Many people hear about the exemptions that states allow for unclaimed property reporting, and they get very excited. Free money, right? What could go wrong? I will share what I know about exemptions and let you decide.
Let’s start with a simple kind of exemption. Some states exempt reporting of gift cards or gift certificates that do not have an expiration date. This example is actually cut and dry. If you allow the customer to use the gift card no matter how long they’ve held onto it, it makes sense you would not turn anything over as unclaimed funds.
Another type of exemption is a business-to-business exemption. For most states that offer this type of exemption, the intent is that you don’t turn over funds for another business with which you have an ongoing relationship. Instead, you would make reasonable efforts to contact that business and get them to claim the property. It doesn’t mean that you don’t have to report property for any owner who is a business.
Some states exempt wages, or other types of property, if they are under a certain dollar amount. If you take these exemptions, it doesn’t erase your liability to the owner. So then what do you do with this money?
There are many types of exemptions and many things to consider if you decide to take the exemptions. This is a very complicated topic to cover in detail in a blog post. The main point of this post is to raise awareness about exemptions and cause you to think about whether or not you should take advantage of them.
If in doubt about taking an exemption, contact the state and have your legal team review the legislation that describes the exemptions in detail so you can make an informed decision.