State Tax Notes

Sara Lima, Joseph Carr and Michael Kenehan discuss the gross method and net method of calculating unclaimed property liabilities.

Authors: Sara A. Lima Joseph Carr, Michael Kenehan

Accounting, tax, and legal professionals are left wondering about the impact on the calculation of unclaimed property given the ruling in Temple-Inland v. Cook1 and the Uniform Law Commission’s Revised Uniform Unclaimed Property Act (RUUPA).2 Can more than one state extrapolate escheat liabilities for the same holder of property in overlapping periods? Does Delaware’s historically applied bright-line standard of estimation solely sourced to one’s state of incorporation/formation prevail? Or are we headed for a 50-state apportioned extrapolation calculation? Regardless of the answer, one has to ask: Does it even matter? Report all estimated liabilities to one state or report to all 50 — wouldn’t the result be the same or very close?

This article explores the details of the gross method of estimating unclaimed property, and particularly how it contrasts with other state-sanctioned methods. We analyze the jeopardy that the varying methods impose upon holders, and identify some best practices to help
minimize such exposure.

For the full text of this State Tax Notes article, please download the .PDF below.