Unclaimed Property in New York State

11.29.16

Every business will usually find that they have old outdated uncashed payable and payroll checks on its bank reconciliation for months and sometimes even years.  New York State has recently started to increase its audits of abandoned or unclaimed property audits, and the penalties for not following the requirements can be severe, with penalties of 10% of the total amount that should have been remitted.

New York State’s Abandoned Property Law requires certain entities to transfer abandoned money or securities to the New York State Comptroller’s Office of Unclaimed Funds.  The Comptroller serves as the custodian of unclaimed funds until they are claimed by the rightful owners.  Entities required to report and remit unclaimed funds include, for example, banks, insurance companies, corporations and state agencies.  The funds come from inactive bank accounts, uncollected insurance policies or refunds, amounts due for undelivered goods or services, abandoned stocks, uncashed checks and more.

New York businesses have a number of responsibilities concerning unclaimed property. Initially, written notice must be sent to the apparent owner of the unclaimed property, if known.  If the property remains unclaimed, businesses have a number of filing and reporting requirements to fulfill.  Most importantly, businesses are required to turn over any and all unclaimed property to the State.

Individuals should know that New York property is generally presumed abandoned if there has been no activity in the account for a set period of time, usually between two and five years.  However, this time limit varies depending on the type of property involved.  Once abandoned property is turned over to the State by a business, an individual then has the burden of reclaiming it from the State.

In New York, information reports are required of persons holding property which has escheated to the State by reason of a presumption of abandonment.  The report is made to the New York State Comptroller on forms prescribed by that officer by August 1, reporting abandoned property held as of June 30 in the case of financial organizations and held as of July 1 by utilities.  Corporations holding unclaimed condemnation awards report by August 1 describing abandoned property held as of July 1.

Most unclaimed property is delivered to the State Comptroller at the same time that the information report is filed.  In addition, financial organizations are required to deliver by November 10 property abandoned as of June 30.  Also, utilities deliver by October 10 property deemed abandoned as of July 1.  Corporations deliver unclaimed condemnation awards by February 10 for abandoned property held as of the preceding July 1.

A business must generally maintain related records five years after the unclaimed property is reported.  However, the period for dealers and brokers is ten years following the end of the year in which records were created.

Remember, if you fail to file full and complete reports or affidavits the statute requires in the manner the Comptroller prescribes, you may be subject to a fine of $100 for each day such report or affidavit is willfully delayed or withheld.  If you are late delivering abandoned property, the Comptroller can charge you late filing interest.  Interest is 10 percent per year from the date payment or delivery was due to the date you make payment or delivery.  Interest on securities is based on the closing price of the securities, as of the tenth day of the month in which delivery was due.