California’s push to return unclaimed property: Opportunity and compliance considerations for businesses

California is reigniting its efforts to return unclaimed property to rightful owners. For individuals, that may mean a check from the state. For businesses, however, the opportunity to recover funds should also be tempered with the question of whether the company itself is in compliance with California’s unclaimed property laws.

California is trying to make claiming easier

On June 4, 2026, California State Controller Malia M. Cohen announced that the State Controller’s Office (SCO) was mailing letters to approximately 130,000 Californians who may be owed money through the state’s unclaimed property program. The outreach is part of a second round of proactive efforts to reunite owners with lost or forgotten funds. The SCO stated that the letters were being sent using information identified through its partnership with the Franchise Tax Board, matching data between unclaimed property records and existing state tax records.

The state’s program covers common forms of dormant or forgotten financial property, including bank accounts, uncashed checks, insurance proceeds, stocks, dividends and other financial assets. California holds these assets indefinitely until claimed by the rightful owner or heir, and the SCO reports that it safeguards approximately $15 billion in unclaimed property belonging to individuals, businesses and government entities.

Claiming property

For individual recipients, the individual needs to review the notice, verify that it came from the SCO, use the claim code provided and complete the process through official state channels. The SCO has also noted that individuals don’t need to pay a fee to claim property directly from the state, and that there is no deadline to claim property once it has been transferred to the state.

Although outreach has focused on individual claimants, businesses should not overlook the possibility that they, too, may have property being held by California. Funds may be listed under a prior legal name, former address, acquired entity, dissolved subsidiary, trade name or legacy account. A company that has undergone acquisitions, divestitures, entity conversions, shared-service transitions or other changes may have multiple names and addresses that should be searched. However, companies should remember that while it may be entitled to recover funds from California, it also has a duty to report and remit unclaimed property it holds owed to customers, vendors, employees, and shareholders.

California’s outreach efforts do not appear to state that a business must be fully compliant as a holder before filing a claim. However, before it contacts the state to recover funds, a company should understand its own level of compliance with California’s unclaimed property laws. That review should include:

Has the business been in compliance with California unclaimed property reporting requirements?

• California requires businesses to review their records each year to determine whether they hold property that has remained unclaimed for the applicable dormancy period (generally one year for payroll and three years for most other property types).
• Types of potentially unclaimed property held by most businesses include items such as uncashed payroll checks, vendor checks, customer credits, rebates, refunds, deposits, overpayments, securities, and dividends.
• Once property has remained unclaimed for the required period, it becomes reportable. For most businesses, the Notice Report is due before November 1, and the Remit Report is due June 1–15; life insurance companies follow a different cycle.

Did the company accurately answer the questions about its unclaimed property compliance on its California tax returns?

• The Franchise Tax Board has questions on certain business entity returns asking whether the entity previously filed an unclaimed property report with the SCO, when the last report was filed, and the amount last remitted. This data-sharing framework has given the SCO more visibility into potential holder compliance gaps that can easily be accessed if potential claims are filed.

What noncompliant companies can do

A company with only a small amount of past-due property owed to the state may decide to report the late property and pay the required interest assessment of 12% per annum in addition to any penalties, if applicable. Another option would be for the company to enter California’s Voluntary Compliance Program (VCP), an ongoing program to allow holders to report and remit past-due unclaimed property without interest and penalty assessments.

While companies with only small amounts of past-due property can take advantage of the VCP, it is especially beneficial for companies with significant past-due unclaimed property liabilities owed to the state. Once enrolled into the program, companies that complete required training and meet program deadlines may be eligible for waived interest on past-due property reported through the program.

No matter its size, a company should evaluate its eligibility before applying to the VCP. California Code of Civil Procedure section 1577.5 provides that holders may be ineligible if they are already under examination, have received notice of an impending examination, are subject to civil or criminal prosecution involving unclaimed property compliance, have certain outstanding interest assessments, or have received a prior interest waiver within the statutory period. There are however limited acquisition-related eligibility exceptions. The statute also requires participating holders to complete training, review at least 10 years of books and records, conduct owner outreach, file reports and remit property within prescribed timeframes.

Claiming property before the state comes to you

Although California has begun reaching out to owners to return unclaimed property owed to them, a company may decide to take a more proactive approach and search state databases to locate property owed to it or its related entities. While a company may choose to manage the unclaimed property search and claims process internally, most may benefit from outside support, particularly when multiple legal entities, historical name changes, acquisitions or numerous jurisdictions are involved. Our team works with asset recovery specialists who can help identify and pursue potential claims by leveraging fuzzy match logic and large databases that aggregate property listings from hundreds of agencies to uncover records that may not be obvious through a standard search.

In the right circumstances, this approach can reduce the administrative burden on internal finance, tax and legal teams, while improving the efficiency of the recovery process. Because fees for this assistance are typically contingent on property successfully recovered and returned to the company, businesses can pursue potential recoveries as a value add, without any upfront out-of-pocket expense. This approach allows companies to minimize internal time commitments while improving the likelihood of identifying and recovering amounts to which they may be entitled.

The takeaway for business leaders

California’s recent outreach is a positive development for rightful owners, including businesses that may have money being held by the state. But for companies, claiming property should not be viewed in isolation. It should be treated as a prompt to confirm entity history, review prior reporting, assess exposure and determine whether the regular reporting process or the VCP is the right path forward.

In short: California is trying to return money to owners. Businesses should take advantage of that opportunity—but they should also make sure they are not overlooking their own compliance obligations as holders.

If you would like to know more, please reach out to any member of the Baker Tilly Unclaimed Property Management Team to set up a call to answer any questions about California’s unclaimed property program, asset recovery, or any other unclaimed property developments likely to impact your company.