IL Unclaimed Property Rules Update
Is your business subject to Illinois Unclaimed Property rules?
Does your business have employees, customers, or suppliers? If so, you may have an obligation to report and remit unclaimed property to the state of Illinois.
What is the purpose of unclaimed property rules and is this unique to Illinois?
The purpose of unclaimed property rules is to ensure protection of the unclaimed property until the rightful owner is located. All 50 states and the District of Columbia have unclaimed property laws.
What is unclaimed property?
Unclaimed property is intangible personal property for which there has been no owner activity related to that property for a certain period of time. Examples of unclaimed property include uncashed payroll checks, customer overpayments, uncashed/voided checks to vendors, and gift cards/certificates with an expiration date.
How long of a period of inactivity before I need to do something?
The period of inactivity is referred to as the dormancy period. The general rule is that after a 3-year dormancy period the unclaimed property must be reported and remitted to the state. Some property types have different dormancy periods. For example, the dormancy period for payroll is one year.
I don’t have any unclaimed property. I don’t need to file, right?
This was true until the law recently changed for certain businesses. If your business has annual sales of more than $1,000,000 or more than 100 employees, an unclaimed property report is required even if there is no property to remit to Illinois.
If I need to file a report, how do I do that and when is it due?
Reports must be filed electronically with the Illinois Treasurer. The filing deadline for most businesses is May 1st and is based on unclaimed property held as of 12/31 of the previous calendar year. Business must also reach out to the presumed owner of the property at least 60 days prior to filing the report in an attempt to return the property and/or to inform the presumed owner that the property will be remitted to the state.
What are the consequences of failing to file?
Interest and penalties may be imposed on the failure to file, pay or deliver property by the required due date. Interest may be charged at 1% per month on the value of the unreported/unpaid property. A penalty of $200/day up to a maximum of $5,000 may be imposed until the date a report is filed or the unclaimed property is paid or delivered.
How far back can Illinois go in determining if my business has a liability?
The statute of limitations for the State Treasurer to enforce ends 10 years after property is reported.
What do I do if I have never filed, or I am late on some prior year filings?
Illinois offers a Voluntary Disclosure Agreement (VDA) which allows non-compliant business to voluntarily come forward and become current with their filings. In exchange for voluntary compliance, the state agrees to waive any interest and/or penalties that may have otherwise been due. It’s similar to a free pass in exchange for current and future compliance.
If you have any questions regarding unclaimed property, please give us a call. We’re always here to help!