This article cautions that budget-strapped states have begun to eye uncashed rebate checks as a source of revenue under unclaimed property laws.
Though most finance executives pay little attention to unclaimed property, state-level economics will likely drive this issue into the forefront. For many companies, what was once a low-profile compliance matter could soon become a costly financial mess.
Over the past several years uncashed rebate checks, commonly referred to as "slippage", have become a growing concern for companies that offer rebates for their products as well as the companies that process and issue them. Although not technically a tax, states have embarked on an aggressive campaign, stepping up the collection of unclaimed property from all corporations. Uncashed rebate checks have become their most recent area of pursuit. When states collect this unclaimed property, there is technically no one to forward it to. These collections oftentimes go directly into the state coffers to fund general budget expenditures.
Duff & Phelps helped the major retailer to achieve over $3 million in savings as a result of planning to avoid unredeemed gift cards from constituting as unclaimed property in addition to securing a $300,000 refund of over remitted unclaimed property from a state.
Duff & Phelps helped the company realize $1.5 million in savings through the identification of potential items of unclaimed property that were exempt either because of statutory and administrative exemptions or because the items related to previously undocumented accounting mispostings and classifications.
Bob Peters, managing director, and Matthew Beintum, vice president, discuss how states are actively pursuing unclaimed property to mitigate budget shortfalls. Businesses need to include unclaimed property as a vital and necessary consideration for sound financial reporting.