One of the biggest challenges small businesses face with unclaimed property reporting is handling different requirements across multiple states. Unlike many regulations that follow federal standards, unclaimed property reporting required by states vary significantly state-to-state, creating a complex compliance landscape for SMBs operating in multiple jurisdictions.
Understanding State Reporting
For small and medium-sized businesses operating across state lines, unclaimed property compliance and understanding where to report unclaimed property is the first critical hurdle. The Supreme Court established a clear priority system in its landmark Texas v. New Jersey decision that governs jurisdictional rules:
First priority goes to the state of the property owner’s last known address. This means if you have an uncashed vendor check for a supplier based in California, that property would generally be reportable to California’s unclaimed property program, regardless of where your business is located.
Second priority applies when no owner address exists or if the state has no unclaimed property law. In these cases, property gets reported to the state where your business is incorporated or formed. This secondary rule often affects small businesses with incomplete customer records or very old dormant items.
This jurisdictional framework means your small business might need to file unclaimed property reports in several states annually, each with different forms, deadlines, and specific requirements. The compliance burden can be significant for resource-constrained SMBs.
State-specific variations include different dormancy periods for unclaimed property, property type definitions, due diligence requirements, reporting thresholds, and filing methods. For example, Delaware requires reporting by March 1st for most property types, while California, Texas, and Florida use October 31st deadlines. New York has different deadlines for different property categories.
Some states have minimum reporting thresholds—they don’t require reports for owners with property valued below certain amounts (often $50-$100). Others require reporting regardless of value. Due diligence requirements also vary, with some states requiring owner notifications for all property and others only requiring notices above specific dollar thresholds.
Electronic filing requirements differ significantly between states. While many have moved to online-only reporting systems, some still accept paper filings. Payment methods also vary—some states require electronic funds transfer (EFT) above certain amounts, while others accept checks.
How to Stay Ahead
Small businesses should create a comprehensive compliance calendar tracking unclaimed property deadlines for all relevant states. Research each state’s specific requirements annually, as states frequently update their procedures, forms, and electronic filing systems.
Consider using specialized unclaimed property software designed to handle multi-state reporting requirements. These solutions can manage the various state forms, deadlines, and specific compliance requirements automatically, reducing the administrative burden on small business owners.
Start by identifying which states you have reporting obligations to based on your customer and vendor locations. Then research their specific unclaimed property requirements, focusing on deadlines, forms, and filing procedures. Taking a systematic, state-by-state approach ensures your small business remains compliant across all relevant jurisdictions while avoiding the penalty risks associated with non-compliance.
Frequently Asked Questions
What are unclaimed property reporting requirements by states?
Unclaimed property reporting requirements vary from state-to-state. Ensuring compliance when you have reporting requirements in multiple states can be time-consuming and confusing. ReportMyUP manages all unclaimed property reporting, reporting to 50+ states and jurisdictions.
What happens if businesses fail to report?
Failing to report unclaimed property can result in monetary penalties and audits for your business. Many states have a look-back period of 10+ years for unclaimed property audits, meaning you need to ensure you are keeping track of all unclaimed property activities to ensure compliance.
How are dormancy periods calculated?
Dormancy periods are set at a state level and often times are specific to the type of property you are reporting. Certain states may have different dormancy periods depending on the property type, but usually this period is between 60 and 90 days.
Can a software simplify multi-state unclaimed property reporting?
Yes. Utilizing a software can create efficiencies in your unclaimed property management process. ReportMyUP, Powered by Sovos helps businesses manage their unclaimed property with built in due diligence tracking, NAUPA-compliant reporting, and complete property management so your business stays compliant and audit-ready year-round.