NAUPA III compliance: Is your company ready for the changes?
The National Association of Unclaimed Property Administrators (NAUPA) is introducing significant changes in the reporting process with the transition to the NAUPA III format. These updates are crucial for all holders to understand and implement effectively, as they are expected to improve the reporting process and modify its entire structure.
Below is an overview of the more significant changes:
Introduction of the new XML format
The new reporting format is set to transform data inputting, transitioning from a rigid fixed-width format to a dynamic XML structure. This change promises enhanced readability, making it accessible to both computers and humans alike. By utilizing tags, “<>”, information will be more flexible and adaptable, allowing for seamless integration within various fields. Designed to streamline the reporting process, this new format aims to boost efficiency and minimize errors.
Additionally, it offers superior data integration and compatibility across different platforms. However, it’s crucial for holders to familiarize themselves with the XML structure and requirements to help ensure compliance. It’s important to reach out to your software provider to confirm their support for this new format.
Transition from 4-character to 5-character type codes
One of the most notable changes is the shift from a four-character identification code to a five-character code. This modification aims to provide a more comprehensive classification system, allowing for better identification and tracking of property types. Holders must update their systems to accommodate this new format and help foster accurate reporting.
These property types will undergo reclassification under the new format. The reclassified types are as follows:
- AC — bank accounts: This category includes savings accounts, checking accounts, and other types of bank accounts.
- CK — checks: All types of checks, including cashier's checks, traveler’s checks and money orders, will be classified under this code.
- MS — wages and miscellaneous items: This category encompasses wages, accounts receivable credits, stored value cards and other miscellaneous items.
These reclassifications are intended to simplify and standardize the reporting process, ensuring that all property types are clearly defined and properly categorized. The common MS08, MS09 and MS11 property type codes will now be CK002, MS003 and MS004/MS005, respectively.
Additional requirements: Due diligence and RPO dates
The NAUPA III format is ushering in new requirements, including the addition of both a due diligence date and a returned by post office (RPO) date in reports. The due diligence date marks when the necessary notification was sent to the property owner, while the RPO date indicates when a mailed notice was returned as undeliverable.
These extra data points are designed to enhance the accuracy and transparency of the reporting process. However, this can lead to an increased workload due to the meticulous task of tracking all correspondence. For those managing a large volume of mailed letters, consider printing a barcode on the letter above the address or on the envelope. This will allow for easy scanning of return letters without the need to search for the name or property.
How Wipfli can help
The transition to the NAUPA III format involves several significant changes that can feel overwhelming to navigate. Wipfli specialists stay on top of all the changes related to unclaimed property and are ready to help you stay in compliance. Our team will work closely with your business, answer your questions, and give you confidence in implementing the required changes. Contact us to learn more about our state and local tax services.
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