Originally published in KEEP UP TO DATE on ACCOUNTS PAYABLE
Reprinted with permission

Revenue-hungry states seizing uncashed checks

‘Bounty hunters’ on the howl, looking for abandoned property

It’s more important now to track down and resolve old outstanding checks on the books.

States are getting more aggressive about hunting down and claiming "abandoned property" as their own. Uncashed checks qualify – once written, they’re legally considered property the payee abandoned.

Nationwide, we’re talking up to $12 billion in potential revenue – that’s like blood in the water for state auditing sharks. One state has even hired third-party "bounty hunters" to search company books high and low for funds to seize, says A/P expert Jon Casher of RECAP, Inc.

Texas, New York, California, Massachusetts and Delaware are most aggressive. But any state can come knocking, and pore over open or closed checking accounts.

Casting a wider net

Historically, escheatment laws let states claim abandoned property after seven years. But regulators have now cut that minimum to as little as 36 months to raise money. What’s more unless you can prove a vendor was actually paid, even stop orders may not help. The state can rule you didn’t have legal authority to issue one.

Double payments are the highest exposure. Other targets: small dollar refund checks, dividend checks to inactive shareholders and checks never sent.

To protect your firm:

• Review checking accounts and resolve any stale checks, starting with large-dollar amounts.
• Going forward, document all open, void and stopped checks fully, to give auditors less ammunition

Info: Casher, RECAP, 888-697-6430, or www.recapinc.com

© January 19, 1998 Keep Up to Date on Accounts Payable