When it comes to the world of unclaimed property, holders are any companies that report unclaimed property. In fact, the states they report unclaimed property to are the ones that refer to them by this term. However, many may not realize that holders can actually also be owners of unclaimed property. Owners are the individuals or organizations to whom the funds are owed.
Companies, in particular, can be owners of a few different types of unclaimed property. Some examples include accounts payable, credit balances from overpayments on invoices, and inactive bank accounts. All of these types of unclaimed property may be owed to a company by a state once they are reported.
Furthermore, if one company owes money to another, such as may be the case in a vendor relationship, and the funds never reach the company owed or the check is never cashed, that would also qualify as unclaimed property. Therefore, it must be reported and the company owed would be the rightful owner of the unclaimed property.
In some states, however, there are exemptions that exist when it comes to this unclaimed property reporting process. In specific instances that concern unclaimed property related to business-to-business transactions, these exemptions exist if the two companies involved have an existing relationship with one another.
In these scenarios, the companies may not need to consider the money they owe to another unclaimed property immediately. Instead, companies that owe money to an existing vendor, for example, should make an effort to reach out to the vendor and inform them of this or apply the credit to the next invoice it receives. Therefore, it is imperative for companies to have established policies and procedures in place to address such situations. When these systems are created in advance, companies are easily able to employ them and ensure the situation is dealt with promptly and completely.
How do companies determine if the states are in possession of their unclaimed property?
Luckily, the process is pretty simple, and companies have multiple ways of doing so. First, companies can search each state’s treasury website to see if one is holding any of their unclaimed property that was reported by another holder. However, this can often be a time-consuming and daunting process. Therefore, companies can also move forward with determining this by hiring an unclaimed property compliance service like Dunbar.
Dunbar and similar service providers conduct the searches and facilitate the claims process on behalf of the company that hired them. Dunbar, in particular, has a specialized service called Corporate Asset Recovery for companies looking to complete this process. Generally, we will charge companies that opt to use this service a contingency fee to help them recover their property.
Furthermore, it is in good practice for companies to perform searches for unclaimed property owed to them on a regular basis. It is recommended they do this at least yearly as new unclaimed property is reported to the states each year. Companies, especially those that are publicly traded, should be aware this information is made public by the states on their unclaimed property websites. Therefore, a company or financial institution with an excess of unclaimed property held by a state could look negligent, particularly in the eyes of current or potential shareholders.
It is important to note that companies reporting unclaimed property in the name of another organization have the same obligation to perform due diligence for that organization as they would for any individual. Therefore, before reporting another company’s unclaimed property to the state, the company must send a letter to that company, informing it that it is owed money. Companies that receive these letters must then take action to claim their funds and prevent them from being turned over to the state.
Lastly, companies that never filed an unclaimed property report or have gaps in their filing history should be aware it is in their best interest to not file a claim for money owed to them. Companies that attempt to claim funds from the state while not being in compliance with their filing obligations, risk landing themselves in hot water. These companies put themselves at risk of being subject to an inquiry from the state they are attempting to claim funds from, a desk audit, or a full-scale audit.
Therefore, companies looking to report unclaimed property owed to another company or claim their property from a state may find it helpful to consult Dunbar before doing so. Our consultants are expertly trained to assist companies through this reporting process and help them guarantee it is in their best interest to claim their property.
Dunbar is a reputable provider of unclaimed property compliance services, offering a comprehensive suite of solutions to help organizations remain compliant with all applicable laws. With a professional team with decades of experience, Dunbar is the ideal choice for businesses seeking a reliable and knowledgeable provider for their unclaimed property compliance needs.
