Do you know of any business that follows the Indiana unclaimed property rules? Does your employer? Don’t be surprised if the answer is no to both of those questions. Only a small percentage of all businesses comply with the Indiana unclaimed property rules. In this recessionary period, when states need all of the revenue they can find, it is expected that the states will start enforcing their unclaimed property rules.
So, what is unclaimed property? Have you ever ‘written off’ old outstanding checks? Most likely there is some unclaimed property in that group of checks. The shortened definition includes any outstanding liability on a business’s books. These liabilities could include unclaimed payroll checks, vendor checks, refund checks, expense reimbursement checks and credit balances or credit memos. There are several rules regarding what liabilities apply and the length of time they are held. Also the business is required to apply due diligence to find the rightful owner before turning the money over to the respective state.
How do the unclaimed property rules work? The business (holder) would report to the state the information they have on the person who the unclaimed property is due and remit that amount to the state. The state then advertises the listing of unclaimed property to find the rightful owner. At some point, if it is determined that the rightful owner cannot be found or is not claiming the money, it would revert to the state as revenue.
All fifty states have some sort of unclaimed property rules. The rules vary by state. There is no statute of limitations in the state of Indiana. The holder may have to report to more than one state. There are also several rules determining to which state the money is to be reported.
The difficulty is determining if your business should begin to report unclaimed property if it hasn’t in the past. The rules state that you have no option. Because the state has not enforced the rules in the past, many believe their exposure is limited. However, it is expected that the state of Indiana will begin including audits along with the more common audits of the Indiana Department of Revenue, State Board of Accounts, and Department of Workforce Development.
Holders are required to file annually even if the amounts they have to report are zero. The state may waive penalties and interest for past unfiled reports, but the newly complying business will have to agree to file in the future. The state of Indiana is currently working towards an amnesty program but it is not currently in place.
Indiana is currently transitioning to online reporting. Effective August 1st of 2009, all reports must be filed online. Holders can now begin registering for online access.
This article does not cover all of the rules determining how unclaimed property is defined. Be sure to contact your business advisor or the attorney general’s office in your state to find out all of the requirements before filing under the unclaimed property rules.