Unclaimed Property

TRACEY L. REID, JD, LLM, is President of Reid Unclaimed Property Services LLC. Her company helps businesses of all sizes become compliant with state unclaimed property laws. Prior to forming her own company, she was a manager with a Big 4 accounting firm where she concentrated on unclaimed property.

• Preface xiChapter 1 Four Myths of Unclaimed Property 1Myth 1: “We Don’t Have Unclaimed Property.” 1Myth 2: “Unclaimed Property Compliance is Voluntary.” 1Myth 3: “If I Don’t Have Records, the Auditor Can’t Determine Any Unclaimed Property Liability for My Company.” 2Myth 4: “I Am Only Liable for Reporting Unclaimed Property to States Where I Conduct Business (i.e., Have Nexus).” 3Chapter 2 What is Unclaimed Property? 5Purpose of the Unclaimed Property Laws 7Terminology 8What Types of Property Can Become Abandoned Property? 9When Does an Item Become Unclaimed Property? 10States’ Responsibilities 12Holder’s Responsibilities 12Notes 14Chapter 3 Basics of Unclaimed Property Reporting 15Why You Must Report Your Unclaimed Property 15Determining Your Liability 16Where You May Have a Reporting Obligation: Jurisdiction 18Due Dates, Due Diligence, Aggregates, and Dormancy Periods 19Preparing the Report 20Note 22Chapter 4 Calculating Unclaimed Property Liability 23Gather Your Records 23Identify Your Company’s Unclaimed Property Types 24Determining Your Liability 24You Do Not Have All of the Records for the Audit Period: Determining the Best Estimation Technique for Your Company 28Do Your Due Diligence 34Complete the Final Summary Report and Pay the Money! 34Chapter 5 Preparing for and Managing an Unclaimed Property Audit 37Audit Targets: Are You Next? 37Offense—Contact the States for a Voluntary Disclosure Agreement 38Beware the Gift Horse 39Where to Start 40Defense—Your Company Has Received Notification of an Audit: Do Not Ignore the Letter! 41First Contact 43Recruit Your Team 45Know Your Enemy: Unclaimed Property Auditors 46Audit Timeline 49Records Requests 49Opening Meeting 50Site Visit and Records Analysis 51Closing Meeting 52Final Assessment 53Appeal Process 54Audit Best Practices 55Post-Audit Cleanup 56Notes 57Chapter 6 Developing Unclaimed Property Policies and Procedures 59Compliance Timelines: Due Diligence, Aggregates, and Dormancy Periods 64Content of Due Diligence Letters 65Timing of Due Diligence Mailings 66Aggregates 67Dormancy Periods 69Record Retention Policies 70Managing Your Exceptions and Exemptions 70Internal Controls: Checks and Balances 71Internal Audits 71Handling a Desk Audit or Fishing Call from a State Auditor’s Office 72Note 72Chapter 7 Exemptions and Exceptions to Unclaimed Property Reporting 73Business-to-Business Exemptions 74Current Business Relationship 78Gift Certificates/Gift Cards 80Gift Card Corporations 85Dormancy Fees 86Customer Credits/Credit Balances 89Tangible Personal Property 89Notes 91Chapter 8 Special Industry Considerations 93Insurance 93Offers to Settle 94Demutualization of Shares 96Banking 97When is an Account Considered Dormant? 97What Fees Can Be Imposed on Dormant Accounts? 98Safe-Deposit Boxes 98Money Orders and Traveler’s Checks 99Health Care 99Not-for-Profit Medical Service Providers 103Oil, Gas, Utilities, and Energy 103Oil, Gas, Coal Mining, and Other Mineral Mining Industries 103Utilities 105Utility Co-ops 106Retail 107Customer Loyalty/Incentive Programs 107Gift Certificates/Gift Cards 107Notes 108Chapter 9 Foreign Unclaimed Property Laws 111U.S. Laws on Foreign Escheat 112Indian Reservations 112U.S. Territories 113Other Nations’ Laws 115Canada 115United Kingdom 118Australia 119New Zealand 124Hong Kong 127Notes 128Chapter 10 Selected Legal Issues in Unclaimed Property Audits 129Lack of Nexus as an Audit Defense 129Dormancy Fees and Service Charges 130Expiration Dates and Other Contractual Limitation Periods 131Unclaimed Employee Benefits 132Unclaimed Property of Bankrupt Holders 133Mergers and Acquisitions: Successor Liability 134Asset Acquisitions 135Notes 137Chapter 11 How Not to Be a Victim of Unclaimed Property Fraud 139Psychology of Fraud 140Types of Fraudsters 141Mitigating the Risk of Unclaimed Property Fraud 143Note 146Chapter 12 Trends in Unclaimed Property 147Legislative Trends 147Non-Legislative Trends 150Conclusion 153Appendix A XYZ Corporation: Unclaimed Property Holder Questionnaire 155Appendix B Sample Policy and Procedure Manual 159Appendix C Sample Due Diligence Letter 171Appendix D State Unclaimed Property Office Contacts 173Appendix E Sample Audit Records Request 185Appendix F Summary of Current Gift Certificate Law 187Glossary 201Index 203

"The book demonstrates the need for complying with escheat laws, and can teach readers how to develop a compliance system, as well as how to survive a state audit." (Accounting Today, January 26th, 2009)