New York Unclaimed Property Program

September 2020

The New York State Comptroller’s Office of Unclaimed Funds (OUF) contacted a group of companies in August and September 2020 through a series of notices to participate in the state’s Voluntary Compliance Program (VCP). The letters inform holders, based on a record of non-compliance and business activity, that the state offers a VCP program that may allow them to self-report unclaimed property with a waiver against interest and penalties. Failure to respond to this letter could result in:

  1. Further inquiry or audit, or
  2. Lack of future admittance into the program.
If your organization has received an unclaimed property notice or letter, it is important to act quickly.
 

What to Do

In preparation for responding to the state, companies that receive a notice should review the following:

  • Past reporting and escheatment practices
  • Policies and procedures related to escheatment and reunification of funds to customers, employees, vendors, etc.
  • Record retention policies
  • Business operations, customers, vendors, employees, etc. in the state of New York
  • Organizational structure including state of incorporation
  • Merger and acquisition history

Use this unclaimed property risk chart to help identify the material risks you should consider and evaluate in order to properly mitigate exposures while complying with the law. This applies to New York businesses and Delaware incorporated entities in New York.
 

# Risk Question  NY DE Comments
1 Does the state have a B2B exemption for A/R and A/P transactions amongst business associations? No No Historically NY offered a B2B deferral policy for amounts owed to holders who maintained a current relationship with the reporting entity. However, this B2B deferral was reversed in 2014. 
2 How does the state treat extrapolation? Escheat Liability Escheat Liability  
3 How is extrapolation calculated? Gross   Gross   Historically NY has calculated estimated liabilities on a gross method using the earliest year as a base year for estimation purposes. 
4 What is the record retention period? 10 years (VDA); 1992 (audit) 10 years Effective January 1, 2017, NY lowered its reach-back from 20 years to 10 years (plus dormancy) for VDA only. The reach-back in audit is still 1992.
5 What is the statute of limitations period? 10 years 10 years  
6 What is the void waiver period? 90 days 90 days The void waiver typically refers to a time period in which the state will exempt voids that are recorded within a certain timeframe from the original check issuance date. This waiver can be applied automatically (e.g., DE typical approach on VDA; note this is typically a 30-day void waiver on DE audits) or may require some level of documentation to show contemporaneous voiding for cause (e.g., appears to be NY standard).
7 Can the state pay a contract auditor on a contingent fee basis? Yes Yes Most states allow this arrangement between 5-15%. NY has contractual agreements with contract auditors and conducts unclaimed property audits in-house.
8 Can the state share a holder's information collected on examination with other states? Yes Yes Generally, this happens on piggy-back audits as an auditor will typically represent more than one state on the audit. Notwithstanding, other rules may apply.
9 What is the state's interest provision? 10% per year of amounts owed from original report date 0.5% per month, maximum of 50% of unreported property DE interest is mandatory and can be abated up to 50% for good cause. Under NY law, a waiver can be granted if a holder acted in good faith and without negligence.
10 What is the state's penalty provision? Various Various  
 



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