Client Alert
October 21, 2010
Last Call for PA Amnesty
Pennsylvania Treasury Department's Unclaimed Property Compliance Amnesty Program Ends October 31, 2010


By Alexander F. Barth, Esq.

Pennsylvania is making a last call for companies that are out of compliance with the Commonwealth's Unclaimed Property Law (Law). Sunday, October 31, 2010, is the last day to enroll in the Unclaimed Property Amnesty Program.  After this date, businesses that are out of compliance may be subject to penalties and interest, which can date back to the time the property should have been turned over to the Commonwealth. 

Many companies do not realize their obligations under the Law. The Law requires that any company holding any financial assets of a third party, which have been unclaimed or unused for a statutorily prescribed period of time, otherwise known as a dormancy period, is obligated to report and tender that unclaimed property to the Pennsylvania Department of Treasury (Treasury Department). The Treasury Department will serve as a custodian, holding the assets in perpetuity until reclaimed by the owner.  
 
Financial assets that are subject to this law include, but are not limited to, such commonplace things as:
  • Wages and Payroll
  • Accounts Payable
  • Accounts Receivable
  • Credit Balances/Customer Overpayments
  • Gift Certificates/Layaways
  • Commissions
  • Unused Refunds/Rebates
  • Escrow Accounts
  • Unused Deposits
  • Basic tangible property including, but not limited to, jewelry, money, antiques and musical instruments
Unclaimed property must be reported and turned over to the Commonwealth after a dormancy period of five years. However, unclaimed wages, payroll and commission payments must be turned over after a dormancy period of only two years.
 
If a company or organization does not comply with its obligation to both report and turn over unclaimed property, it runs the risk that the Commonwealth will discover this during a standard audit. If it is determined that a company has failed to properly handle, report and turn over any unclaimed property, the company will be required to turn it over and pay substantial penalties and interest. The Law provides that holders of unclaimed property who fail to file reports may be convicted and fined $100 for each day a report is withheld, up to a maximum of $1,000. Those who fail to turn over the unclaimed property may be convicted of a misdemeanor and fined between $1,000 and $10,000, imprisoned for up to two years, or both. 
 
While the normal reporting deadline is April 15th of each tax year, the Treasury Department has created a special amnesty program that expires on October 31, 2010.  The amnesty program allows companies that have never reported unclaimed property, those who have gaps in their reporting history or those who simply missed the April 15th deadline to come into compliance without having to pay penalties and interest normally associated with non-filing. The program is open to all companies and organizations, other than those currently undergoing an audit and those that have been previously notified by the Commonwealth of their failure to report unclaimed property.  
 
The attorneys at Cohen Seglias are available to assist businesses in determining whether they have a filing obligation in Pennsylvania and to ensure that they are in compliance with the Law.  Please contact Alexander F. Barth at (215) 564-1700 or abarth@cohenseglias.com, or the Cohen Seglias attorney with whom you normally consult.  
     
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