It’s a notice you don’t want to receive in the mail – a representative from your state is coming to audit your organization’s unclaimed property. Would you be ready? It’s very likely that you’ll receive such a notice sooner or later, especially if you’re in one of these situations:
• You have an incomplete reporting history
• You have repeatedly reported that you had no unclaimed property
• You have reported an unusual amount (large or small) of unclaimed property relative to the size of your company
• Compared to your industry, you haven’t reported similar types of unclaimed property
• You’re in an industry prone to unclaimed property (fast food franchises, for example, have a lot of turnover and “lost” employees)
• You pay taxes in a state but don’t report unclaimed property for that state
What can you do to prepare for an audit?
First of all, be sure your office and accounting staff members have a good understanding of unclaimed property rules.
Institute good processes to ensure you’re maintaining unclaimed property records (you can read our previous article on this topic by clicking here).
Conduct your own internal audits on a routine basis. Once you’ve received an audit notice, you lose the ability to come forward with any deficiencies you’re aware of, so it’s better to audit your own records regularly. If you conduct your own audit and find some unreported or unpaid amounts, many states offer voluntary programs that don’t penalize you for reporting that delinquent information, and may even waive applicable interest and/or penalties.
Conducting your own audits can also show you what records you may be missing. Be sure you audit all of your entities.
The good news is that we’re here to help! If you’d like assistance or consulting on your unclaimed property processes or reporting for your state(s), just contact your Mize Houser relationship manager or our Technical Tax Team at 800.234.5573.