California: Guidance Issued on Steps to Apply for New Unclaimed Property Voluntary Compliance Program
In September 2022, legislation (Assembly Bill 2280) was signed into law authorizing the California Controller to establish an unclaimed property Voluntary Compliance Program (VCP) for businesses holding past due unclaimed property. Under the VCP, approved holders that fulfill all program requirements, including completing a training program and meeting reporting deadlines, will be eligible for waived interest on past-due unclaimed property. The enactment of legislation authorizing such a program was welcome news, as California had not held an unclaimed property amnesty for almost 20 years and the state imposes interest on past due property at 12 percent per year. The establishment of the VCP was also particularly timely given that certain 2021 California income tax forms (e.g., Form 100, Form 100W, Form 565, Form 568) included new questions seeking information related to a company’s California unclaimed property filings. Specifically, taxpayers were required to indicate on their income tax forms whether they previously filed an unclaimed property report with the State Controller’s Office. Recently, the Controller’s website was updated to include details of the program and a form for interested holders to start the process of applying for participation in the VCP.
Action Steps: Companies interested in participating in the VCP should complete the VCP interest form, which is necessary to receive an application. The application must identify the individual(s) in the business that will attend the required training and will be responsible for submitting the reports. The application must also include an estimated value of the business’ inactive properties and accounts. After reviewing applications and approving enrollment, the Controller’s Office will provide due dates for required deliverables that coincide with the standard unclaimed property reporting cycle. The dates below will be assigned to initial enrollees for the upcoming report year:
- July 30, 2023 – Required training completed
- September 30, 2023 – Due diligence completed
- Before November 1, 2023 – Notice Report submitted
- June 1-15, 2024 – Remit Report and remittance submitted
As a reminder, the Controller’s Office will not consider applications from holders that:
— Are currently undergoing a California unclaimed property examination or have been notified that such an examination will occur;
— Are the subject of a civil or criminal prosecution involving unclaimed property compliance; or
— Have been notified by the Controller of an interest assessment within the past five years, and the assessment is unpaid.
Next Steps: Companies interested in participating in the VCP may wish contact a professional in KPMG’s Unclaimed Property Practice for assistance with the initial application and the extensive review of books and records that will likely be required to remit the report in a timely manner Please contact Will King | +1 (214) 840-6107 | email@example.com or Marion Acord | +1 (404) 222-3053 |firstname.lastname@example.org.