Authors
This week, California announced the requirements that unclaimed property holders need to satisfy to be considered for the state’s recently-enacted Voluntary Compliance Program.
AB 2280
On September 13, 2022, Governor Newsom signed California Assembly Bill 2280 into law, allowing for an unclaimed property California Voluntary Compliance Program (“CVCP”).
Under the law, the Controller waives interest for past due properties reported by unclaimed property holders that voluntarily enroll, are accepted, and successfully complete the CVCP.
The CVCP is particularly appealing in light of California’s 12% interest rate and renewed focus on unclaimed property enforcement. The law also comes on the heels of AB 466, which requires companies to disclose details of their unclaimed property compliance history on California franchise tax returns.
CVCP Requirements
Holders that are interested in participating in the program must notify the California State Controller’s Office (the “SCO”) of their interest via a form on the SCO’s website. The SCO will send interested holders an application form to complete.
When completing the application, holders must provide information on the staff members who will attend training and submit reports, and the estimated value of inactive properties and accounts in their records.
After reviewing applications and approving enrollment, the SCO will provide due dates for required deliverables that coincide with the standard unclaimed property reporting cycle.
The dates below will be assigned to initial enrollees for the upcoming report year:
- July 31, 2023 – Required training completed
- September 30, 2023 – Due diligence completed
- Before November 1, 2023 – Notice Report submitted
- June 1-15, 2024 – Remit Report and remittance submitted
If holders are unable to meet the due dates for the current reporting season, the SCO will continue to accept applications and provide due dates to subsequent enrollees that are consistent with future report years.
Eligibility Criteria
Unfortunately, some holders are ineligible to participate in the program. The SCO will not consider applications from holders that:
- Are currently subject to an unclaimed property examination;
- Are currently subject to civil or criminal investigation; or
- Currently have unpaid interest assessments from the past five years.
Take away
Companies are well advised to renew their focus on California unclaimed property compliance now, especially if they file tax returns with the Franchise Tax Board. Holders of California unclaimed property that are not currently in compliance should begin making preparations to participate in the CVCP. As always, our Reed Smith unclaimed property team is happy to talk about whether entering the CVCP is most advantageous for your Company.
Client Alert 2023-070