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Businesses Facing Unclaimed Property Enforcement Pressure, Internally and Externally

In the wake of the recession, states facing budget shortfalls have looked for spare revenue wherever they can find it, including in unclaimed property enforcement. Now, however, in addition to facing income-starved state governments, companies with less-than-compliant unclaimed property procedures could face pressure from within their own ranks.

A recent decision from the Superior Court of Delaware, New Castle County, found that a business' former tax manager, joined by the state's attorney general, could proceed with a case under Delaware's False Claims Act alleging that the business failed to properly remit unclaimed property. The claim states that the company, SourceGas Distribution, LLC, failed to report unclaimed property acquired in its purchase of a retail gas distribution business, even though the former tax manager had identified the property to them.

SourceGas moved to dismiss, but the unclaimed property allegation was allowed to proceed. Specifically, the company was accused of changing the name of an acquired liability account from "Unclaimed Property Liability" to "Converted Balance from Dec. 2004," which was found to be sufficient evidence of an attempt to conceal unclaimed property.

"Not only are the states pushing harder with enforcement," said Valerie Jundt, managing director at Keane Consulting and Advisory Services, "but now employers need to be concerned that employees will expose them, and for a fee."

As internal and external pressure on escheatment and unclaimed property compliance continues to build, companies of all sizes must take action to minimize their exposure to these potentially harmful violations and penalties. Credit professionals interested in tightening their companies' policies will find a great deal of information in Jundt's presentation, "The ABCs of Unclaimed Property Compliance," at NACM's upcoming Credit Congress. This session will cover the fundamentals of unclaimed property and give attendees the tools they need to implement a successful program to ensure that their companies are audit-ready.

Credit professionals from around the country will attend NACM's Credit Congress from June 10-13 at the Gaylord Texan in Grapevine, TX, taking advantage of this year's cutting-edge educational sessions and value-adding networking opportunities. To find out more about Credit Congress, and to register, click here.

-- Jacob Barron, CICP, NACM staff writer