One of the things that makes Unclaimed Property Reporting so complex is the aspect of Dormancy. According to the National Association of Unclaimed Property Administrators’ (NAUPA) website, Dormancy is “the period of time during which the owner of the property does not take action on his property”. This sounds simple enough except for the fact that Dormancy is dependent on the State to which you are filing, the type of property you are reporting, and the Last Activity Date of the property.
Dormancy is calculated by most reporting software systems. The number of years of dormancy required by the state is applied to your Last Activity Date value and records that have aged enough to be reported will be included in the state reports that are generated. State dormancy requirements can be viewed on state websites and your software vendor should have an easy list for you to look at. For example, the state may have a dormancy requirement of 5-years for bank accounts but only 1-year for payroll checks.
It’s important to understand the states’ dormancy requirements and follow them so that you are not reporting early. Some states will accept early reporting and others, such as Florida, have stated that early reporting is an audit trigger. It’s best to err on the safe side and trust your reporting software. So—when exactly does the clock start ticking? Again, this is a property type specific and state dependent question. If the property is a check, the dormancy clock starts ticking as soon as a check is issued (Last Activity Date) and subsequently not cashed.
If the property is a bank account then the Last Activity Date could be the last time the account was accessed, the last time there was a withdrawal/deposit into the bank account, the last time there was correspondence with the lost owner, or the date in which you receive correspondence Returned by Post Office (RPO) due to a bad address. If you are unsure what to use as your Last Activity Date or what constitutes as communication based on the Property Type code that you are using, then it is always best to call the State that you are ultimately filing to for their opinion.
Incorrectly assigning or calculating Dormancy periods can have serious repercussions in the form of disgruntled property owners or State administrators. It is always best to involve the State in which you are filing if you have questions or concerns about Dormancy.