California’s Unclaimed Property Law: Is Your Business in Conformity?

California’s Unclaimed Property Law (UPL) requires banks, insurance companies, corporations, and certain other entities to review their books and records annually, and report any property to the State Controller’s Office when there has been no activity for a period of time (generally three years). Unclaimed Property (UP) is remitted to the state and held until the owner makes a claim. There is no deadline for claiming these once they are transferred over to the State Controller’s Office (SCO).

State law mandates that holders who intentionally neglect to report, pay, or transfer unclaimed property to the State Controller’s Office must pay an annual interest rate of 12 percent on the property’s value starting from the date it should have been reported, paid, or transferred. Due to California’s typical 10-year lookback period for unclaimed property audits, the accrued interest can surpass the actual amount of unclaimed property owed.

FTB and SCO Data Sharing

Assembly Bill 466 has authorized the California Franchise Tax Board (FTB) to share certain information with the State Controller’s Office (SCO) related to unclaimed property. FTB added  the following questions to certain business entity tax returns (Forms 100, 100S, 100W, 565, and 568) for the 2021 tax year and after.:

•  Has this business entity previously filed an unclaimed property Holder Remit Report with the State Controller’s Office? [Yes/No]
•  If “Yes,” when was the last report filed? 
•  Amount last remitted? $ 

What is Unclaimed Property?

Unclaimed Property (UP) is generally intangible property. Common types of unclaimed property are:

• Savings or Checking Accounts
•  Stock, Dividends, Bonds or Debentures
•  Life Insurance Accounts
•  Escrow Accounts
• Negotiable Instruments, Certified Checks, Money Orders, or Travelers Checks
•  Safe deposit box contents
•  Business Accounts: Vendor Checks, Accounts Receivable, Credit Balances, or Rebates

Unclaimed Property does not include Real Estate.

Who Must File an Unclaimed Property Report?

• Business associations, banking and financial organizations, and life insurance corporations
•  Non-profits, sole-proprietorships, and partnerships
• Other entities holding property belonging to another 

California’s Unclaimed Property Voluntary Compliance Program (VCP)

Under the California State Controller’s Voluntary Compliance Program (VCP) approved and enrolled holders that fulfill all program requirements will be eligible for waived interest on past-due unclaimed property reported under the program.

Program Requirements

California has a unique process for reporting unclaimed property.

1. Completing training program: First-time reporters should register for a free educational webinar on California’s unclaimed property reporting process.
2. Meeting reporting deadlines: For complete reporting instructions, forms, and links to free reporting software, visit the State Controller’s website at GoReport.sco.ca.gov.  

Read more about Holder reporting here.

Reporting Quick Guides

If you generated your unclaimed property report using third party software or on a third party website, you must still upload your report to the State Controller’s Office directly.

Complete this form to notify SCO of your interest in applying for the VCP.

The 5 Steps to Reporting Unclaimed Property to California

1. Identify Reportable Unclaimed Property
2. Send Due Diligence Letters and Respond to Owners
3. Submit a Notice Report
4. Respond to Owners from SCO Pre-escheat Notices
5. Submit Remit Report and Remittance to SCO 

Important Reporting Dates

Extension requests due no later than 30 days prior to the report due date.

Claiming Your Property

You can search for unclaimed property on California State Controller’s website.

Dana R. Borys, an Accountancy Corporation is a boutique tax consulting, compliance, and representation firm working with start-up/emerging growth companies and affluent individuals. Building connections beyond the code.