California Voluntary Disclosure Program for Unclaimed Property Proposed
DALLAS, April 20, 2018 /PRNewswire/ — The state of California charges some of the highest penalties in the country when it comes to unclaimed property that is reported late. The most common examples of such properties include unclaimed payroll and vendor checks, as well as unclaimed accounts receivable credit balances. California currently charges interest at 12% per year for any past due unclaimed property, which can add up to millions of dollars for non-compliant companies with a large presence in that state.
Additionally, in contrast to many other states, California has a robust enforcement program, which identifies non-compliant companies that have never reported unclaimed property as well as compliant companies that report properties late, to impose its significant interest assessments.
However, on February 16, 2018, a bill was introduced in the California Assembly, which would create a Voluntary Disclosure Agreement (VDA). An unclaimed property VDA is a program that is similar to a tax amnesty program in that it would allow companies to report past due unclaimed property without being assessed interest or other penalties. If enacted, the VDA would represent the first opportunity in approximately 18 years for companies to report past due unclaimed property to California without interest or other penalties. California enacted a time-limited unclaimed property VDA in the year 2000, but since that program expired in 2002, interest assessments have been imposed on companies without any possibility of a waiver.
According to the proposed bill, AB-2773, companies would be given one year to complete a self-review and would need to review ten transaction years. The program would sunset in 2024.
Because California actively seeks out companies with unclaimed property compliance gaps and imposes very significant interest assessments for reporting unclaimed property late, the proposed VDA would present a good opportunity for companies operating in that state to lower their unclaimed property liability risk. This is especially true for companies in the technology, real estate, medical and sports industries, which have recently been the focus of increased unclaimed property audit activity in California.
To learn more about your company’s potential unclaimed property liability risk in California and ways to reduce that risk, please reach out to one of Ryan’s unclaimed property professionals.
Ryan, an award-winning global tax services and software provider, is the largest Firm in the world dedicated exclusively to business taxes. With global headquarters in Dallas, Texas, the Firm provides an integrated suite of federal, state, local, and international tax services on a multi-jurisdictional basis, including tax recovery, consulting, advocacy, compliance, and technology services. Ryan is a six-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan’s multi-disciplinary team of more than 2,200 professionals and associates serves over 14,000 clients in more than 45 countries, including many of the world’s most prominent Global 5000 companies. More information about Ryan can be found at ryan.com. “Ryan” and “Firm” refer to the global organizational network and may refer to one or more of the member firms of Ryan International, each of which is a separate legal entity.
TECHNICAL INFORMATION CONTACTS:
Mark A. Paolillo
View original content with multimedia:http://www.prnewswire.com/news-releases/california-voluntary-disclosure-program-for-unclaimed-property-proposed-300633858.html