On February 16, 2022, the California Legislature introduced AB 2022, which would establish a Voluntary Disclosure Program for unclaimed property. If approved, this program would allow companies to become compliant without incurring a 12% interest assessment on the outstanding unclaimed property remittances. This would be the first such amnesty program for unclaimed property since the early 2000s. If enacted, this bill could encourage compliance from holders of unclaimed property that were reluctant to incur the high-interest assessment on the unreported amounts.
To be eligible for the program, holders of unclaimed property would have to comply with the following terms:
- The holder could not be a subject of an examination or could not have received notice of an examination of unclaimed property,
- The holder could not be the subject of a civil or criminal examination related to compliance with the state’s unclaimed property statutes,
- The holder could not have had an interest assessment under unclaimed property statutes within the past five years that remains unpaid, and
- The holder could not have had an interest assessment waived by the Controller in the past five years.
If accepted into the program, all interest would be waived, provided the eligible holder complied with the following terms:
- The holder would be required to participate in a state-provided unclaimed property educational training program within three months of being accepted into the program,
- The holder would be required to review their books and records for the previous 10 years preceding the date accepted into the program,
- The holder would be required to provide a due diligence report 30 days before submitting the report required under the program,
- Initial reports would be filed within six months of the date of acceptance, and
- A final report would be due no sooner than seven months and no later than seven months and 15 days after the initial report, with full payment included.
If the above timelines are not followed, the Controller would have the right to reinstate all applicable interest assessments. The bill also contains language to protect the privacy of individuals in the interest of reducing identity theft and fraud by preventing the disclosure of certain documents provided during this program.
We will keep you updated as this legislation advances.
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.