Unclaimed property reporting is essential for compliance with state regulations, ensuring that lost or forgotten assets are returned to their rightful owners. Pennsylvania’s unclaimed property laws, governed by the Disposition of Abandoned and Unclaimed Property Act (DAUPA), have specific nuances that set them apart from other states. This blog post will explore the key aspects of Pennsylvania unclaimed property reporting, highlighting the importance of compliance, dormancy periods, filing dates, fines, and recent updates.
Understanding Unclaimed Property Reporting in Pennsylvania
Unclaimed property in Pennsylvania includes financial assets such as bank accounts, stocks, uncashed checks, insurance policies, and safe deposit box contents. These assets become unclaimed after being inactive or unclaimed for a specified period. The Pennsylvania Treasury manages these assets and ensures they are returned to their rightful owners.
Key Aspects of Pennsylvania’s Unclaimed Property Law
Disposition of Abandoned and Unclaimed Property Act (DAUPA)
This act, also known as Pennsylvania’s “escheat” law, governs the handling of unclaimed property. It outlines the procedures for reporting, transferring, and reclaiming unclaimed property. DAUPA ensures that unclaimed property is held in trust by the state until the rightful owner claims it, protecting owners’ rights and preventing the loss of assets.
Dormancy Periods
Pennsylvania has specific dormancy periods for different types of unclaimed property. Here are the dormancy periods for various property types as highlighted by the Pennsylvania Treasury:
- Accounts Payable: 3 years
- Accounts Receivable/Credit Balances: 3 years
- Certificates of Deposit: 3 years
- Checking Accounts: 3 years
- Credit Balances: 3 years
- Debt (private/government bonds): 3 years
- Dissolution/Liquidation: 2 years
- Dividends: 3 years
- Escrow Accounts: 3 years
- Fiduciaries: 3 years
- Funds held by State or Local Courts/Agencies: 3 years
- Gift Certificates: 3 years
- Mineral Proceeds/Royalties: 3 years
- Money Orders: 7 years
- Lay-a-way Deposits: 3 years
- Life Insurance: 3 years
- Demutualization: 2 years
- Official Bank Checks: 3 years
- Refunds/Rebates: 3 years
- Safe Deposit Box Contents: 3 years
- Savings Accounts: 3 years
- Securities: 3 years
- Tangible Property: 3 years
- Travelers Checks: 15 years
- Utility Deposits: 3 years
- Utility Refunds: 3 years
- Vendor Payments: 3 years
- Wages/Commissions: 2 years
Due Diligence Notifications
Holders of unclaimed property with a value of $50 or more are required to send due diligence notifications to the owner. These notifications must be sent no more than 120 days and no less than 60 days before filing the report, unless the owner has agreed to electronic communications.
PA Unclaimed Property Reporting Requirements & Format
Businesses, financial institutions, insurers, utilities, and other entities holding property that is presumed abandoned or unclaimed must report it to the Pennsylvania Treasury. Reports must be submitted by April 15 each year.
The Pennsylvania Treasury adheres to the National Association of Unclaimed Property Administrators (NAUPA) reporting format, which utilizes standardized codes in both written and electronic reports. This makes electronic reporting easier and ensures consistency.
“Money Match” Program
Pennsylvania has a program called “Money Match” that allows the state treasury to automatically return certain unclaimed property to individuals, without requiring them to file a claim, for amounts up to $500. While this program is efficient, holders may have concerns about the accuracy of the identification and verification process used to match unclaimed property with its rightful owners. Ensuring that the correct individuals receive their property is crucial to avoid disputes and potential legal issues.
Recent Legislation and Updates
Notification Requirements
Holders of unclaimed property with a value of $50 or more are required to send due diligence notifications to the owner. These notifications must be sent no more than 120 days and no less than 60 days before filing the report, unless the owner has agreed to electronic communications. The notice must include a description of the property, the property’s ownership, the value of the property (if known), and any information necessary to contact the holder to prevent the reporting of the property to the State Treasurer.
Modification of Presumed Abandonment Rules
Property held by agents-in-fact and fiduciaries is presumed abandoned three years after the holder has lost contact with the owner, unless within the three-year period the owner has increased or decreased the principal in the account, commenced receiving distributions, or otherwise indicated an interest in the account or plan.
Policy Guidance for Retirement Accounts
In September 2016, in response to amendments made to the Commonwealth’s Disposition of Abandoned and Unclaimed Property Law, the Pennsylvania Treasury issued a Policy Guidance. This guidance was designed to ensure that IRAs and other types of retirement account owners would not be subject to negative tax treatment as a consequence of an escheatment of retirement-related assets to the Commonwealth.
Enhanced Enforcement Efforts
Pennsylvania has intensified its enforcement of unclaimed property laws, with audits often extending back 15 years or more. This underscores the need for businesses to maintain meticulous records and strictly adhere to reporting obligations to avoid penalties.
Importance of Compliance
Compliance with Pennsylvania’s unclaimed property laws is essential for businesses and organizations. Failure to comply can result in significant fines and penalties. Key reasons for compliance include:
- Avoiding Legal Repercussions: Non-compliance can lead to fines and penalties.
- Supporting State Efforts: Compliance helps the Pennsylvania Treasury return unclaimed property to its owners.
- Maintaining Good Standing: Businesses that comply with regulations maintain a positive reputation.
The Pennsylvania Treasury emphasizes voluntary compliance and provides resources to assist businesses in meeting their reporting obligations. For first-time filers, the Pennsylvania Treasury provides a Voluntary Disclosure Agreement to help businesses catch up on their unclaimed property reporting and obtain a waiver for any penalties and interest.
Fines and Penalties
Pennsylvania imposes fines and penalties for non-compliance with unclaimed property laws. Key points to note:
- Interest Rate: Unreported or undelivered property is subject to a 12% interest rate.
- Additional Penalties: Other penalties as provided by statute may apply.
These fines underscore the importance of timely and accurate reporting to avoid financial repercussions.
Negative Reporting Requirement
Unlike some states, Pennsylvania does not statutorily require businesses to file a negative report if they have no unclaimed property to report. However, the Pennsylvania Treasury encourages businesses to file a negative report as a best practice. This simple, one-page report indicates that the business has reviewed its records and determined that no unclaimed property exists. Filing a negative report demonstrates due diligence and helps maintain accurate records.
Steps for Reporting Unclaimed Property
- Identify Unclaimed Property: Review records to identify any unclaimed financial assets or tangible items.
- Notify Owners: Attempt to contact the owners of the unclaimed property before reporting it to the state.
- Prepare Reports: Use the NAUPA format to prepare your unclaimed property reports.
- Submit Reports: Submit the reports electronically or manually by the April 15 deadline.
- Maintain Records: Keep detailed records of reported unclaimed property for future reference.