Every day that a Business or Non-Profit Organization is open it issues checks to pay for the goods and services it has purchased. What if that check to pay a Vendor is never cashed? How about an Employee’s salary check that was direct deposited into the Employee’s Bank by their Employer that the Employee forgot about because they had physically moved to a new town and never used their Salary because they forgot to close the Bank Account?
What about a multi-location Business that closed a location or two during COVID and forgot to close their Bank Account? If any of these monies are not identified by the Business or Non-Profit Organization that wrote a check to pay a Vendor, issued a payroll check to an Employee that never got cashed, or forgot about a Bank Account that they had that they never closed, they are in danger of losing those monies forever by a Law in every 50 States called escheatment. That’s right. If the business does not identify this abandoned property at some point in time it becomes the property of the State!
These unclaimed and unaccounted assets can happen to any size Business or Non-Profit Organization and can take the form of any tangible and/or intangible assets such as checks and cash, as well as property in the form of safe deposit boxes, life insurance policies, securities (stocks and bonds) and real property such as jewelry and real estate. Because accounting practices inclusive of accounts payable and accounts receivable cannot fully track all these assets, such as stale checks that are written that go uncashed, these revenues oftentimes go completely unaccounted. That is how they become the property of the State.
The reasons that States have amassed tens of billions of dollars of these unaccounted revenues (assets) are numerous. First, the Laws that regulate these unaccounted revenues are complex and vary from State to State. Second, sadly, most Businesses and Non-Profit Organizations are not large enough to hire an expert in identifying and recovering these lost assets. No regular salaried employee has the skill set and expertise to recover these revenues. Third, recovering the assets of the unaccounted revenues is time-consuming because even when they are identified, many States require that the Business or Non-Profit Organization that finds these assets has to make an attempt to find the payee that they intended to remit in cases of items such as accounts payable Vendor and Employee checks.
The good news is that there are experts that specialize in recovering these unaccounted revenues that perform their services strictly on a performance-based shared benefit basis for any size Business in any State. They split out the value of the assets that they recover for Client’s as their authorized advocate. If there is no recovery, there is no fee. Therefore, there is no reason for Businesses and Non-Profits to not retain their services because if they do nothing they will never know if they have revenues (assets) that are unaccounted for. This is a particularly attractive contingency fee audit for any business that has acquired any other Business in a Merger because it would never occur to the new Owner there are unaccounted assets.
The documentation needed by these unclaimed asset recovery experts simply includes providing a W9 form for any Business, Or Non-Profit and including the physical addresses that have been associated with that entity since it opened its doors. The Client simply then needs to provide the unclaimed asset recovery expert with access to both its accounts payables and accounts receivables for up to the past five (5) years. It is recommended that for larger Businesses and Non-Profit Organizations, they should retain the services of the unaccounted asset expert annually.
It needs to be stated that the Business, Or Non-Profit has to first attempt to contact the rightful owner of these assets that were originally intended for them. In those cases, these unaccounted assets need to be reported to the State based on the dormancy policy of each State which itself can be lengthy. The good news is that once the assets are in the hands of the State, there is a process to recover those assets based on the proof of entitlement of that Specific State. This cumbersome process is another reason that it is attractive for Businesses and Non-Profits to engage the services of an unaccounted asset expert, as again, this work can be time intensive.
Finally, the vast number of States initiate their escheatment to claim these unaccounted revenues (assets) after only one year for Wages paid for Employee Salaries. This timeframe is typically 3-5 years for the unaccounted revenues associated with Bank Accounts and Checks.
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