themselves as taking custody of the property from the holder of the property for the benefit of the property’s rightful owner.
Examples of unclaimed property subject to escheat include uncashed payroll checks, uncashed payments to suppliers, uncashed dividend checks, customer overpayments, unreturned deposits, and uncashed refund checks. In addition, gift cards and gift certificates can deemed escheatable (though not by all states, e.g., CT).
While state laws relating to the escheat of abandoned property have existed for many years, until recently there was relatively little awareness of or compliance with these laws.
Who gets what?
The first priority claim to the abandoned property is to the state of last known address of the apparent owner (i.e., the person whose name appears on the business records of the holder), as shown on the business records of the holder.
If the apparent owner’s address is unknown, or if the apparent owner resides in a state that does not claim the abandoned property (or in a foreign country), the holder’s state of corporate domicile (i.e., state of incorporation or place of principal business of a non-corporate holder) has the next claim to the abandoned property.
What Should You Do?
Determine you hold escheatable property to New York (or any other state). Individuals/businesses should check their state’s unclaimed property website to see if their name, family members or business names show up with accounts the state is holding - they may get a surprise gift.
Factors a business should consider when evaluating whether aNYVCP makes sense includes:
Incorporated in New York
Headquartered in New York
Maintain significant business in New York
Never filed Unclaimed Property Reports
Acquired additional entities that meet any of the above facts
Prior to filling out Questionnaire, you should discuss options with a SALT professional to determine appropriate course of action.
Citrin Cooperman’s State and Local Tax (SALT) Practice has experience with guiding clients through the annual reporting of unclaimed property in addition to taking part in Voluntary Compliance Programs.