California’s Unclaimed Property Voluntary Compliance Program Goes Live

California estimates that approximately 1.3 million businesses that file taxes with the Franchise Tax Board have unclaimed property but failed to submit a report to the Controller.

What is unclaimed property (UP)?

• UP is generally intangible property (including everything from stocks and uncashed payroll, dividend, or vendor checks to credits owed to customers or patients) that has not been resolved with its rightful owner for an extended period.
• UP is remitted to the state and held until the owner makes a claim.
• Sourcing of UP first goes to the last known address of the property owner. If an address is unknown, then the UP is to be reported to the company’s state of incorporation.

Who is ineligible for the California Voluntary Compliance Program (VCP)?

Any businesses that are currently subject to an unclaimed property examination, or a civil or criminal investigation, or that have unpaid interest assessments from the past five years are ineligible.

What are the terms of the VCP?

• Businesses must enroll and participate in the Controller’s unclaimed property educational training program within three months.
• Businesses should review books and records for unclaimed property for at least the previous 10 report years (typically, 13 transaction years).
• Businesses should make reasonable efforts to notify owners of reportable property by mail or electronically.

What is the benefit of the VCP?

• The 12% interest on past-due unclaimed property may be waived.

Who should consider the VCP?

Companies that meet the following requirements should consider the VCP:

• Have significant customers, vendors, or payroll in California;
• Headquartered in California;
• Have entities incorporated or domiciled in California;
• Written off aged checks, deposits, or accounts receivable credits; or,
• File a California income tax return.

What is your next step?

Reach out for a quick discussion to understand if the VCP is a program your company should consider and any potential unclaimed property exposure you should be aware of.

You may contact Angela Gebert or your Marcum tax professional.