What is unclaimed property, you might ask? With some exceptions, unclaimed property includes items your practice has in its possession that it is not entitled to. The two most common types of unclaimed property for a dental practice are un-cashed patient refund checks and credit balances on patient accounts. If your practice has a minimum balance write-off policy, then any account that had a credit balance before this adjustment would be included on this list as well.
Generally, unclaimed property that has not been returned to its owner for three years must be reported and turned in to the State Department of Lands. The deadline for this reporting is November 1st. In the months preceding the filing deadline there is also a requirement to notify the owner of the funds if the amount held by the practice is over a certain dollar amount. This gives the owner an opportunity to claim the funds directly from the practice prior to them being turned over to the state. Each state has its own filing requirements, and the compliance offices are looking into this as an additional source of significant revenue. To get an idea of how big a revenue source this can be, the Oregon Department of Lands website states that the Department receives about $50 million in unclaimed property each year, while it only returns about $15 million to its rightful owners.
In Oregon we expect this amount to increase considerably in the coming years. The State of Washington has ramped up their compliance efforts, and the Washington Department of Lands website indicates that their Department received over $185 million in unclaimed property last year. It is worth noting that an agent who helped implement the stricter compliance process has now taken a position with the State of Oregon in hopes of duplicating these results.
Penalties exist for non-compliance, including late reporting interest and daily fines until the report is filed, up to a 10% penalty in Washington. In addition, the state can assess a penalty of 100% of the value of items not reported. Oregon can impose a civil penalty of up to $50,000 for willful non-compliance.
No matter where you practice is located, the states are searching for new sources of revenue, and unclaimed property reporting is a current area of focus. As the required compliance becomes more and more stringent, it is important to know how to properly report unclaimed property and what your due diligence requirements are as the holder of the property.
Fluence will give you a list of any uncashed refund checks each year to review with instructions. Please make sure to be reviewing this and following your state’s procedures. See the following link for the letter that is sent out.
Information on the reporting of unclaimed property in your state can be found at one of the links below; please contact our office if you have questions or concerns.