California unclaimed property voluntary disclosure program proposed
INSIGHT ARTICLE |
Recently, legislation providing for an unclaimed property voluntary disclosure program was introduced in California through Assembly Bill 2773. The program would allow holders of unclaimed property the opportunity to come into compliance with their unclaimed property obligations by offering a limited lookback of 10 years and waiver of interest and penalties. It would be the first such program in the state in over a decade.
The penalty waiver is noteworthy as California currently assesses penalties at a rate of 12 percent per year from the time the property becomes reportable. Often times, these penalties can result in a total penalty liability larger than the unclaimed property on which they were assessed.
Most notably, the proposal limits the state’s ability to audit holders for the voluntary disclosure period except in cases of fraud. Although many states offer voluntary disclosure programs, most of those states reserve a blanket right to audit after the disclosure agreement is finalized.
The current draft of the bill schedules a sunset date for the program of Jan. 1, 2024.
California has not offered a similar program since an unclaimed property amnesty that ended in 2002. An unclaimed property voluntary disclosure program has been requested by the holder community in the state for years.
Assembly Bill 2773 is currently in committee. If the bill is enacted, holders with unclaimed property liabilities will want to consider applying for the program. RSM will continue to monitor the legislation for updates. For more information on unclaimed property, including recent insights, please visit RSM’s unclaimed property landing page.