Many states have changed the way they handle unclaimed property–and it sometimes feels like it’s not to ensure the rightful owners are reunited with their lost profits.
More states discovered the lucrative nature of unclaimed property, and they began to figure out ways to keep more of it. Why? To help fix the operating budget shortfalls in the state. It turns out in many states, the amount of unclaimed property was substantial. By some estimates, unclaimed property accounted for up to $40 Billion for state budgets nationwide.
In the late 90s, states began hiring auditing firms to analyze company books for insurers, retailers, and other businesses to identify some of this property, and turn it over to them! In the past, there were more active ways of locating these property owners used by the state to connect people or companies with their property. However, in the past ten years, many states have eliminated these notifications, leaving the onus for finding the property up to the claimant.
Other examples given include:
- Delaware used to wait until the letter they sent came back as undeliverable before they said the property was abandoned; now call it abandoned if the owner doesn’t have contact with their account within three years—and they make no attempt to reach the owner before the claim it!
- Minnesota sent letters to the owners when the property turned over to the state. But they eliminated this step in 2005, and they no longer publish the information in the newspaper like they did in the past.
- California did little to notify owners before they seized their property. The feds stepped in to fix their practices in 2007, but instead of the amount of seized property in California going down, it increased by $3.5 BILLION! Apparently their state legislature passed a law that kept their seizing practices alive and well.
- Oklahoma’s unclaimed property practices were compared to a Ponzi scheme in a lawsuit earlier this year. However, they are actively trying to change how they handle unclaimed property moving forward, even offering incentives to match consumers with their money to employees of the state’s Treasury.
I have to admit, the examples revealed in the article on Yahoo.com do not surprise me much. In my line of work, I see how these things work with unclaimed property all the time.
Here’s an example of a process I feel is not in the owner’s best interest. The state budgets a cap on unclaimed property claims to disperse in a year. Once the disbursement budget amount is reached for all the claimants in the state in a given year, any owner with an outstanding claim has to wait until the next fiscal year.
That is not right.
The money is not the state’s; it belongs to the owner. When the owner proves the property belongs to them, it is due to them right then—not next month, not the next quarter, and certainly not the next year!
The recovery process should be simpler. The progressions for unclaimed property should be standardized between all states. The process for disbursement should also be more automated. Furthermore, discovering you even have a claim should be uniform. The data tables displaying Property Listings should be standardized and available free of charge to download.
But it isn’t that simple; it isn’t standardized, and the process for disbursement or even discovery is not automated.
So, as it stands, it’s up to you to reclaim what’s yours before the state does. It’s a good idea to do a periodic audit to see if one of the states where you operate is claiming some of your lost profits. The fact is if you don’t find it, the state will–and it is sometimes hard to find you even have property available to you.
Isn’t it time you knew what states are doing with YOUR money?
If you enjoyed this post, you might be interested in the following blogs:
- What a Bulldog and an Auditor Have In Common
- What is Escheatment and Why Should You Know
- How Far Back is Too Far Back?
Alan Srader is the Director of Audit Development and Corporate Training for AP Recovery, a firm delivering straightforward audits to enhance accounts payable efficiency. With thirty years of experience in Accounts Payable, Alan knows what makes audits work—and what makes them fall apart. Alan approaches his clients with a desire to help and a passion for solving the Account Payable overpayments and recovery of assets puzzle.
More articles by Alan.