The State of Michigan requires annual reporting of ‘unclaimed property’. Unclaimed property is defined as any asset, tangible or intangible, belonging to a third party that remains unclaimed for a specific period of time by the rightful owner. Any holder who fails to file a report of unclaimed property may be subject to fines and penalties as provided in the Uniform Unclaimed Property Act, Public Act 29 of 1995.
Companies and governmental agencies need to identify properties that may be reportable as unclaimed property as of March 31, 2018 and file an unclaimed property report by July 2, 2018.
The requirement covers every business or government agency with unclaimed property belonging to someone whose last known address is in Michigan and Michigan based companies with unclaimed property where the address of the owner is not known. Copies of reports and supporting records must be kept for ten years.
Most businesses have uncashed checks to vendors or other organizations generated as a result of daily activity. The abandonment period on these range from one to three years and must be reported and remitted if outstanding after this time. However, there are other types of unclaimed and abandoned property that must be reported as well. A few examples are customer overpayments, escrow funds, cashier’s checks, CD’s, securities, pension and insurance checks and safe deposit box contents. The period of abandonment and date dormancy begins varies by property type. A comprehensive list is available on Michigan’s unclaimed property website.
A change for 2018 reporting as noted on the website indicates entities having no unclaimed property to report are not required to file a zero/negative report but are encouraged to do so for historical compliance verification.
The following property types are exempt from reporting:
- Properties with a value of $25.00 or less, except for dividends or stock-related properties.
- Wages of $50.00 or less that remain unclaimed by the owner for more than 1 year after becoming payable.
- Amounts due between two or more businesses except for any funds held by financial institutions as well as all outstanding checks, drafts or other similar instruments held by any entity.
- Gift certificates, cards or credit memos which do not expire in less than 5 years and do not charge inactivity fees.
Reporting ten or more unclaimed property accounts must done via either upload, CD-ROM or USB flash drive. Electronic or paper filing is allowed if reporting 10 or fewer items. Required forms can be found at Michigan’s unclaimed property website.
Remittance of the property is required when reports are filed. Those who have previously reported unclaimed property to the State of Michigan have the option to remit electronically. This is not available for first time filers. A refund of a remittance can be requested if the owner receives payment for property that was reported.
Requirement for written notice to owners.
An attempted must be made to notify the owners that their property could be turned over to the State of Michigan. Written notice must be sent no less than 60 days or more than 365 days before filing a report sent if:
The address for the owner appears to be accurate.
- The property has a value of $50 or more.
- The statute of limitation does not bar the claim of the owner.
Examples of the due diligence letters can be found in the Manual for Reporting Unclaimed Property in the Forms section of the website.
The result of these filings is a database created to connect the property reported with the rightful owner. The MI Unclaimed Property website has a search tool available for finding and claiming this property.
For further instructions on how and what to report, type and dormancy periods of Unclaimed Property, and claiming Unclaimed Property visit www.michigan.gov/unclaimedproperty.
Any questions? Please feel free to contact one of our CPAs at (616) 642-9467 or request a complimentary accounting consultation.