By Terry Barrett, CPA, Tax Senior Manager
We are pleased to share Terry Barrett’s feature article in the March/April issue of VSCPA‘s Disclosures Magazine, “Found money? Maybe not”
A former employee never cashed that last payroll check. A refund check issued to a customer was never cashed. Is this “found money?” What about those unredeemed gift cards that expired? Do you get to keep the cash? Can all these be written off to income? Many businesses do not understand that the uncashed checks, customer credits and similar types of transactions may represent unclaimed property that should be turned over to the state.
Unclaimed property (abandoned and unclaimed property, or “AUP” as is the technically correct term) is property, tangible or intangible, held by a business, including nonprofit organizations, that belongs to another person or business yet that other person has made no attempt to claim such property or utilize the funds for an extended period. This includes the uncashed payroll checks and unredeemed gift cards noted above. The business is considered the “holder” of the property; the person to whom the money/credit, etc., is due is considered the “owner” of the property — even though he or she does not have possession of and has not taken any action to claim it.
Some of the more common types of unclaimed property are outstanding payroll checks, outstanding checks to vendors, accounts receivable credits, customer deposits, insurance proceeds, dividends and checking/savings accounts. The Virginia Department of the Treasury, which administers the unclaimed property program in Virginia, lists on its website 133 different types of property. One of the more recent areas of unclaimed property is gift or stored value cards. With gift cards, only a portion of the value may be used or the card may have been forgotten and never used. The states vary as to their treatment — some (like Virginia) do not consider gift cards with no expiration dates as unclaimed property; other states do. This area is problematic these days, particularly for online sellers who issue gift cards, as their cards may be purchased by anyone, anywhere.
Access full article.
Questions on this topic? Contact your Keiter representative or our State and Local Tax team | 804.747.0000 | Email.
About the Author
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.