From time to time, reporting unclaimed property is brought to our attention. The Michigan Uniform Unclaimed Property Act (Public Act 29 of 1995, as amended) strongly suggests that all companies with unclaimed property file reports for 2017. Beginning in 2018, all entities registered to do business in Michigan will be required to file unclaimed property reports whether or not there is unclaimed property to report.
What is Unclaimed Property?
It is tangible or intangible property that is not claimed by its rightful owner for a specified period of time. For example, a company writes a payroll check to an employee and he or she doesn’t cash the check. If it remains uncashed after a year, it is considered unclaimed property. There are many other types of unclaimed property and dormancy periods vary by type (see below).
What is tangible and intangible property?
Tangible property would include items in a safe deposit box, personal property or personal effects. Intangible property would include checks, money, interest, dividends, unpaid wages, credit memos, refunds, pension, health savings account, etc.
What is the dormancy period?
The time when an owner doesn’t take action on his or her property. In the example above, the dormancy period would begin on the date the payroll check was issued to the employee. The dormancy period is different for each type of property. Click here to view Appendix A from the Unclaimed Property Manual to understand the types of property and dormancy periods.
What is a Holder?
A person who is in possession of property belonging to another, a trustee or is indebted to another on an obligation.
Reporting Unclaimed Property
The Unclaimed Property report was due July 3, 2017, for property reaching its dormancy period as of March 31, 2017. The State of Michigan prefers that the report be filed electronically, but if a holder is a first-time filer or has fewer than ten properties to report, paper-filing is acceptable. Form 1223 Michigan Annual Report of Unclaimed Cash and/or Safe Deposit Boxes, Form 2011 Michigan Holder Transmittal for Annual Report of Unclaimed Property and a check made payable to the State of Michigan should be remitted. Holders who have previously reported unclaimed property to the State of Michigan have the option to file and pay electronically, free of charge. Instructions for doing so are located online at www.michigan.gov/unclaimedproperty.
In preparation of reporting unclaimed property, the following is a guideline for taking action on potential unclaimed property:
- Property should be identified which may be considered unclaimed property as of March 31st of each year.
- Due diligence letters should be prepared and mailed to the property owners identified as inactive by April 15th each year.
- Determine which property owners have not responded by May 15th and follow up.
- Begin preparing the annual unclaimed property report by June 1st.
- The report is due annually on July 1st, unless that date falls on a holiday or weekend. In 2017, the report was due Monday, July 3, 2017.
Below you’ll find a few resources to help you through the process of reporting unclaimed property.
- State of Michigan Property Type Codes and Dormancy Periods
- Sample Due Diligence Letter for an Outstanding Check
- Form 2011 – Michigan Holder Transmittal for Annual Report of Unclaimed Property
- Form 1223 – Michigan Annual Report of Unclaimed Cash and/or Safe Deposit Boxes
It is not our intent to cover all the rules related to unclaimed property but to make you aware of such filing requirements. If you need further assistance, please contact our team and we would be glad to provide further guidance. Looking to reclaim your unclaimed property? Check out this post.
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