We previously reported on February 25, 2022 that the California Legislature introduced AB 2022, which would establish a Voluntary Disclosure Program (“the Program”) for unclaimed property. If approved, this Program would allow companies to become compliant without incurring a 12% per year interest assessment on the outstanding unclaimed property remittances. This would be the first such amnesty program for unclaimed property since the early 2000s.
On May 25, 2022, the proposal passed the Assembly and was sent to the Senate for consideration in the Committee on Rules for assignment. If California were to enact the Program, it would join approximately 30 other states that have already enacted such programs to increase holder compliance with unclaimed property laws. Supporters of the bill estimate that currently less than 2% of businesses are in compliance with the unclaimed property laws in the state. If enacted, this bill could encourage compliance from holders of unclaimed property that were reluctant to incur the high-interest assessment on the unreported past-due amounts. Passage of this bill could also result in increased audit activity of unclaimed property. On July 16, 2021, with the passage of Assembly Bill 466, California authorized its Franchise Tax Board to provide information to the Controller with respect to whether California taxpayers have previously filed unclaimed property reports. Since the California Controller’s Office is the authority that initiates unclaimed property audits, this new information sharing is likely to dramatically increase the amount of potential unclaimed property audit targets. Please reach out to our professionals if you need assistance in this area. We will keep you updated as this bill progresses.
TECHNICAL INFORMATION CONTACTS:
Mark A. Paolillo
Principal
Ryan
857.288.1976
mark.paolillo@ryan.com
Susan Han
Principal
Ryan
442.244.2447
susan.han@ryan.com
Jeff Henshall
Principal
Ryan
404.682.1200
jeff.henshall@ryan.com
Christopher Jensen
Principal
Ryan
469.399.4142
christopher.jensen@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.