California VCP
AB 2280 provides the state’s controller authority to establish an unclaimed property voluntary compliance program that requires participants in the program to:
- Submit a report within six months of entrance into the program, with the possibility to extend the submission to 18 months upon acceptance of written request
- Participate in an unclaimed property educational training within three months of enrolling in the program
- Review books and records for a 10-year lookback period
- Perform due diligence at least 30 days prior to submitting an unclaimed property report
Additional guidance from the state controller, including formal instructions on how to complete a review, is expected.
Companies are precluded from entering the program if they are undergoing a California unclaimed property examination or if they are involved in a civil or criminal prosecution involving California unclaimed property compliance. Companies that have unclaimed property interest assessments or unpaid interest assessments that have been waived by the state within the past five years also are not permitted into the program.
Looking ahead
This VCP is another indication that California is focusing more on unclaimed property. Beginning with tax year 2021, companies are required to disclose unclaimed property filings on their California income tax returns. Given the state’s increased attention to unclaimed property compliance, companies should understand their unclaimed property exposure and reporting obligations in California.
Companies with past-due reports for unclaimed property should consult their tax adviser about California’s unclaimed property requirements and whether voluntary compliance is right for them.
