Article
Unclaimed property – Risk of late reporting
March 18, 2026 · Authored by Cathleen Bucholtz, Matthew Chenowth
As companies begin preparing for the 2026 unclaimed property compliance season, it is important to recognize that internal administrative capacity and resource availability do not always align with compliance obligations. System updates, corporate transactions, employee attrition, scheduled time off and other unexpected operational demands can create challenges that affect a company’s ability to meet unclaimed property reporting deadlines.
When a company finds itself in the position of reporting unclaimed property after the applicable due date, it is important to understand the potential risks and outcomes in order to determine the most appropriate course of action.
Whether a company files a report after the due date or includes past-due items in a subsequent annual filing, understanding the associated risks is critical. Unlike many other forms of regulatory reporting, enforcement actions and assessments related to late or past-due unclaimed property reporting vary significantly by jurisdiction and continue to evolve. There is little uniformity among the states in how these matters are addressed.
Unclaimed property laws apply to a wide range of transactions across jurisdictions where vendors, customers or employees are located. Additionally, the state in which a company is incorporated may also influence reporting requirements, filing options and enforcement exposure.
Limited options
One of the most compelling reasons to report unclaimed property in a timely manner is to avoid drawing regulatory scrutiny. In addition to potential interest and penalty assessments, late reporting may trigger a multi-state audit.
Regardless of whether the audit findings are material or not, the time and resources required to complete an unclaimed property audit can be substantial. These examinations often extend three to five years, or longer, and require significant internal coordination and documentation production. Filing late or including past-due property in an annual filing can make it easier for states to identify potential noncompliance.
Once a company has been identified by a state for potential noncompliance, the available options for mitigating penalties or avoiding an audit may be limited.
If the past-due property amount is relatively small, a practical approach may be to report the property and request a waiver if the state issues a penalty or interest assessment. However, when the amount involved is material, or when the state involved is known for strict enforcement practices, companies may consider contacting the state to determine whether a voluntary disclosure agreement (VDA) program is available. These programs typically allow companies to come into compliance while obtaining waivers of interest and penalties.
Related sections
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.