Indiana Unclaimed Property – Update

Our CPA’s belong to the Indiana CPA Society (INCPAS).  One of the issues we have been addressing through our Society is the position the Attorney General’s office has taken with respect to enforcing the unclaimed property statute.  The following letter was written by the Society’s President to its members to update us regarding the ongoing discussions:

To: All INCPAS members:

I want to keep you abreast of an issue which we, the Indiana CPA Society, are addressing on your behalf with the Indiana Attorney General’s Office. You may recall that the Attorney General’s Office had an unclaimed property amnesty program (which expired in November 2010) for Indiana businesses holding unclaimed property, who had not yet reported as required by Indiana law.

The Attorney General’s Office recently sent 3,500 businesses letters and invoices indicating a $5,000 penalty for not registering and filing a zero return. We are uncertain of their criteria in delivering these letters and invoices. In addition, we do not think that the "tone" of the letter is appropriate.

We’re currently working with the Attorney General’s Office, although we are still at odds with their position, which asserts they have the authority to penalize businesses that were not holders of unclaimed property. We’ve also consulted our legal counsel, Society leadership and other business groups to voice our unified concerns.

Based on the advice of legal counsel, we are sending a letter to the Indiana Attorney General outlining the multitude of problems with the State’s tactics to collect money from people who do not owe anything.

Part of our position, as stated by our attorney, follows:

" … The reporting obligations of the unclaimed property act (and correspondingly the penalty provisions for one’s failure to report) apply only to a ‘holder.’ IC 32-34-1-26(a). The act defines a holder as ‘a person obligated to deliver or pay to the owner property that is subject to this chapter.’ IC 32-34-1-8. If one does not hold property of another as listed in the act that doesn’t fall within one of the many statutory exceptions, he is not required to report and cannot be fined for not reporting or not taking advantage of the amnesty program offered to delinquent holders."

Thanks to an INCPAS member bringing this to our attention, we were able to immediately address this with the Attorney General’s Office. Many members have since kept us informed of what they and their clients are experiencing. This type of communication is always helpful.

We encourage you to support our message by contacting the Indiana Attorney General’s Office by phone at 1-800-447-5598, or e-mail, upd@atg.in.gov, to voice your concerns and those of your employers and/or clients.

We appreciate your effort to keep the Indiana CPA Society in the loop on any additional information, and please copy us on any messages you send to the Attorney General’s office. As always, don’t hesitate to contact us with questions or comments.