The Uniform Disposition Of Unclaimed Property Act
Are you aware of the Uniform Disposition of Unclaimed Property Act?
by Jane Tucker
05 Nov 2003
Chapter 11.1 §§ 55-210.1 to 55-210.30 of the Code of Virginia (the Act) deals with defining what constitutes unclaimed property, how long a business organization must maintain the property, what to do with the property once it is determined to be abandoned and what happens if the property is not reported to the Commonwealth in a timely manner. Virtually every business organization from non-profits to Fortune 500s to governmental agencies have some form of unclaimed property in their possession.
· What is unclaimed property?
Unclaimed property is all tangible or intangible property for which there has been no owner generated account activity for an extended period of time (a dormancy period). “Owner generated account activity” means that the owner must have contacted you regarding the status of the account or made a deposit or presented a demand for the property. If no such activity occurs within a specified period of time, the property is presumed abandoned.
· Why does Virginia have such a law?
The purpose of Virginia's law is three-fold:
1. To protect the property rights of the absentee owner and to reunite the owner with the property;
2. To provide that the use of any funds which arise from unclaimed property will go to the benefit of the general public rather than a chance possessor; and
3. To provide the holder relief from any liability and the responsibility of record keeping on the account.
· Questions you should consider in determining whether you may be a holder of unclaimed property:
1. Do you file reports with the State Treasurer annually?
2. Do you have property to report every year?
3. Do you reconcile your bank accounts?
4. What do you do about outstanding payables?
5. What do you do about accounts receivable credit balances, overpayments, unidentified remittances?
6. Do you ever take outstanding items into income? After what period of time?
7. What efforts are made to locate customers/stockholders/etc. who do not cash checks/claim dividends/etc. or who have mail returned?
8. Is the abandoned property function assigned to an individual or a department?
9. Is a third party (a contractor) reporting on your behalf or returning itemized lists of property for you to report?
10. Do you realize that your company may have to report to multiple states?
11. Do you have documented procedures in place to explain which accounts/records need to be reviewed for possible reporting?
12. Do you have documented procedures in place on how to perform due diligence?
13. Do you have documented procedures in place on how to report and remit property to the appropriate state agency responsible for administration of this statute?
· Common Types of Unclaimed Property:
- Uncashed Payroll Checks
- Utility Deposits
- Dormant Bank Accounts
- Travelers Checks
- Uncashed Refund Checks, etc.
- Stocks, Bonds, Mutual Funds
- Safe Deposit Box Contents
· Where to Report?
Report and remit property to the state of the owner's last known address. If you have no address, remit to the state of the holder's corporate domicile.
Mail your report and remittance for property due to Virginia to:
Division of Unclaimed Property
P. O. Box 2478
Richmond, VA 23218-2478
· When do I have to report?
The report is due on or before November 1 of each year. An extension may be requested, but the request must be received on or before November 1.
· Why do I have to report unclaimed property to the State Treasurer?
First and foremost, because it is the law. This consumer protection act has been in effect since 1961. Until recently, Virginia has relied on voluntary compliance, but that time is coming to an end soon. Second, because the property doesn't belong to you; it belongs to the owner. When you created the obligation, you took on the responsibility of holding the property for this individual or business until the transaction was complete. The Division of Unclaimed Property is simply stepping into the owner's shoes until they can be located and the property returned to them.
· Filing Your Annual Report of Unclaimed Property
is as Easy as 1, 2, 3
1. Determine your liability by identifying the properties that meet the definition of being abandoned.
2. Perform due diligence by attempting to contact the property owner by first class mail for all properties with a value greater than $100.
3. Complete the AP-1 form, certifying your report, and the AP-2 form detailing the records for the properties you must report and remit the property to the Department of the Treasury, Division of Unclaimed Property.
· After That:
Maintain records of your compliance for 10 years in case of audit.
· What happens if I fail to comply with the Act?
The Commonwealth has typically relied on voluntary compliance on the part of the business community, but current efforts will center on holder education and compliance reviews. Failure to comply to this Act can have serious financial consequences. Penalties and interest can be assessed if a business has failed to meet its obligation either to perform due diligence in attempting to contact owners regarding their property or to report and remit such property to the Commonwealth in a timely manner.
· Is there an Amnesty Program?
The Commonwealth is embarking on an amnesty program to promote compliance for business organizations that have not reported in the past. Through December 31, 2003, penalties and interest will be waived for organizations that come forward and report their unclaimed property voluntarily by completing an Amnesty Application Form. Once the amnesty period is over, a concentrated effort will be made by audit staff to perform compliance reviews and audits, and a strict adherence to the schedule of penalties and interest charges authorized by the Code of Virginia will be applied.
The Amnesty Application Form along with information about unclaimed property reporting can be located at www.trs.state.va.us.
· Where can I go to learn more?
The Department of the Treasury website, www. trs. state. va.us, contains information regarding the Act as well as many helpful links to information you will need to file your report. Questions regarding the Act can be directed to Melinda Barbish, Audit Manager, Division of Unclaimed Property, (804) 225-2515 or Jane D. Tucker, Esquire at Vandeventer Black LLP, (757) 446-8600.
Questions?
If you have any questions about this article or any other related matters, please contact Jane Tucker.
