It probably comes as no surprise to you, but the State of Michigan needs money. So at the same time they are rewriting the tax laws, they are also dredging up old laws designed to bring in more money to Treasury’s bank accounts. Several years ago they began placing emphasis on the use tax that has been around, but only lightly enforced, since the 1930s. This year they are focusing on the unclaimed property reporting laws which have been around since 1947.
Were you aware that for the last 60+ years your business may have had an obligation to turn over money to the state? The idea is that when you have cut a check that has not been cashed, or when a customer has overpaid you (two of the most common scenarios for most small businesses), that money is not yours to keep. After a certain “dormancy period,” that money needs to be turned over to the state for safekeeping and to allow the rightful owner of that money to find it.
That information is “old news,” but what is new is the state’s extra efforts to enforce the law. Recently some of our clients have received a letter from the state detailing changes to the law. For one thing, most dormancy periods have been standardized at three years; the major exception is that paychecks become dormant after only one year.
Reporting is required to be done each year by July 1 for any unclaimed property that has passed its dormancy period as of March 31. According to the letter received by some of our clients, failure to comply with the unclaimed property laws may result in an audit of the last 10 reporting years.
If you have any questions or need assistance with reporting your unclaimed property, the professionals at Willis & Jurasek are here to help.