As a business owner, did you know that if you are holding uncashed payroll checks, customer refunds or have other amounts owed to customers, vendors or former employees, you cannot hold those funds indefinitely? After a certain period of time, those funds might be required to be sent to the State of Wisconsin as part of their Unclaimed Property program.
This is a program that attempts to reunite citizens with lost property. Under Wisconsin law, businesses are required to review their financial records annually to determine if any accounts have not had any activity for a specified period of time. This period of time can range from one year for unpaid wages to five years for customer refunds or other dormant accounts. Not all amounts owed to clients or former employees are required to be reported and submitted, but there are many that do.
The Wisconsin Department of Revenue has a specific page on their website that explains which accounts are subject to these requirements and which are not. Reviewing www.revenue.wi.gov/Pages/UnclaimedProperty/home.aspx annually is important as the requirements do change from time to time.
Once you determine that there are amounts subject to these requirements, there is a four-step process that must be done.
1. Identify the property.
2. Attempt to locate the owners.
3. Prepare and file the report.
4. Submit the payment, security or other asset.
Once the property is identified, the business must attempt to locate the owners. This requires a good faith effort to contact the individual via notification letter send by first class mail to the last known address if the amount is $50 or more. This due diligence should be done between July 1 and September 1. Once the notification is sent, you should keep the letter for a period of 10 years as the department can request this at any time. The Wisconsin Department of Revenue Publication 82 has an example of what the notification (due diligence) letter should look like.
If you do not hear back from the customer, vendor or former employee, the abandoned amounts must be reported and sent to State. The report and submission of assets are due by November 1 of each year. This reporting process is done electronically using the company My Tax Account or other electronic means.
The State can impose penalties for filing or submitting information after the November 1 date, so timing is important.
As some businesses have not participated in this required program in the past, the State of Wisconsin has a voluntary disclosure program available to get into compliance. To be eligible for the program businesses must have unclaimed property to report from any of the five most recent reporting periods and have not been audited for those periods, not received notice of an upcoming audit, or have a balance due on the business unclaimed property holder account.
Lastly, in this article, we have referred to businesses, but this requirement is also intended to cover non-profit organizations and governmental units.
If you have any questions or would like more information on the Wisconsin Unclaimed Property program, please contact your local Hawkins Ash representative.
