Many companies today rely on third-party services to help them efficiently and effectively accomplish all the tasks they need to keep their businesses running smoothly. Whether a company relies on these services to help it complete its advertising, legal, or accounting responsibilities, it can be sure these services will take all measures to ensure all aspects of their jobs are fulfilled. However, the same cannot always be said for third-party services with close ties to unclaimed property reporting.
Companies that use payment processing, payroll, or transfer agent services cannot simply assume these third-party services will complete unclaimed property reporting for them although their work aligns closely with the matter. Instead, companies must clearly define the third-party’s obligation report unclaimed property in their service agreements.
The states view the company, also known as the holder, as the responsible party for reporting property. Therefore, if a company fails to report unclaimed property because it assumed a third-party service would do so, it will be held liable. Therefore, companies need to take thorough measures to ensure all unclaimed property is reported to avoid fines and penalties.
This does not mean third-party services cannot take on this responsibility for companies. If companies choose to have third-party services report unclaimed property, they should monitor them to ensure they are completing this responsibility with proper due diligence and reports are filed on time and in compliance with each state’s unclaimed property law.
Therefore, it is often a smart measure for companies to outsource their unclaimed property responsibilities to third-party services that specialize in unclaimed property compliance, such as Dunbar. These services understand the nuances of reporting unclaimed property. They understand when the property must be reported, how payments should be made, and how they must go about doing so in a way that aligns with each state’s laws. Outsourcing unclaimed property can reduce a company’s overall risk and exposure and can often cost less than purchasing software or hiring a resource to take on this responsibility.
However, regardless of whether a company chooses to use a third-party that specializes in reporting unclaimed property or offers it as one of its many services, companies should request copies of all due diligence letters and unclaimed property reports filed on their behalf. These records should be retained for at least 10 years to ensure proper documentation can be presented in the event of an audit. An ancillary review should be performed to ensure the due diligence letters included the state-mandated language, met the dollar threshold and were mailed in accordance with state requirements. State reports and payments should be examined for timliness and proper delivery to the state.
Therefore, while companies cannot just expect the payment processing, payroll, or transfer agent service providers they contract to automatically complete their unclaimed property responsibilities, they can take measures to ensure they do so. By creating clear contracts with these providers or hiring third-party services that specialize in reporting unclaimed property, companies can minimize these responsibilities, allowing them to focus on other areas of business.
Dunbar is a reputable provider of unclaimed property compliance services, offering a comprehensive suite of solutions to help organizations and 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.
