Consolidated Reporting

Unclaimed property laws have been enacted in all 50 states, certain United States territories, as well as in various foreign countries. However, with little uniformity of reporting deadlines, dormancy periods, filing methods and payment methods, unclaimed property compliance can be both challenging and frustrating for holders. One way holders can streamline the process and maximize resource efficiencies is by filing a consolidated report.

A consolidated unclaimed property report is one report sent to a specific state or jurisdiction by a parent inclusive of properties emanating from all its legal operating entities. Sometimes, this is also referred to as reporting under one Federal Employee Identification Number (FEIN). The use of consolidated unclaimed property reporting generally is a “win-win” for both the holder community, as well as the jurisdictions that receive such reports.

Holders that want to take advantage of the benefits of consolidated reporting should consider several important factors and best practices.

Cover letter: Include a cover letter, addressed to the state administrator, specifying that the filing is a consolidated report. Include a list of entities and their Federal Employer Identification Numbers so the state can easily identify all of the entities included in the filing.

Filing classifications: Not all holders are created equal. There are several different filing classifications and related schedules for certain industries such as financial/banking, life insurance, property and casualty, and mutual funds. Holders cannot combine entities with differing filing classifications into one report (e.g., life insurance entity and property and casualty entity). Holders need to adhere to the appropriate filing schedules and keep filing classifications consistent and separate.

Owner-unknown property: When consolidating entities that have a differing state of incorporation than the parent, holders need to ensure the priority rules of Texas v. New Jersey (1965) are recognized and applied. Owner-unknown property should be sourced to the state of incorporation or formation from the entity that emanated the property, rather than the state of incorporation of the parent or consolidating entity.

Originating entity identification: When possible, holders should identify the entity where the property originated within the NAUPA file. Unfortunately, the current NAUPA format, which was originally developed in 2002, does not have a dedicated field for that information. One option is to repurpose the “Property Description” field, which is otherwise duplicative of the “Property Code” field. For example, when reporting a vendor check, the report includes the NAUPA Property Code of “CK13”, and also shows the description “Vendor Checks”. Including the NAUPA code is essential, but the description is not. Holders can override the information in the “Property Description” field and replace it with the name of the entity sourcing the property. If the state ever questions the source of the property, having this information in the report will help to identify the originating entity. It can also help property owners identify the origins or details about their property. Owners may not be familiar with the name of a parent company, but could easily recognize the name of an entity where they worked, purchased something or otherwise did business.

Verification: Before filing, check with the state to ensure it accepts consolidated reports. Apart from Nevada, many states typically do, and encourage them! However, it’s wise to verify with each state that consolidated reporting is acceptable in case such practices have changed.

Allowing consolidated reporting is a benefit to the state or jurisdiction as well. From an administrative perspective, it significantly reduces the number of reports to accept and process each year, all while maintaining the same volume of properties reported and remittances accepted. In an era where state personnel have been asked to do more with less, it will exponentially reduce the burden with processing (possibly) unnecessary reports. From a practical perspective, allowing consolidated reports may encourage compliance with state unclaimed property laws, as the once laborious requirements that dictated a separate report per entity have now been made more efficient and holder-friendly.

Ryan is the premier provider of unclaimed property compliance and outsourcing services, serving over 200 clients with their filing responsibility annually.Should you have questions regarding consolidated reporting or how to streamline your unclaimed property process, please reach out to the team at Ryan.