Maybe it was lost, or got tossed out. Maybe the dog ate it. While it may be hard to understand how payroll checks can go uncashed, it happens. Unclaimed wages (and other property, such as commission checks, shareholder dividends, checks to vendors, and unredeemed gift cards) create problems for businesses — and revenue opportunities for cash-strapped state governments. That could be an unfortunate combination if your company isn’t in full compliance with state law.
When Wages Go Unclaimed
Generally speaking, businesses are not permitted to hold on to uncashed checks indefinitely. Each state has its own laws regarding unclaimed property, and employers must follow the rules for reporting and remitting such property to the state.
Most states consider unclaimed wages to be “abandoned” after a year. During that period, employers must make a good faith effort to contact the wage earner so the property can be claimed. If these attempts fail, employers must turn over the abandoned wages to the appropriate state agency.
States Want To Know
To supplement tax revenues, states have generally been stepping up their audit and enforcement efforts regarding abandoned property. For businesses, the cost of noncompliance can be quite high, especially if they haven’t been keeping reliable records. In the absence of records, auditors may — and often do — estimate a business’s liability, which may result in an exaggerated assessment.
Protect Your Business
In addition to paychecks, you might have other unclaimed property to contend with, too. Take steps to protect yourself by putting someone in charge of handling your business’s unclaimed property, keeping accurate records, regularly filing required reports of unclaimed property with the appropriate state agency, and promptly turning over any unclaimed property according to state law. Your time and effort will be well spent if it helps avoid costly problems in the future.
Don’t get left behind. Contact us today to discover how we can help you keep your business on the right track. Don’t wait, give us a call today.