We have all lost things from time to time. Our keys, our phones, and sometimes it seems our minds. But did you know that more than 200,000 Ohioans have lost financial assets worth more than $1 billion? As a result and in an effort to protect property rights and reunite the owners with their rightful funds, Ohio enacted unclaimed property laws.
These laws provide a central point of contact for the unclaimed fund owners, while providing the holders relief from liability. The Ohio Department of Commerce-Division of Unclaimed Funds oversees the program for the state and provides guidelines for businesses that may be in possession of unclaimed property. The state holds the property for the owner/heir in a custodial nature. If you find your business in this situation, look through the seven questions below and learn what you are required to do with unclaimed property.
- What exactly is unclaimed property?Accounts become unclaimed property when, over a specified period, there has been no activity, and the holder of the funds cannot locate the owner. Unclaimed funds may include savings, checking, certificates of deposit accounts, payroll (wages, underlying shares principal), insurance proceeds, credit balances, customer deposits, traveler’s checks, money orders and other intangible interests or benefits.
- When does property become unclaimed?The period for inactivity varies depending on the property, but in most cases, it spans three to five years. A listing of accounts and their related dormancy periods can be found here (pages 6-7).
- Who must report unclaimed property?All businesses that operate in Ohio or hold funds due to Ohio residents are required to file Form OUF-1–Unclaimed Funds Reporting Form.OUF-1 is due Nov. 1, 2013. An automatic extension granting up to an additional 120 days may be obtained by completing the application for automatic extension of time. Don’t delay as further action may be needed prior to this due date.
- As a business owner, how do I file an unclaimed funds report?Follow these steps when completing your unclaimed funds report:
a) Identify your dormant accounts as of June 30, 2013. Check your records for voided/reissued, voided/not issued or cleared payments not removed from your outstanding check list. These items would not constitute unclaimed funds.
b) Notify account holders of their unclaimed funds. Form OUF-8, Notice of Unclaimed Funds, should be sent to the last known address of the owner of the funds. The notice should inform the owner that the funds will be remitted to the state as “Unclaimed Funds” in 30 days if not claimed. It is important to note that the unclaimed funds cannot be remitted to the state until the 30-day period has expired. Consequently, Form OUF-8 must be mailed no later than Sept. 30, 2013. This will allow time for the 30-day period to expire before unclaimed funds must be remitted to the state by Nov. 1, 2013.
c) There is no minimum reportable dollar amount. Accounts less than $50 may be required to be filed in the aggregate. Notices for unclaimed funds between $50-$1,000 can be sent via first-class mail. Notices for unclaimed funds in excess of $1,000 are required to be sent via certified mail with a return receipt requested.
d) After the 30-day period has elapsed, file Form OUF-1.
i. If you determine you are not in possession of an unclaimed funds, you must still file a negative (NONE) report.
ii. If you have unsuccessfully located the owners of the unclaimed funds, in addition to completing OUF-1, complete Form OUF-2, List of Owners of Unclaimed Funds (cash value accounts, OUF-4, List of Owners of Unclaimed Stock and Other Securities, and OUF-5, List of Owners of Safe Deposit Contents and Safekeeping, as applicable. You will also need to submit remittance for the unclaimed accounts to the Ohio Division of Unclaimed Funds.
- Are there any accounts exempt from unclaimed fund reporting requirements?Yes, the following accounts are exempt:
- Wages less than or equal to $50
- Merchandise gift certificates— A credit due to a retail customer that is represented by a gift certificate, gift card or merchandise credit.
- Business-to-business transactions made in the course of wholesale trade (issuance of receipt or invoice). Equity, dividend, and interest payments could still be unclaimed funds as they do not result from wholesale trade.
- Why should I comply?Not only are the reporting requirements the law, but failure to comply could subject your business to civil and criminal penalties. Penalties begin at $100 per day for non-compliance. Supporting documentation should be maintained for five years. Record retention requirements along with other forms and instructions can be found on Ohio’s Unclaimed Funds FAQ webpage for holders.
- What if I think I’m one of the 200,000 Ohioans owed money?You can begin your search for unclaimed funds online here or by contacting the state at 1-877-644-6823.
Unclaimed Property Help
Do you think you may have money or property out there that you haven’t claimed? Not sure exactly where to start or how to go about searching for it? Contact Rea & Associates. Our team of Ohio tax professionals can help you get started on the hunt for your money.
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