By Pauline Perrone, CPA – Senior Manager and Mark D. DeVience, CPA – Partner
August 5, 2020
With little publicity, Illinois revised its unclaimed property laws. Although all profit and not-for-profit business entities that conduct business in Illinois have been required to report unclaimed property on an annual calendar basis, the revisions significantly expanded the list of assets comprising unclaimed property. Entities not holding unclaimed property are required to file a negative (no unclaimed property) report. The unclaimed property report and related payment are due May 1st of each year.
Unclaimed property consists of intangible property which the business owes to others but has not been returned to the true owners. Such property, which is to be turned over to the state includes uncashed checks, voided checks not reissued, customer deposits, unpaid customer refunds, and customer overpayments.
Changes to the Unclaimed Property Act which became effective January 1, 2018 include:
- Business to business (B2B) transactions are no longer exempt from unclaimed property reporting. Although the changes became effective January 1, 2018, a look-back period to January 1, 2013 is required for B2B unclaimed property which was previously exempt.
- For most types of unclaimed property, property held after three years instead of the previous five-year time period is to be turned over to the state.
- Uncashed payroll, commission, bonus, and reimbursement checks, or other compensation for personal services must be reported after being outstanding for one year.
- Entities are required to send due diligence letters to owners of unclaimed property for any property valued at $50 or more.
- Gift cards and merchandise credits are exempt. However, general purpose cards that charge fees or have expiration dates remain reportable unclaimed property when not used for five years.
- Illinois can audit all years for which an unclaimed property report was never filed. More significantly, although an unclaimed property report was filed, no matter how many years earlier, Illinois can still search for and assess for property that was not reported on such return.
- Requirement to maintaining supporting records for a minimum of 13 years.
- All unclaimed property reports are to be filed electronically at: https://icash.illinoistreasurer.gov/app/holder-info.
We recommend that that you annually review your records as of each December 31st for old outstanding checks, customer deposits, credit balances, and the like and attempt to return the funds to the true owner. In fact, Illinois requires an attempt be made to contact and return the funds to the true owner before remitting the funds to Illinois.
The Illinois State Treasurer’s Office (ISTO), with the help of outside third-party auditors, performs examinations when they believe an entity fails to report unclaimed property as required by law. The ISTO is actively pursuing the reporting of unclaimed property.
A Voluntary Disclosure Agreement (VDA) program allows businesses with compliance issues from prior periods to become compliant. In exchange for voluntary compliance, the ISTO will forgo the right to assess penalties and interest on past-due unclaimed property. Entities currently under examination by the ISTO or an agent of the ISTO are ineligible to participate.
The MichaelSilver professionals have extensive experience assisting clients in properly reporting unclaimed property. Please call us at 847.982.0333. If you think you are holding unclaimed property, or you are not sure if you may have such exposure, we would be happy to assist you.