Author: Taska S. Parker, CPA, Tax Senior Manager
Given the focus of many state on finding revenue wherever possible companies are advised to develop a formal process for tracking their unclaimed property.
Abandoned or unclaimed property laws apply to property that a business (a “holder” of property) essentially “owes” to the owner of that property after the passage of a certain period of time or account inactivity (the “dormancy periods”). This includes a broad range of property types, ranging from uncashed payroll checks, unclaimed gift cards, credit balances in customer accounts and life insurance proceeds. The dormancy periods vary by state and by property type. For example in Virginia, if a gift certificate for merchandise or services does not expire then it is not considered abandoned or unclaimed property. If it does expire, however, it is presumed abandoned five years after the last activity on the card. The dormancy period requirements for Virginia can be found on their website at http://www.trs.virginia.gov/ucp/holder/dormancy.aspx.
Any property that meets the definition of abandoned or unclaimed property must be reported and remitted to the Virginia department of treasury on or before November 1st each year by filing form AP1 which is located on Virginia’s website at the link noted above. It is advised that you review your Unclaimed Property and consider any needed changes to documentation, policy and prepare any needed filings in both Virginia and other states in which you conduct business. Failure to follow Unclaimed property laws in the individual states can result in significant penalties being charged.
Should you have any questions about how the unclaimed property laws may affect your business, please contact your Keiter Tax team.