If You Have Unclaimed Property In California, Here Is What To Know

Cassidy Jakovickas

May 15, 2024

California’s unclaimed property law requires organizations to review their records annually to determine if they’re holding any funds, securities, or other properties that have been unclaimed for the required dormancy period.  

Businesses that, without reasonable cause, fail to comply with the unclaimed property reporting requirements are subject to interest at the rate of 12% on the value of the property that should have been reported, paid, or delivered.

A business that willfully fails to comply is subject to additional fines of $100 per day for each day the report is withheld or the duty is not performed, up to a $10, 000 cap. Businesses that refuse to pay or deliver a sheeted property to the controller are subject to fines of $5, 000 to $50, 000.

In 2022, the following questions were added to California business entity tax returns.

  • Has this business entity previously filed an unclaimed property holder remit report with the state comptroller’s office?  
  • If yes, when was the last report filed?  
  • And what is the amount last remitted?  

The FTB shares these responses with the State Controller’s Office as part of a statewide effort to boost compliance with the unclaimed property reporting requirements.

In 2022, AB 2280 established an Unclaimed Property Voluntary Compliance Program that waives interest for taxpayers who come into compliance with the unclaimed property reporting requirements. The Voluntary Compliance Program is ongoing and property holders can apply at any time throughout the year.

The controller has full discretion as to whether to accept an applicant. If accepted into the program, in order to have the interest assessment waived, the business will need to:

  • Complete the controller’s Unclaimed Property Educational Training program within three months of enrollment in the Voluntary Disclosure Program.
  • Review their books and records for unclaimed property for at least the previous 10 years.  
  • File a report with the controller within six months of enrolling in the program regarding any unclaimed property discovered during the review, but an extension to 18 months may be granted.  
  • Make reasonable efforts to notify owners of reportable property by mail or electronically, no less than 30 days prior to submitting the report
  • File an updated report within seven and a half months of enrolling in the program and remitting all identified as sheeted property to the controller

A business can request a voluntary compliance program application on the controller’s website

Between requiring the FTB to put these questions on the business tax returns and establishing the unclaimed property voluntary disclosure program, it’s likely that the controller will be starting an unclaimed property audit campaign.  

Make sure you get into compliance now to avoid large fines later.

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Since 2011, MBS Accountancy has helped numerous business owners throughout California remain compliant and aligned with the latest changes and guidelines on the local, state, and federal levels. Contact us today to learn more.