New Report From Sovos Shows Over $77 billion in Unclaimed Property in the United States, With 80% of Organizations Not in Compliance with State Laws

BOSTON, March 22, 2022 /PRNewswire-PRWeb/ -- Companies often don't realize they have an unclaimed property (UP) obligation until they find themselves under audit or receiving a compliance notice, according to the new "The State of Unclaimed Property" report from Sovos. The report combines research from individual states and third-party audit firms with samplings of thousands of due diligence letters and individual holder reports by employee identification number (EIN) to determine trends across states and a wide range of industries, including health services, financial institutions, retailers and construction.

Unclaimed or "abandoned" property refers to property or accounts that have no customer-generated activity for one year or longer. These dormant funds – including uncashed payroll and vendor checks, unredeemed gift cards and inactive checking accounts – are subject to due diligence requirements, meaning organizations must contact property owners to give them time to respond and potentially claim their property. Failure to comply can result in a UP audit, and/or costly penalties and fees.

"Unclaimed property is often overlooked and forgotten because it can appear to be immaterial and inconsequential," said Kristine Butterbaugh, solution principal, Sovos. "But, companies need to be proactive in complying with state UP laws, or they are in danger of finding themselves under audit, which will become more common practice as states look for new ways to generate revenue to shrink tax gaps and close budget shortfalls."

With some states citing UP as their third highest revenue driver, some fines of more than 2.5 times the amount owed are being implemented against organizations found to be out of compliance.

Other notable findings in the report centered on types of companies that are more prone to generating exposure that would be considered reportable UP, as well as trends from annual reporting submitted to the states:

• Industries with the most UP: In terms of different UP property types by industry, corporate organizations led in reported property count (each individual UP record held by the company) with 79%, as well as cash remitted to the states through escheatment (57%). Banking was the next highest industry, with 13% property count and just under one-third (28%) cash remitted.
• Top UP in terms of value: When it comes to the average value of individual properties reported, brokerage firms had the highest amount with $784.78. Life insurance companies ($476.85), mutual funds ($456.97) and government organizations ($302.42) were the next highest averages.
• Top states with UP reporting: Texas and California each accounted for 13% of total property reported, followed by Florida (9%), New York (7%) and Pennsylvania (7%).
• States with the most UP cash remitted: Delaware (12%), California (12%) and Texas (11%) led the way. Delaware has the most companies incorporated within the state.

Unclaimed Property Enforcement
UP is just one of the areas where state departments of revenue monitor the behaviors and patterns of businesses as they relate to managing tax and regulatory compliance. But as one of the top revenue drivers, organizations can expect increased scrutiny and more demanding reporting requirements from states, making it crucial to follow the latest guidance on managing and reporting UP.

To download the full "The State of Unclaimed Property" report, visit https://sovos.com/content-library/trr/state-of-unclaimed-property-report-2022/.

About Sovos
Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company's SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe, and is owned by Hg and TA Associates. For more information visit http://www.sovos.com and follow us on LinkedIn and Twitter.

Media Contact

Amelia Wright, ARPR on behalf of Sovos, 855.300.8209, [email protected]

SOURCE Sovos