Massachusetts Unclaimed Property Program Has Commenced

April 2021

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The Commonwealth of Massachusetts began a new unclaimed property program around April 1, 2021, to identify noncompliant companies that are incorporated, have locations or carry business permits in the state. Companies that have failed to file unclaimed property reports regularly or have filed incomplete reports with the state may be contacted by a third-party company notifying them that they must conduct a self-audit. Companies that receive notices or emails like this one from the state of Massachusetts or a third-party audit firm should act quickly to address the issue.

 
How to Prepare

Companies that receive a notice of noncompliance will be expected to conduct a self-review for all property owed to the state for the last six report years (nine transaction years), due Nov 1, 2021. A third-party audit firm is assisting the state with the self-audit program. In preparation for responding to the state, companies should review the following (not an exhaustive list):
  • Prior unclaimed property filings
  • Unclaimed property policies and procedures
  • Record retention policies
  • Business operations, customers, vendors and employees in Massachusetts
  • Organizational structure, including state of incorporation
  • Merger and acquisition history
  • Unclaimed property liability owed to all states – including Massachusetts
  • Source documentation, including but not limited to:
    • Check registers and/or other banking data for check disbursement accounts
    • Accounts receivable agings and write-off accounts
 

Massachusetts Unclaimed Property Q&A

1. Does the state have a B2B exemption for accounts receivable and accounts payable transactions among business associations?
Yes. Massachusetts has an exemption for credit balances to a vendor or commercial customer "resulting from a transaction occurring in the normal and ordinary course of business." Exemptions generally do not apply between the property holder and individuals.

2. How is extrapolation calculated? 
Historically, Massachusetts has calculated estimated liabilities on a gross method.

3. What is the record retention period?
Six report years for filers. Massachusetts dormancy periods are typically three years (accounts payable, payroll and accounts receivable). Any Massachusetts examination for a holder that has not filed unclaimed property will have the "the six-year period of limitation waived for purposes of record retention and the conducting of examinations.”

4. What is the statute of limitations period?
Nine years.

5. What is the void waiver period?
The void waiver for Massachusetts self-reviews is 90 days. The void waiver typically refers to the time period during which the state will exempt voids that are recorded within a certain time period from the original check issuance date. This waiver can be applied automatically or may 
require some level of documentation to show contemporaneous voiding for cause. Note that void waivers in unclaimed property audits may be 30 days. 

6. Can the state pay a contract auditor on a contingent fee basis?
Yes. Most states allow this arrangement, with payments ranging between 5% and 15% of findings or assessment. 

7. Can the state share a holder’s information collected on examination with other states?
Yes. Generally, this happens on piggyback audits, as an auditor typically will represent more than one state. However, other rules may apply.

8. What is the state's interest provision?
Massachusetts law provides for a 12% per annum interest rate. Under Massachusetts law, a waiver may be granted with appropriate justification.