What is “unclaimed property?”
Unclaimed property is property being held by a business or organization where there has not been contact with the owner for a specific number of years, depending on the type of property. If your business or organization has in its possession property that is owned by another, your business or organization is a “holder.” In the state of Minnesota, a holder of unclaimed property is required to submit a report and turn over the property to the Minnesota Department of Commerce. The Minnesota Department of Commerce will then include the property in their searchable database, where owners can search for property and, if found, file a claim to retrieve.
Although unclaimed property can take many forms, for many small businesses and organizations, unclaimed property will be in the form of uncashed checks (outstanding checks), typically written to vendors and employees.
What should you do if you suspect that your business or organization has unclaimed property in the form of outstanding checks?
Uncashed checks written to vendors are considered unclaimed property if the check remains uncashed three years from the date of issue. For uncashed payroll checks to employees, checks are considered unclaimed property after just one year.
If your business or organization does have stale checks that are deemed unclaimed property, first try to contact the owner/payee of the check. Let them know about the uncleared check and ask them how they prefer to resolve it.
The Minnesota Department of Commerce has a form letter included in their Unclaimed Property Program Holder Report Guide that you can use to assist with this process. Of course, this is a simplified answer, and it may take more than one attempt to re-connect with the payee of the check, especially if the payee has moved or is otherwise difficult to locate.
If you cannot locate the payee or the payee does not respond within a certain amount of time, your business or organization is required to report and submit the funds to the Minnesota Department of Commerce, generally by November 1 of the year of discovery.
The rules regarding unclaimed property can be complicated. For additional resources, timeline of requirements, and reporting requirements and information, visit the Minnesota Department of Commerce website.
For additional considerations or to find a QuickBooks ProAdvisor, please reach out to Gretchen Otto, CPA, Associate Director on Mahoney’s Business Solutions Team. Let us know if we can help in any way.