1. Best Practices & Preparation Tips for Unclaimed Property Reporting
Pamela Wentz, Director

2. Agenda Unclaimed Property Reporting Overview Holder Duties
Common Reporting Errors
Requirements for Royalties
Best Practices
1099 Reporting
Questions & Answers
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3. Unclaimed Property 101
Definition– Financial assets that have had no owner-generated contact after a specified period of time, usually 3-5 years
Roots are in English common law:
Escheat vs. Custodial
Governed and enforced at the state level
Fifty-four (54) reporting jurisdictions including, DC, Puerto Rico, Guam and U.S. Virgin Islands:
No two laws are exactly the same
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4. Rules of Jurisdiction *Provision added in the 1981 Uniform Act
Texas v. New Jersey 379 U.S. 674 (1965)
State of owner’s last known address
State of holder’s incorporation or domicile if address not known
*State of holder’s incorporation or domicile if address of apparent owner is in a foreign country and if holder is incorporated or domiciled in the U.S.
*Provision added in the 1981 Uniform Act
Note – after nearly 40 years this remains the law of the land today
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5. Filing a Report Why Should You Care? It’s the law!
Generally no statute of limitation
Historically an area that has been overlooked
States estimate 70-90% general ledger out of compliance
Increasing audit activity
Potential for significant penalties
Reputational risk
Sarbanes-Oxley Section 302 & 404
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6. Know the States, Know the Dates
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7. Identifying Applicable Property Types
Mineral proceeds/royalties
Bonus
Delay rentals
Matured bonds
Un-exchanged shares
Unpaid dividends
Underlying stock
Other general ledger items
Tangible property - Safekeeping
Commissions
Rebates
Unidentified cash/credits
Un-cashed checks
Deposits
Customer credits
Refunds
Unapplied payments
Dormant accounts
Payroll
Accounts receivable
Accounts payable
Retirement assets
Workers’ Comp
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8. Quantify the Potential Liability
Identify periods where detailed records are available
Review records and schedule items that are potential unclaimed property
Research items to determine if they represent a fixed and certain obligation
Identify royalties in escheat status
Review suspense accounts for aged items that might not be designated as escheatable
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9. Dormancy Decisions Date of last activity/contact Production date
Issue date
Date returned from Post Office (RPO)
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10. Reporting Owner Information
Complete name and last known address
Social Security Number, if known
Account number
Amount
Property type
Description of property
Joint ownership or custodial information
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11. Filing a Report Know the filing requirements by state
Are you required to file electronically?
Is a cover letter required?
Must the cover letter be notarized?
How should the funds/shares be delivered?
Can you upload via the state Web site? Is there a cost?
Do you need to send a paper copy of the report?
Who in your company must sign the report? CEO? CFO?
Does the state require a negative report if there is no reportable unclaimed property this year?
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12. Holder Responsibilities
Duty to file a timely report
Duty to perform due diligence timely
Duty to file in state mandated format
Duty to maintain copies of the reports and supporting documentation
Duty to protect the funds until reported and transferred to the state
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13. Holder Responsibilities
It is imperative for holders to ensure they are not
Under reporting
Over reporting
Failing to report entirely
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14. Holder Responsibilities
Holder is required to report and remit every applicable property type generated by the organization and adhere to the unclaimed property laws and requirements for the appropriate reporting jurisdictions.
Unless otherwise identified by contract, the legal obligation to file the report remains with the holder.
If a holder fails to reunite the dormant asset with the owner, heir or beneficiary, the holder is required to file an unclaimed property report with complete details of all reportable property.
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15. Common Problems Organizations Face When Filing Reports
Making incorrect dormancy decisions
Formatting names incorrectly
Using incorrect property codes
Failing to submit complete owner information
Placing data in incorrect fields
Creating multiple payments for a single report
Sending reports without payments
Sending payments without reports
Aggregating property incorrectly
Failing to identify joint owners
Reporting only to the state of incorporation
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16. 1995 Uniform Act Section 1(8) defines “mineral”
Section 1(9) defines “mineral proceeds”
Section 25(c) prohibits finders from claiming a portion of the underlying minerals or mineral proceeds not yet abandoned
Section 2(b) – current balance rule
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17. Organizational Structure
Identifying which entities have the legal obligation or are the holders of the unclaimed property
Partnerships and joint ventures
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18. Suspense Accounts Aging items held in suspense
Date of last contact v. production date
Classifications
Unsigned division orders
Title disputes
Deceased Owner
Bad Address
Miscellaneous
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19. Current Pay Definition of current pay Discussion of “rollup” concept
Discussion of “pay to current”
Current pay states
New Texas rules
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20. Current Pay?
At the time that an interest is presumed abandoned under subsection 1, any other property right accrued or accruing to the owner as a result of the interest, and not previously presumed abandoned, is also presumed abandoned.
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21. Forced Pooling Oklahoma
Applies to mineral owners whose mineral interest was forced pooled on a well located in Oklahoma
Within year of pooling, the Holder must report and remit funds to Oklahoma Corporation Commission
Funds are transferred to the Unclaimed Property Division after the dormancy period has passed
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22. Texas – Mineral Proceeds
Do not aggregate
Do not include owners with a net negative balance
Do not report owners if you have had contact in the last three years
Current pay
Each owner listed once – combined total
Report continuing production payments with property type code MI10
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23. Best Practices – Create a Timeline
Fall Begins in Spring
May/June – File delivery
July – Due diligence
August/September – Process due diligence returns
September – Prepare preliminary reports and confirm totals
October – Prepare final reports and transfer assets
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24. Best Practices - Gather Relevant Data
Corporate Structure
Owner unknown property to the state of formation
General Ledger / Chart of Accounts
Bank Reconciliations / Outstanding Check Lists
Journal Entries
Accounts Receivable & Payable Aging Reports
De-Minimis / Automatic system write-offs
Contracts w/applicable service providers
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25. Best Practices – Review Suspense
Review suspense codes
Which codes quality for escheat?
Does status need to be changed to escheat?
Are codes used properly?
Are any codes problematic?
Review aged items
Pull a report by production date
Minimum Suspense
Identify amounts not released
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26. Best Practices - Perform a Self Review
Analyze corporate structure
Understand and document the current and historical policies and procedures
Document and review historical unclaimed property reporting history
Identify potential types of unclaimed property your company may generate
Quantify the potential liability for each property type
Research items to verify that they are unclaimed and pay owner where possible
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27. Best Practices – Stay Current
Be aware of legislative changes that impact your industry
Participate in industry associations that represent your interests
Review state filing instructions annually
Update your policies and procedures
Include new lines of business in procedures and reporting
Include unclaimed property compliance in due diligence of acquisitions
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28. Best Practices – 1099s
PROCESSING IRS NOTICE CP-2100A FOR MISSING OR INCORRECT NAME/TINS
CP-2100A received from IRS
Review accounts to determine if resolution is possible
Prepare and mail 1st “B” Notices with W-9 to owners, when applicable
Prepare 2nd “B” Notices for owners previously placed on backup withholding due to prior notification
Owners accounts noted in computer system as to type of notice issued
Update accounts as owners provide documentation to correct discrepancies
After applicable waiting period for 1st “B” Notices, unresolved accounts are placed on backup withholding
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29. Best Practices – 1099s PROCESSING IRS PENALTY NOTICE
Penalty Notice 972CG received from IRS
Review accounts to determine if accounts have been resolved
Issue 2nd “B” Notices to owners previously placed on backup withholding
Owner’s accounts noted that 2nd “B” Notice has been issued
Correct any accounts for which a SSN printout or IRS Letter 147C is received
Corporate office drafts letter to IRS to request waiver of proposed penalties
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30. Best Practices – 1099s
MONTHLY TIN MATCHING TO REDUCE IRS PENALTY EXPOSURE
IT department provides listing of owners who received a payment during current month
Upload file to IRS website for processing
IRS returns file indicating the accounts with TIN/Name discrepancies
Review the list to determine if any accounts can be resolved immediately
Contact owners whose TIN discrepancy remains unresolved to request W-9 or name verification
Update accounts as owners provide documentation to correct discrepancies 
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31. Best Practices – 1099s
ANNUAL TIN MATCHING TO REDUCED IRS PENALTY EXPOSURE
IT department provides listing of owners who will receive Form 1099-Misc.
Upload file to IRS website for processing
IRS returns file indicating the accounts with TIN/Name discrepancies
Review the list to determine if any accounts can be resolved immediately
Contact owners whose TIN discrepancy remains unresolved to request W-9 or name verification
Update accounts as owners provide documentation to correct discrepancies
Issue corrected Form 1099-Misc. to owners who provide updated TIN information
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32. Question and Answers
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33. Contact Information
Pamela Wentz
Director
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