Unclaimed
Property UNCLAIMED PROPERTY UPDATE by Gary Joseph, MBA, CIA – Keane Consulting & Advisory
3. Accounts Receivables – Customer and JIB 4. Land Checks 5. Lease and Rent Payments
Industry Update Unfortunately, holders in the oil & gas (“Energy”) sector are tasked with enduring one of the most arduous unclaimed property compliance responsibilities out there. To accompany day-to-day job responsibilities, those assigned unclaimed property management must also keep current with legislative updates, cyclical reporting, liabilities assumed via M&A activity, managing engagements with State Administrators and their 3rd party auditors, etc. As many holders have discovered, attaining and sustaining compliance is a year-round job function requiring company-wide accountability and cooperation from various divisions. To be clear – State Uniform Unclaimed Property Laws are anything but “uniform.” Outreach requirements, dormancy periods, statutory deadlines and a vast number of other critical factors differ by State which contributes to the reasoning behind why States project that more than 90% of businesses are out of compliance. Due to its dynamic nature, there is not a single software or system that has been created that will resolve 100% of the Unclaimed Property compliance issues – however we’re hoping contributing resources, such as this article, will assist in spotlighting areas to which your company may need to attend. ENERGY SECTOR - REPORTING One important note that must be stressed is that unclaimed property in the energy sector is not just mineral proceeds and suspended royalties. Although, it’s our experience that holders in the sector limit property reported to mineral proceeds and suspended royalties (“MI02”). While this property type presents the greatest unclaimed property exposure to energy companies, holders in this sector are also responsible for reporting anything that falls in to the definition of unclaimed property, such as the following property types: 1. Payroll 2. Accounts Payable
The aforementioned list is merely a snapshot of property types that should be reported in addition to Royalties. Omission of these property types from your unclaimed property filings can increase audit risk or receipt of an invitation to the Delaware Voluntary Disclosure Program (“DE VDA”) – which is now a precursor to Delaware audit. If your company has not historically reported Royalties or any of the other property types listed, it is imperative that an internal review of potential exposure related to these areas be completed to ensure they are being monitored for unclaimed property. Current to Pay Currently, there are now 30 Current to Pay (“CTP”) reporting jurisdictions, including the State of Colorado (“CO”) who adopted Section 209 of the Revised Uniform Unclaimed Property Act (“RUUPA”), with an effective date of July 1st, 2020. Section 209 of RUUPA states: “At and after the time property is presumed abandoned under this act, any other property right or interest accrued or accruing from the property and not previously presumed abandoned is also presumed abandoned.” As States continue to make their unclaimed property Statutes more comprehensive and inclusive, we expect more States to adopt this same provision which requires you to report all property held – even property that doesn’t meet the definition of abandonment once the initial trigger has been met. To further complicate matters, several States provide differing reporting instructions regarding Royalties. Texas, for example, instructs mineral proceeds reported under its CTP provision be filed under reporting code
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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s
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