If an outstanding check is under $1, or certain amount, does it still need to be escheated? If there is no payee information associated with an outstanding check, does it need to be escheated? If so, where? The state of incorporation?

Follow

In escheatment questions, the answer often begins with “it depends,” because each state is different. Regarding your first question, it will depend on the state. Some states do exempt de minimis amounts for certain kinds of payments from escheatment.  See The Exacting Unclaimed Property Exemptions.  Other states allow aggregate reporting for small amounts, such as anything below $50—see Unclaimed Property Aggregate Reporting.

As for your second question, the answer is yes, an outstanding check needs to be escheated. The rules are as follows:
 
Rule 1: Unclaimed property belongs to the state of the owner’s last known address as reflected on the holder’s records.

Rule 2: If the owner’s last known address is unknown, is foreign, or if no laws exist in that state, the property goes to the state in which the holder is incorporated (not necessarily the state in which your company is physically located).

If the amount involved here is substantial and the owners spread across many states, you might want to consider getting help from an unclaimed property specialist. It is a complicated issue, which—as noted above—varies by state.

Have more questions? Submit a request

Comments