It’s here Again…Time to send the Due Diligence Letters

June 14, 2013 Blog post by Moyer & Osibodu

It’s here again…time to send out the unclaimed property due diligence letters.  Before reporting the funds as unclaimed property, most states (with the exception of Delaware and Pennsylvania) require that a last contact letter (i.e. due diligence letter) be sent to the last known address on the holder’s books and records.  In most cases, a letter sent by first class mail not more than 120 days and not less than 60 days prior to reporting the funds, meets the states’ due diligence requirements.  In addition, many states have a monetary threshold relieving the Holder of the due diligence requirements for small dollar accounts.    

Below are some general rules, but like everything else relating to unclaimed property, the rules vary from state to state.  Some notable exceptions to these rules are as follows: 

California: requires the due diligence letters be sent for items $50 or greater if the holder has in its records, an address for the apparent owner that the holder’s records do not disclose to be inaccurate.  The timeframe for sending the letters should not be less than 6 months or more than 12 months from the time the account becomes reportable.  Also, the following must be printed at the top of the letters “THE STATE OF CALIFORNIA REQUIRES US TO NOTIFY YOU THAT YOUR UNCLAIMED PROPERTY MAY BE TRANSFERRED TO THE STATE IF YOU DO NOT CONTACT US.”  The good news is that holders can charge or deduct up to $2 for the cost of sending the letters and this charge can only be deducted from those accounts that are remitted.  Also, holders should be prepared to show evidence that the letters were sent. 

Connecticut: requires due diligence letters on company letterhead to be sent for all property regardless of the amount.  CT Sec. 3-65a (Duties of holder of abandoned property) (a) requires that ‘within 180 days before a presumption of abandonment is to take effect for wages, salary, or other compensation, and utility deposits or refunds, and within one year (365 days) before a presumption of abandonment is to take effect for all other property, the holder shall notify the owner by first class mail…’. 

New Jersey: requires the due diligence letters be sent by certified mail and return receipt requested if the property is $50 or more.  The mailing expenses cannot be deducted from the property remitted to the state.   

New York: has special requirements depending on the industry and it is important to understand the requirements for the holder’s industry.  However, corporations have a two-tier due diligence requirement.  Not less than 90 days prior to reporting the funds, a first class letter must be sent to all owners with an amount of $20 or more.  In addition, and not less than 60 days prior to the report due date, all holders shall send a certified mail, return receipt requested to all owners whose property value is in excess of $1,000.  The certified mailing is not required if the original first class mailing was returned as undeliverable.  The cost for the certified mailing can be deducted from the property remitted to the state.  

Ohio: has a two tier due diligence requirement.  A first class letter is required to be sent to the last known address of the owner or beneficiary with a balance of $50 but less than $1,000.  For amounts $1,000 and above, the letter must be sent by certified mail, return receipt requested.  The holder can deduct up to $20 for each account subject to the certified mail requirement.  A self-addressed stamped envelope must be included with each due diligence letter regardless of the amount. 

Texas:  changed its filing deadline to July 1 effective January 1, 2013.  The due diligence letters for amounts greater than $250 must be mailed by May 1st and the postage cost may be deducted from these amounts.

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