Recovering funds from the state

Most unclaimed property discussions focus on the holder side of the process: reporting obligations, voluntary disclosure programs, and state enforcement activity. However, that is only part of the picture. Businesses can also be owners of unclaimed property, with funds previously remitted to a state in the name of the company or one of its affiliates. In fact, it has been estimated that states collectively hold upwards of $100 billion of unclaimed property, not to mention property held by municipalities, bankruptcy courts, and other agencies.

These amounts can arise in the ordinary course of business and may include uncashed checks, customer credits, insurance proceeds, refunds, rebates, dividend payments, or other outstanding items. For companies with multiple legal entities, merger and acquisition activity, or a long operating history, such property may be listed under prior names, DBAs, affiliates, or outdated addresses.

Claiming unclaimed property from a state can provide a meaningful benefit through the recovery of cash or other assets that rightfully belong to the company. At the same time, companies should consider the risks and practical challenges before submitting claims. Locating property can be time-consuming, particularly when reviewing multiple states or searching for historical entities. Even after property is identified, states generally require documentation establishing ownership, successor rights, or authority to claim the funds. The process often takes several months or more and may involve follow-up requests for additional information.

The most important consideration is compliance risk. A company’s right to claim property as an owner is separate from its obligations as a holder, but in practice the two can intersect. Before paying a claim, some states may review the claimant’s unclaimed property filing history. If a company has not been filing where required, a claim could lead to questions about past compliance or further state inquiry. For that reason, companies should evaluate their unclaimed property compliance history before filing a claim.

Some companies manage the search and claims process internally, while others use outside assistance. Baker Tilly works with asset recovery specialists that can help identify and pursue unclaimed property claims, by leveraging large databases comprised of 100s of agencies property listings and employing fuzzy match logic. Furthermore they can facilitate a streamlined search, particularly where there are multiple legal entities, historical name changes, or a large number of jurisdictions involved In the right circumstances, this support can reduce the administrative burden on internal teams and improve the efficiency of the recovery process. Best of all, there is no out-of-pocket expense as all charges are contingent on the value of property successfully recovered and returned to the company. This allows for a process that minimizes the need for company involvement, while maximizing recovery and ROI.

In short, unclaimed property should not be viewed solely as a compliance liability. For many businesses, it may also represent an opportunity to recover assets and help offset the cost of compliance. A thoughtful approach—one that considers both the potential recovery and the related compliance implications—can help companies determine whether pursuing claims is worthwhile.

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 asset recovery, or any other unclaimed property developments likely to impact your company.