In 2025, New York unclaimed property reporting will undergo significant changes. In this post, we’ll explore the items business owners need to be aware to remain compliant and avoid penalties. They include the transition to the Kelmar Abandoned Property System (KAPS), enhanced enforcement efforts, and new regulatory measures.
We’ll also delve into New York escheatment time frames, including dormancy periods and reporting deadlines for different property types. In addition to frequently asked questions.
Transition to the Kelmar Abandoned Property System (KAPS)
The New York Office of Unclaimed Funds is moving to the Kelmar Abandoned Property System (KAPS) for reporting New York unclaimed property. This transition mandates that everyone format all reports using the National Association of Unclaimed Property Administrators (NAUPA) standard. Businesses currently using alternative formats must update their reporting methods to avoid non-compliance.
Enhanced Enforcement and Audit Activities
New York State has intensified its enforcement of unclaimed property laws. Audits now often extend back 15 years or more, underscoring businesses’ need to maintain meticulous records and strictly adhere to reporting obligations to avoid penalties.
Focus on Gift Card Compliance
In December 2022, new legislation was introduced in New York State to extend the expiration dates of gift cards to a minimum of nine years from the date of purchase and prohibit various fees that could reduce the value of the gift cards. This law aims to safeguard consumers and encourage them to keep track of their gift cards.
The legislation also mandates that businesses correctly remit unclaimed gift card balances. New York General Business Law Section 396-I prohibits the sale of gift certificates that have a face value or balance that declines due to dormancy or the passage of time. This ensures that businesses cannot reduce the value of gift cards through inactivity fees or other charges.
These recent actions highlight the state’s commitment to ensuring businesses correctly remit unclaimed gift card balances. Additionally, legal action will be pursued against companies that do not comply with these regulations, reinforcing the state’s dedication to consumer protection.
Implementation of the Self-Directed Compliance Program
New York’s Self-Directed Compliance Program allows businesses to disclose and remit past-due unclaimed property voluntarily. This initiative provides a pathway to rectify non-compliance proactively, mitigating severe penalties and reducing the risk of audits.
New Regulation for Date of Death Validation
A new regulation now requires businesses to check the date of death of a presumed owner of unclaimed funds within 90 days. This measure ensures more accurate and timely reporting, especially regarding the assets of deceased individuals.
Property Types and Dormancy Periods in New York
Understanding the dormancy periods for various property types is critical for compliance. New York’s guidelines say that the dormancy period, or the time a property is seen as abandoned, varies by asset type. Here are some examples:
- Outstanding Payroll: Typically considered abandoned after 3 years of no activity.
- Accounts Payable Checks: Often fall under a 3-year dormancy period, though specifics can vary.
- Escrow Funds: Generally, they have a 5-year dormancy period before they are reported as unclaimed property.
- Class Action Settlements: Commonly subject to a 5-year dormancy period, but this may depend on the case details.
- Bankruptcy Funds: These usually become abandoned after 5 years of inactivity.
- Real Estate Proceeds: Often deemed abandoned after 5 years if unclaimed.
- Injury and Medical Claims: These can range between 3 to 5 years, depending on the nature of the funds and contractual agreements.
Dormancy periods can differ by property type, and may change over time. Therefore, check the latest guidelines from the New York Office of Unclaimed Funds for precise information.
Reporting and Payment Due Dates
How to Report Unclaimed Property in New York
In New York, unclaimed property holders must adhere to detailed reporting guidelines set forth by the New York Office of Unclaimed Funds. Here’s a step-by-step guide on how to report and remit payments:
- Identify Unclaimed Property: Review your records to determine which funds or assets qualify as unclaimed property, including uncashed payroll checks, escrow funds, and more.
- Determine the Dormancy Period: Verify the dormancy period for each property type. Different assets have varying inactivity periods before they are considered abandoned.
- Prepare the Report: Compile the required information using the NAUPA standard format mandated under the Kelmar Abandoned Property System (KAPS). Ensure that all details are accurate and complete.
- File the Report: Submit your report through the state’s designated electronic filing system. Timeliness is crucial to avoid non-compliance penalties.
- Remit Payment: Along with your report, remit any due payments for unclaimed property. Follow the state guidelines regarding the calculation and submission of these amounts.
Due Dates by Property Type
Due dates for reporting and payment can vary by property type. Below are general guidelines to help you plan.
Outstanding Payroll
Usually, must be reported and sent by the end of the year after the dormancy period. This is often December 31.
Accounts Payable Checks
These are generally subject to an annual reporting cycle. Often, the state sets due dates at the end of the calendar year, typically December 31.
Escrow Funds
Escrow funds generally have a 5-year dormancy period. Companies are usually required to report shortly after this period lapses, with deadlines aligned to the state’s reporting cycle
Class Action Settlements
These funds are often reported annually after the dormancy period, with reports due by the end of the year, generally December 31.
Bankruptcy Funds
Unclaimed funds from bankruptcy cases are typically reported annually. The due dates come after a 5-year dormancy period, usually December 31.
Real Estate Proceeds
The state often considers real estate proceeds abandoned after 5 years of no activity. Reporting deadlines are in line with the annual reporting cycle.
Injury and Medical Claims
Reporting is usually due within the year following the dormancy period, commonly December 31.
The exact due dates and reporting requirements can vary based on the latest state guidelines and updates. Always check the current regulations with the New York Office of Unclaimed Funds. Or consult a compliance advisor for the most accurate information.
Recommendations for Business Owners
- Stay Informed: Regularly monitor updates from the New York Office of Unclaimed Funds to keep abreast of regulatory changes.
- Review and Update Reporting Practices: Ensure that all unclaimed property reports align with the NAUPA standard, especially with the upcoming KAPS implementation.
- Enhance Record-Keeping: Maintain comprehensive records of all transactions to facilitate accurate reporting and preparedness for potential audits.
- Seek Professional Guidance: Consult with unclaimed property compliance experts to navigate the evolving regulatory environment effectively.
By understanding the following, business owners in New York can better manage their compliance obligations.
- Recent changes and updates.
- The specifics of property types and their dormancy periods.
- Detailed steps for reporting unclaimed property along with the associated due dates.
Taking proactive steps is important. This includes updating reporting systems, improving record-keeping, and getting expert advice. These actions help reduce risks and avoid expensive penalties in the changing regulatory environment.