A best practice company will usually have AP and the tax department handle this by breaking up the tasks:
- Accounting notifies AP of uncashed checks.
- AP researches the validity of the payment to make sure it is not a duplicate, then begins trying to contact the payee via phone calls and certified letters to see why it was not cashed.
- If unsuccessful, the tax department files the escheat and requests payment from AP.
- AP issues the payment to the state.
- AP journals to an escheat account by state with the data needed for filing (in the appropriate year).