Reduce Potential Unclaimed Property Liabilities and Penalties
States are increasingly assertive in their rights to unclaimed property, which is valued in the hundreds of millions of dollars from coast to coast. But many businesses don’t closely assess unclaimed property, such as accounts receivable credits, rebates, unused gift cards and certificates, product and service refunds, uncashed dividends, and operating and payroll checks, perhaps assuming the amounts of unclaimed “money” are not material.
All 50 states, four separate U.S. territories and jurisdictions, and several foreign countries have escheat laws. Escheat is the law doctrine that property is not left ownerless. Searching for new revenue, states engage contract auditors who look for companies violating escheat laws and project significant current and historical liabilities and penalties. Escheat laws apply to organizations in a variety of industries including wholesale and retail, manufacturing, healthcare, financial services, and hospitality.
Crowe Horwath LLP can help your organization minimize the escheatable amounts through exemption analysis, remediation, and improved policies and procedures, all while complying with complex escheat requirements.
Crowe offers escheat services in multiple areas:
- Voluntary disclosure agreement filing: Filing this agreement could help your organization reduce or avoid escheat penalties, as well as limit interest charges and the look-back period (often 10 years or longer). Our unclaimed property specialists can help you apply for tax amnesty in certain cases.
- Unclaimed property compliance: If you are experiencing rising costs due to the burdensome unclaimed property reporting provisions, Crowe has a group of professionals dedicated to unclaimed property reporting and due diligence requirements. We have streamlined the compliance process through the use of technology and, as a result, offer a cost-effective reporting solution while adhering to the jurisdiction’s unclaimed property laws.
- Audit defense: If you’re facing an unclaimed property audit, we can help manage the audit process, minimize the exposure, and manage expectations by estimating the exposure at the initial stages of the audit. Crowe has extensive experience negotiating settlements with third-party auditors and unclaimed property administrators.
- Unclaimed property planning and process improvement: Armed with knowledge of which states have advantageous escheat policies, we provide consulting services to assist companies in optimizing their structure and policies to retain unclaimed property, which can increase earnings before interest, taxes, depreciation, and amortization (EBITDA). We also work with organizations to improve processes and make compliance less burdensome.
Crowe has more than 45 professionals who specialize in state and local taxes, including the area of abandoned and unclaimed property, which is not a tax but is collected by state treasuries.
Because unclaimed property claims do not constitute a tax, Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 5 (SFAS 5), “Accounting for Contingencies” may affect an enterprise’s financial reporting obligations. Crowe can help determine your exposure level and recommend appropriate action.