It happens: a vendor forgets to cash a check, a gift certificate is never claimed or a former employee neglects to cash her paycheck. At some time or another, most businesses will have to deal with unclaimed property. What’s important is that you’re aware of and in compliance with Pennsylvania’s Unclaimed Property Act. Failing to do so can have some pretty severe consequences, from fines to jail time.
What exactly is “unclaimed property?”
Any financial asset such as cash, stocks, dividends, unclaimed insurance benefits, activated gift cards and items abandoned in safe deposit boxes that have been left with a “holder” – likely a business – without activity or contact from the owner for a specified dormancy period ranging from two to fifteen years. Several other criteria for the residency of the owner also apply. The Unclaimed Property Act does not require holders to search for lost owners; however, holders are encouraged to make a reasonable effort to locate owners prior to the expiration of the holding period.
What do “holders” need to do to stay in compliance?
Holders of unclaimed property must report to the State Treasurer on or before April 15 of the year following the year in which the property first became subject to the custody and control of the Commonwealth. Any amount of unclaimed property is reportable to the Treasury; however, the Treasury does not require the name and address of an owner in report filings if the aggregate amount per owner is $49.99 or less. Holders reporting ten or more properties are required to file electronically.
Unclaimed property reports must include:
- Name and last known address of owner
- Description and amount of property
- Date the property became payable or found to be without a rightful owner
- Date of the last transaction with the owner of the respective property
When preparing the unclaimed property for delivery to the Treasury, be sure to keep property separated by owner and properly labeled. Form AP-1 must be completed and included with the property being delivered, in addition to Form TUP-40 for those turning over tangible property items.
What are the consequences of failing to comply with the Pennsylvania Unclaimed Property Act?
Failure to file required reporting will result in interest, calculated at 12 percent per annum from the reporting due date, fines of one hundred dollars per day for each day past the filing deadline (not to exceed $10,000) and, possibly, imprisonment of up to 24 months.
Have unclaimed property and are out of compliance?
Fortunately, the Pennsylvania Treasury offers a Voluntary Disclosure Agreement that can get you in compliance and up-to-date with annual filings. Best of all, by doing so, you’ll receive a waiver of penalties and interest.
What can I do to ensure I’m complying with the Pennsylvania Unclaimed Property Act in the future?
Conduct yearly reviews for dormant accounts to identify unclaimed property and make appropriate annual filings.
If you are holding unclaimed property, now is the time to take action to protect yourself and your business. RKL can help you get into compliance – contact your RKL advisor today or visit the PA Department of Treasury’s website to get more details.