Noncompliance with state unclaimed property laws exposes a company to several different types of risks: financial risks of reclassifying assets or liabilities, legal risks for running afoul of state administrators, and reputational risks from clients and customers. Notwithstanding those risks, many holders fail to remedy historical noncompliance because of the possibility of interest and penalties being assessed, and the substantial risk of an audit. Instead, many holders simply hope that they will not get audited.
In at least two states, there are current amnesty programs being offered to allow holders to remedy historical noncompliance without the threat of interest, penalties, or a disruptive audit. Both programs, however, expire on October 31.
Indiana currently has an amnesty program in effect that allows holders to avoid interest and penalties by filing a catch-up report for property due to the state over the past ten (10) reporting years. The details of the Indiana amnesty program can be found here.
Pennsylvania is offering an amnesty program until October 31 for companies that (a) missed the April 15th reporting deadline, (b) have never filed, or (c) have gaps in their reporting history. Holders with significant unclaimed property owed to Pennsylvania can review the amnesty program information here.
Many other states have voluntary compliance arrangements (VCAs) or voluntary disclosure agreements (VDAs) which allow holders to come up to date with their reporting obligations without the threat of interest and penalties. These programs run the gamut from very informal processes with flexible reporting periods and timelines, to very regimented audit-like procedures. In any event, holders with significant unclaimed property liabilities are well advised to look into amnesty programs.