Escheat is a term held over from medieval days, where property of a deceased feudal servant was turned over the lord when the serf died without an heir. In today’s world, escheat normally refers to the reversion of unclaimed property to the state. The state holds the money or property for varying amounts of time, depending upon the type of property, to allow time for the rightful owners to come forth and claim it. When no one claims the property after the appropriate waiting time, ownership of the money and/or property reverts to the states.
If your business has unclaimed property subject to escheat, you are required to perform due diligence in trying to contact the owner, usually including sending first class mail to the last known address. If the property remains unclaimed, depending on the state, you may be required to file a return once a year and submit the unclaimed property to the state. Varying types of property, including uncashed payroll checks, overpayments on receivables, uncashed dividend checks, inactive bank accounts, and abandoned safe deposit boxes, among others, are subject to escheat.
Penalties apply where a business has not filed reports and remitted the unclaimed property to the state. As states look to balance their budgets, more and more emphasis is being placed on auditing businesses for unclaimed property. Our certified public accountants and consultants have the experience necessary to help you determine the holding periods for your unclaimed property and to assist you with the proper reporting procedures.