With the recent rollout of the 2021 Wisconsin Act 87, Wisconsin has made several significant updates to its outdated unclaimed property program. The revisions rely heavily on the provisions within the Revised Uniform Unclaimed Property Act of 2016 (RUUPA) created by the Uniform Law Commission.
RUUPA essentially provides a framework and guidelines for states to consider when updating and revising their unclaimed property statutes. There are currently 14 states that have adopted some or all the uniform laws within RUUPA, and more states are currently pending legislation.
The big Wisconsin unclaimed property program change
One major change for Wisconsin is the creation of a voluntary disclosure program (VDA) for businesses (holders) with outstanding unclaimed property liabilities on their books. The VDA program provides an opportunity to become compliant with the state’s unclaimed property laws without the negative consequences associated with non-filing penalties and audit risks.
This program is ideal for all businesses located within Wisconsin or businesses that have transactions with vendors and customers addressed in Wisconsin. The VDA program started on February 1, 2022, and is currently offered through February 28, 2023. The holder must apply and be approved by the Wisconsin Department of Revenue before being accepted into the program. Holders will not be allowed to participate in the program if they received an audit notice on July 1, 2016, or thereafter, and/or have a balance due on their unclaimed property account.
The scope of the voluntary disclosure program
The VDA will allow holders to report unclaimed property that should have been reported during the last five report years, 2017-2021. Holders should be mindful of the dormancy periods, which is the aging of the property for relevant property types.
The most common property types are outstanding payable items such as stale dated vendor checks, customer credits/refunds (AR) and uncashed payroll. In Wisconsin, items relating to outstanding checks and customer credits must be at least five years old, meaning items with the original transaction date prior to June 30, 2016, should be included in the VDA. Payroll items have a one-year dormancy period; therefore items with an original transaction date of June 30, 2020, and prior should be included the VDA.
Holders will have 30 days once they receive the execution agreement to attempt to locate the owners of the unclaimed property. Wisconsin requires a letter to be sent to the owner’s last known address notifying them of unclaimed property if the amount is $50 or more. Any item less than $50 can be reported without mailing a notification letter. Owners that do not respond to the letter within 30 days of mailing should be reported on the final VDA report to Wisconsin. Holders will have 120 days from the execution date to submit the final report; however, this date could possibly be extended if requested.
VDA program key points
- The final report should be filed online in the approved NAUPA format (.txt) or by manually entering each unclaimed item including the owner’s name, full address, account/check number, SSN or tax identification number, and amount.
- Wisconsin offers a business-to-business reporting exemption for any payment or credit shown on the company’s books and records that is owed to another business association in the ordinary course business.
- A VDA application is required for each legal operating entity, as it helps owners recognize and provide “evidence of association” with the business they transacted with when the owner decides to reclaim it.
- Holders will be required to remain compliant and file the annual unclaimed property reports for the next four years.
If you need assistance navigating through the Wisconsin VDA program, contact Wipfli. Our professionals understand the nuances of each states’ unclaimed property compliance requirements and can assist your company in all matters relating to compliance and consulting.
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