How California’s new unclaimed property laws can benefit businesses
The California State Controller’s Office (SCO) has released guidelines for companies looking to participate in their unclaimed property Voluntary Compliance Program (VCP).
If you suspect your business may have unclaimed property for owners located in California that you haven’t previously reported, the VCP may be a good option for you.
What is the California Voluntary Compliance Program?
The California VCP allows companies to submit reportable property late without facing penalties.
Under the VCP, the 12% interest on late, reportable property will be waived for companies that enroll and complete the program requirements within a given timeline. The VCP is available to companies that have not yet filed or companies that have already filed but found additional property not yet submitted on a prior report.
California did not have an amnesty program prior to the introduction of these guidelines. However, after the law changed to allow the SCO access to a holder’s compliance history, development on a program began. The hope is that, in offering holders opportunities for forgiveness, they can increase compliance.
How you can participate in the program
Acceptance into the program is at the SCO’s discretion.
If your company wants to participate, it cannot:
- Be subject to an unclaimed property examination.
- Be subject to a civil or criminal investigation.
- Have unpaid interest assessments within the last five years.
- Have had interest waived under the VCP in the previous five years, as the program is intended to be ongoing.
To participate in the program, you need to start by notifying the SCO of your interest.
You can contact them via the California VCP website, here. Afterward, you will receive the VCP application to complete and submit to the SCO. An estimation of potential unclaimed property throughout the last 10 years must be included with the application.
Important reporting deadlines
California has provided a timeline with the required steps and 2023 deadlines that you must adhere to when completing the VCP.
Here are the deadlines you need to know:
- By July 31, 2023, a company representative needs to have completed the required training.
- By September 30, 2023, your due diligence needs to be completed.
- Before November 1, 2023, your notice report needs to be submitted.
- By June 1-15, 2024, your remit report and remittance need to be submitted.
Income tax connections
It's worth noting that the California State Income Tax Forms 100 (S)(W), 565 and 568 include questions regarding unclaimed property. Taxpayers are required to indicate whether they have previously filed unclaimed property and, if so, the date of the last report and the amount reported. This serves as a reminder to taxpayers that they may have unclaimed property and that they are responsible for reporting it to the state.
How Wipfli can help
Whether you’re struggling with the California VCP or other unclaimed property issues, Wipfli can give you the experience and perspective you need. Our dedicated team of tax consultants understands the nuances in each states’ requirements so that we’re ready to assist your company in mitigating risk and maintaining compliance.
Contact us today and discover how we can help you minimize your tax exposure.
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