Just a friendly reminder that the first deadline for New York’s annual abandoned property due diligence mailings is quickly approaching. Here’s a quick recap of the deadlines and the rules governing New York’s abandoned property law. 

If you’re a holder of abandoned property, you must file an annual report detailing the property and must remit the property to the state. A “holder” of abandoned property is any organization that possesses property legally owned by another. Most businesses hold some form of abandoned property whether they know it or not. 

The four most common categories of abandoned property are:

• Uncashed payroll checks
• Uncashed accounts payable checks
• Unredeemed customer or vendor credits
• Unused gift cards or gift certificates

If a business has any of these items (or any of the dozens of other categories of abandoned property) sitting on its books, the business cannot simply take the value of the property into income. Rather, if there is no communication between the business and the owner of the property during a pre-set “dormancy period,” typically three to five years, the property is deemed “abandoned” and is required to be remitted to the state of the owner’s last known address.

In New York, most typical business corporations have to file an abandoned property return on March 10 for all property that became abandoned (i.e., property for which the dormancy period has run) during the previous calendar year. But before a holder files the abandoned property return and submits the property to the state, New York requires the holder to perform “due diligence.” This due diligence entails attempting to contact the owners of the property to inform them that the property will be remitted to the state if they don’t claim it by a certain date. New York requires holders of abandoned property to make a first-class mailing to each person or entity whose name is expected to appear on their report of abandoned property and request a signed written statement from the owner acknowledging the property’s existence. This mailing must be made by December 10 - that is, 90 days before the return’s due date. And if the property exceeds $1,000, New York requires holders to make a second mailing via certified mail at least 60 days prior to the final report or remittance. This mailing must be made by January 10. This due diligence requirement is why most holders begin preparing their abandoned property returns in the fall. 

Failure to comply with New York’s abandoned property law can result in significant liability. Not only will noncompliant holders have to remit the abandoned property, but they can also be hit with a 10 percent interest charge and a penalty of $100 for every day an abandoned property report is late (and there’s no cap on this penalty so the potential exposure can be huge). Moreover, on audit, the state looks back to 1992 if a company hasn’t been filing returns.