Top 10 Best Practices to Address State Unclaimed Property Programs

How should holders of unclaimed property address state laws and enforcement programs? Holders should follow the top 10 best practices in this article to understand their risk profiles, appropriately mitigate any risks, and comply with ongoing state escheat laws — especially as states continue to modernize reporting expectations, expand audit coverage, and scrutinize emerging property types and payment channels.

1.    Inventory historical compliance across the entire enterprise (parent and subsidiaries) and validate negative reporting requirements.

Identify whether the company (including subsidiaries, acquired entities, and dissolved and merged entities) has properly filed unclaimed property returns , including:

a)    States filed in, 

b)    Years reported, 

c)    Property types and amounts reported, 

d)    State of incorporation/formation for each entity, and 

e)    Entity formation dates. 

Confirm whether the company has filed negative — that is, $0 — reports where required; whether filings were accepted without follow up  by the state; and whether any states changed expectations for negative reporting, online portals, electronic remittance formats, annual certifications, and required schedules.

2.    Document audits, voluntary disclosure agreements (VDAs), and informal inquiries, then assess audit expansion risk.

Identify whether the company has undergone an unclaimed property audit, participated in a VDA, or received information requests and desk audits. Document which states, years, entities, and property types were covered and note any audit expansions (e.g., additional years, entities , and property types) that states and third-party auditors have increasingly pursued. Preserve (and centralize) closing agreements, waiver language, estimation methodologies, sampling approaches, materiality thresholds, lookback/waiver terms, burden-of-proof positions, and any written state interpretations that were relied on.

3.    Evaluate bankruptcy and insolvency history and current custodial arrangements.

Identify whether the company has undergone bankruptcy proceedings that could preempt state escheat laws and confirm current treatment of unclaimed property in restructurings, wind-downs, abandoned property trusts, receiverships, and custodial/escheat administration arrangements. Confirm who has control of the funds, what legal characterization was applied (trust/custodial/debt), how owner claims are processed, and whether the approach is consistent across entities and jurisdictions.

4.    Update written policies and procedures for modern payment channels and evolving property types.

Determine whether the company has documented policies and procedures that reflect current realities, including ACH and real-time payments, digital wallets, stored value and gift cards, virtual payment products, marketplace platforms, third-party disbursement vendors, and newer asset categories such as some digital assets and crypto-related positions. Policies should define dormancy triggers, due diligence, cutoffs, owner outreach, reissuance controls, stop-payment and void protocols, approvals, escalation paths, and controls over third parties so the holder can defend what was owed, what was resolved, and what was reportable.

5.    Reassess record retention in light of enforcement trends and estimation exposure.

Evaluate whether retention for treasury, tax, payroll, accounts payable (AP) and accounts receivable (AR),  legal, and acquisition records aligns with typical state reach-back periods (often 13–15 years, sometimes longer depending on audits and estimation). Ensure retention covers key substantiation, such as monthly bank statements; void and outstanding listings; reconciliations; check registers; void and paid support; settlement documents; tax returns; complete merger and acquisition (M&A) documentation; vendor and customer master changes; and supporting detail sufficient to prove owner activity, resolution, or why an item was not escheatable.

6.    Map system conversions, data lineage, and reporting gaps (including outsourced functions).

Identify system conversions, ERP changes, bank changes, payroll and provider changes, M&A integrations, and outsourced accounting and disbursement models that could limit data access during the retention period. Document data sources and system of record by property type and year and test whether you can: 

a)    Recreate check issue/void/stop/reissue histories; 

b)    Support aging and dormancy with transaction-level detail; and 

c)    Tie to GL  and bank activity through complete audit trails (including reversals, stale-date sweeps, reclasses, and clearing accounts).

7.    Use state and local tax footprint and operational data to validate owner state sourcing and priority rules.

Determine where the organization has significant customers, vendors, and employees using income tax apportionment workpapers and master data files.  Then validate how owner address data is captured, updated, and preserved, including for e-commerce, platform transactions, and international addresses.  Confirm the company can support priority-rule decisions (including unknown address scenarios), has controls to prevent address overwrites that erase history, and can defend how state sourcing was determined for each major property stream.

8.    Review reserves, contingent liabilities, and audit readiness disclosures.

Identify any unclaimed property reserves or contingent liabilities on the balance sheet (including audit defense costs and potential interest and penalty exposure outside a VDA). Confirm the reserve methodology reflects current enforcement realities (audit volume, estimation risk, record gaps, and entity- and property-type coverage); aligns with internal risk governance; and is supported by documentation that can be explained consistently to leadership, auditors, and other stakeholders.

9.    Analyze AR credits and non-refund liability buckets for escheat triggers.

Identify write-off, reclass, and suspense accounts tied to AR credits, customer overpayments, rebates, promotional credits, chargebacks, and unapplied cash. Confirm whether those balances are being aged, researched, and resolved as true owner obligations versus commercial disputes and whether the company can evidence owner contact, refund attempts, offsets, or contractual terms that would affect escheatability and timing.

10.    Identify and remediate unapplied cash, dummy customers, and reconciliation plug accounts, then operationalize ongoing controls.

Identify dummy customer accounts, unapplied cash accounts, unknown owners, stale-dated disbursements, and reconciliation plug accounts. Implement recurring controls (monthly/quarterly) to clear and document items, reissue where appropriate, and ensure due diligence and reporting are completed timely. Establish ownership and accountability for each suspense category, define clear evidence standards, and institute management reporting so accounts cannot quietly reaccumulate and become avoidable audit headlines.