California Unclaimed Bank Accounts

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California Unclaimed Bank Accounts Powered By Docstoc
					Unclaimed Property
                      Mindy Harada
                OS Payroll Consulting
         mindy.harada@ospayroll.com

                       Cynthia Vance
       California Statistics
There is currently $5.1 billion in unclaimed
property being held by the state
controller‟s office

The $5.1 billion belongs to 8.2 million
individuals and businesses.
 What is Unclaimed Property
Unclaimed property laws are one of the
original consumer protection programs
It is not a Tax
The state benevolently steps into the
shoes of the „lost owner‟ and takes
ownership of the property until the rightful
owner is found
   Yeah, right
What is Unclaimed Property?
Tangible Property
     Inheritances, Bank Accounts
Intangible Property
     Uncashed Payroll Checks
     Uncashed Vendor Checks
     Deposit Accounts
     Credit balances in A/R
When is Property Considered
       Abandoned?

Definition of “Abandoned Property” varies
 from state-to-state.
California considers property abandoned
 after one year from becoming payable
Dormancy Period – Also varies from state-
 to-state
What Companies are Affected
  by Unclaimed Property?

Every company has unclaimed property.
     High audit risk companies include the
      following:
       Manufacturers
       Financial organizations
       Utility providers
       Retailers
       Food processors
       Health care
 Characteristics of High Risk
        Companies

High employee turn-over.
High visibility in the market place.
Large amount of vendors.
Large A/R credit balances.
Customer deposits.
Patient “credits.”
  Unclaimed Property Audits

Unclaimed Property Audits are a hot topic
 for states for the following reasons:
     No statute of limitations.
     Audits result in large assessments – annual
      exposure is cumulative.
        Audit projections and extrapolations.
     States frequently use contract third-party
      auditors on a contingent fee basis.
  What Variations Can You
  Expect in an Unclaimed
      Property Audit
Auditor Projections
     May not take revenue growth or corporate
      changes into account.
Audit Basis
     Reliance on Miscellaneous Income and
      General Ledger rather than source data.
Penalties and Interest.
        Unclaimed Property
           Compliance
Record Retention Requirements
Notification Requirements (due diligence)
   If the employer has in its records an address for the
    owner of wages valued at $50 or more, the employer
    shall make reasonable efforts to notify the employee
    by mail that the wages will escheat to the state if they
    remain unclaimed.
   The notice shall be mailed not less than 6 nor more
    than 12 mths before the time when the owner‟s
    property becomes reportable to the state
Reporting Requirements (annually).
     California Specifics
Reports due by November 1 for each year
ending as of June 30 to the State
Controller.
Report requires identification of the
property and the former employee and the
dates when the property became payable
to the employee.
       California Specifics
Property valued at less than $50 may be
reported in the aggregate
Property reported as unclaimed is
delivered to the State Controller with the
report.
The Controller may at reasonable times
and with notice examine the records of
any employer .
          California Specifics
Penalties
   Any employer that willfully fails to render any
    report or perform other required duties shall
    be fined $100 for each day a report is
    withheld or duty not performed but not more
    than $10,000
   Fines of $5,000 to $50,000 can also be
    assessed against employers that refuse to
    deliver the wages to the state, and interest
    can be charged for late payment
Questions?

				
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