According to recent surveys, billions of dollars worth of unclaimed property across the US are held by governments and treasuries.
Every state in the US has its own processes around unclaimed property, from how to search for it and how to report it. But in this blog, we’ll focus on the state of Georgia, to help residents navigate the complexities and potential advantages of unclaimed property.
Understanding Unclaimed Property
So what exactly is unclaimed property? Also known as abandoned property, the name might be misleading, as it often makes people think of real estate. Basically, this term refers to tangible or intangible financial assets being held by an organization that has not been in contact with the owner for a specific period. After being abandoned, these assets are reported to the Georgia Commissioner of Revenue. As a result, the property is turned over to the state.
Note that all government agencies and private companies (including banks and insurance companies, as well as for-profit and not-for-profit businesses) must report abandoned property.
If you’re wondering what exactly constitutes abandoned property, there are many examples. These include:
- Uncashed checks
- Student stipends and accounts
- Payroll
- Security deposits
- Pension
- Supplier payments
- Royalties
- Overpayments
- Insurance claim payments
- Travel and expense reimbursement
- Patient refunds
- Used gift certificates
- Dividends, stocks, bonds, or trust accounts
How unclaimed property accumulates
For many people learning about unclaimed property, the first question is ‘how?’. It seems unbelievable that anyone could not know about money due to them, and miss out on this. But there are several ways it could happen.
On the top of the list is that this property is simply forgotten, or the owner has passed away before claiming the property. Another common reason is relocating, moving to a new bank, or changing jobs without leaving a new address or contact details.
No matter the reason, the property becomes unclaimed after what’s known as a dormancy period. This is the amount of time after a financial institution reports it as inactive. In most US states, the period is between three and five years, although the statute of limitations for unclaimed property ranges from seven to ten years, or up to 12 years if a bond or security interest has been established. In Georgia, the dormancy period is usually over a year for payroll checks, or more than five years for other checks.
Georgia’s Unclaimed Property Program
The Georgia Department of Revenue (DOR) plays a key role in managing the state’s unclaimed property. Its Unclaimed Property Program collects, maintains, and safeguards these assets until they can be returned to their owners.
Below, we’ll explain how to turn over unclaimed property to the state of Georgia.
It starts with the identification of unclaimed property by businesses or organizations (called “holders”) after the dormancy period. Before reporting these assets to the DOR, the holders must try to find the rightful owners. According to state laws, this involves sending a written notice to the owner’s last known address if the property value exceeds $50, between 60 and 120 days before filing the report.
Reporting is done during the holder’s annual report of unclaimed property to the DOR. This must be done from July 1 to June 30, with reports due by November 1, using the NAUPA II report format. These reports can be submitted electronically, and must accompany remittance for the unclaimed property to the state.
Holders who report unclaimed property must maintain accurate records of their due diligence efforts and report submissions.
How to search for unclaimed property
In addition to letting holders report unclaimed property in the state, Georgia’s DOR makes the process of claiming these assets easy. It provides a free online database where you can search for unclaimed property. Note that you can only search for property for which you are the rightful owner – you cannot undertake the process for friends or family.
- Go to the Georgia Department of Revenue Unclaimed Property page and navigate to the menu to search for unclaimed property.
- Here, you’ll need to enter your name to access potential results. Each entry in the search results will include details like a brief description of the asset, its property ID, and owner name.
- If you find property that belongs to you, click on the property ID or “Claim” button, which will redirect you to a claim form.
- Complete the form, and include any documentation supporting your claim for the property, before submitting it online.
- Then, you can track the status of your claim through the portal. If you’ve been successfully verified, the DOR will process your claim and return your property to you.
Of course, once you receive your property, you will need to ensure that this is correctly reported on your tax returns, to avoid penalties for noncompliance.
Tax Implications of Unclaimed Property
Unclaimed property can affect business and individual taxes. As such, it should be factored into your tax planning strategy. Any income from unclaimed property must be reported to the IRS and the state of Georgia in the tax year that you receive it.
For instance, if your business is the holder of unclaimed assets, failing to report these to the DOR after the dormancy period can result in penalties and interest. Also, if your company recovers unclaimed property that has already been written off, it may be recognized as income, and will affect your tax liability.
Similarly, if you claim unclaimed property as an individual, it’s considered a type of income, which can increase your tax liability. Also, depending on the type of property, the taxation can vary. For example, dividends should be reported on Schedule B of your personal income tax return, while uncashed payroll checks should be reported as wage income.
Tips to keep track of assets
To avoid unclaimed property being returned to the state, ensure that you monitor your assets regularly. This includes reviewing your financial statements, and checking the Georgia DOR website if you have any doubts or concerns.
Also keep detailed records of all financial transactions, like copies of checks, contracts, and relevant communications.
Finally, always update your contact information when moving, changing jobs or banks, or leaving a job.
Professional help makes all the difference
Tax treatment of unclaimed property can vary by state. This can further complicate tax reporting. When in doubt, it’s best to consult a pro. They can help you navigate the tax laws and regulations surrounding these assets. This includes how to report them properly, and how to make the most of potential benefits.
Staying proactive and organized can minimize the risk of losing track of assets and the complexities of unclaimed property taxation.
For help navigating taxation of unclaimed property, schedule a Discovery Call with one of our expert CPAs. We’re here to assist you!
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