Unclaimed
Property
Abandoned & Unclaimed Property TEXAS VOLUNTARY DISCLOSURE PROGRAM
The Texas Comptroller of Public Accounts (TX CPA) is the primary administrator for tax and unclaimed property. Its Unclaimed Property Division oversees reporting and compliance enforcement. The division has eagerly invested time and effort to inform holders of the opportunity to participate in its Voluntary Disclosure Program. Holders who qualify for the program are strongly encouraged to participate to avoid the, often material, risk of penalty and interest.
of the property’s value, along with a penalty of five (5) percent of the property’s value – also assessed annually. An additional penalty of five (5) percent is assessed if the property is not reported before the end of month when the property is due.
QUALIFYING FOR TX VDA
To qualify to participate in the TX CPA Voluntary Disclosure Program, holders must meet the following criteria: • The holder is registered, and current, in its tax compliance responsibilities • The holder has not been notified of, or currently undergoing, an unclaimed property examination initiated by the State • The holder, nor any of its subsidiaries, have a limited or no prior unclaimed property reporting history with the State. Prior reporting history alone DOES NOT preclude a holder from participating in the program. Holders who do not qualify based on the preceding criteria are still encouraged to reach out to the State should it identify past due properties on its books.
BENEFITS OF TX VDA
There are a multitude of benefits to participating in the Texas Voluntary Disclosure Program. For starters, the holder can conduct an internal self-evaluation of its unclaimed property exposure free of pressure from the State or its auditors. This auspicious attribute allows holders to use data of which they are already privy to identify properties and report. In many instances, the company may already be cognizant of the properties that are reportable to the State and need only report them. Another benefit to the holder is the ability to focus on reportable properties that are currently listed on their books, rather than items that may have been voided in prior years. While it is important that the Voluntary Disclosure Agreement (VDA) include both on- and off-balance sheet liabilities, holders can use judgment in determining if certain properties should be included or not. Finally, holders can come into compliance by reporting past due properties free of penalty and interest concerns. Section 74.705 and 74.706 of the Texas Property Code allow for interest and penalty to be assessed, respectively, by the State for delinquent properties. Holders who fail to report unclaimed properties to the TX CPA shall be assessed interest at an annual rate of ten (10) percent
FINAL THOUGHTS
The Texas CPA is leveraging many channels, including these publications, to make holders aware of its Voluntary Disclosure Program. Whether your company was incepted organically or has changed materially by way of organizational restructuring due to merger and/or acquisition activity, serious consideration should be taken to reach out to the State to inquire on the company’s eligibility.
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G rowth T hrough E ducat i on - A pr i l / M ay / J une 2022
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