The Tax & Accounting Business of Thomson Reuters Reveals Results from Unclaimed Property Survey
Increasing audits and aggressive enforcement makes unclaimed property critical topic for energy sector
NEW YORK, July 21 /PRNewswire/ -- The Tax & Accounting business of Thomson Reuters today announced findings from a recent unclaimed property survey indicating that as they face rising state enforcement and audits, only slightly more than half of all companies are filing their unclaimed property reports and less than 50 percent have written policies and procedures in place. The survey conducted during a continual professional educational (CPE) Web seminar in June 2010 attended by 82 energy executives found that:
- 56 percent file unclaimed property reports
- 32 percent have been or are currently being audited
- 41 percent are incorporated in Delaware
- 42 percent have developed and implemented written policies and procedures related to unclaimed property compliance
Unclaimed property collections exceed hundreds of millions of dollars in annual receipts for the various states and with the majority still in deficit (source: Center on Budget and Policy Priorities, "Recession Continues to Batter State Budgets; State Responses Could Slow Recovery," July 15, 2010), states are expected to more stringently enforce and expand the scope of existing unclaimed property laws.
The survey also found that a large portion of companies are incorporated in Delaware, which has a higher risk of unclaimed property audits.
"Delaware is one of the more proactive states in terms of unclaimed property enforcement," said Valerie Jundt, director for the Unclaimed Property Group of Thomson Reuters Tax & Accounting. "With a large majority of the Fortune 500 companies incorporated in that state, we expect the number of audits to rise. Since unclaimed property is not a tax, in recent years, it has been used as an additional avenue for states to shore up their massive deficits without raising taxes."
Other states such as New York, California, Texas and Louisiana are also stepping up enforcement activities. The survey found that approximately one-third of companies have been or are currently under audit, but that number could be expected to increase over the next several years. Companies that are in compliance or that take an active stance with state regulatory authorities will find themselves in a much better position to deal with an audit.
Unlike a tax, there is no "statute of limitations" and nexus rules do not apply. Unclaimed property must revert to the state of the owner's last known address or state of incorporation if the address is unknown. Failure to properly comply with these statutes may subject the company to both state and federal implications. Unclaimed property specific to energy companies can include, but are not limited to:
- Payroll/wages/commissions
- Accounts payable
- Accounts receivable credit balances
- Utility deposits
- Customer credit refunds
- Rebates
- Mineral proceeds/suspense accounts
- Gift cards
- Equity-related property (stocks, dividends, etc.)
- Debt-related property (bonds, debentures, etc.)
- Worker's compensation
- Employee benefits
- M&A related property
In addition to facing stiff fines and penalties for non-compliance at the state level, there could also be federal implications for failure to properly address this important compliance requirement as outlined in Sections 404 and 302 of Sarbanes-Oxley.
For more information on Unclaimed Property and ONESOURCE Property Tax from the Tax & Accounting business of Thomson Reuters, visit http://www.onesource.thomsonreuters.com/propertytax/unclaimed-property.asp.
About Thomson Reuters
Thomson Reuters is the world's leading source of intelligent information for businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world's most trusted news organization. With headquarters in New York and major operations in London and Eagan, Minnesota, Thomson Reuters employs more than 50,000 people and operates in over 100 countries. For more information, go to www.thomsonreuters.com.
The Tax & Accounting business of Thomson Reuters is the leading provider of technology and information solutions, as well as integrated tax compliance software and services to accounting, tax and corporate finance professionals in accounting firms, corporations, law firms and government. Headquartered in New York, Tax & Accounting has major operations in Dallas, Ann Arbor (Michigan), London, Sydney, and Toronto, and offices in nine countries. For more information, go to http://thomsonreuters.com/products_services/taxacct/.
SOURCE The Tax & Accounting Business of Thomson Reuters
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