Florida Bill Would Permit Estimation In Audits When Records Unavailable

A bill pending in the Florida House of Representatives would permit estimation when a holder does not have or refuses to provide records during the course of an examination, even when the holder is not incorporated in the state.

Under Supreme Court jurisprudence, a holder is obligated to report and remit unclaimed property to the state of the owner's last known address. If the name or address is unknown, then the unclaimed property is reported to the holder's state of incorporation (or organization, in the case of a limited liability company). Historically, estimations have been the province of the state of incorporation under the second priority rule. Florida House Bill 783 (identical to Senate Bill 970) would permit Florida to prepare an estimation under the first priority rule.

Florida statute already permits the use of estimation when records are not available. This bill clarifies that estimation is an available tool for auditors when the holder refuses to provide the records during an examination and when the holder is incorporated outside the state of Florida.

Holders should review their policies and procedures to ensure that their document retention and destruction policies are sufficient for purposes on unclaimed property. Most companies have not set sufficiently long record retention time periods, as the unclaimed property statutes do not generally follow standard tax and SEC statutes of limitation. This gap often exposes holders to risk in the case of an unclaimed property audit.

See Also:
Recent Litigation Spotlights Due Diligence Efforts (or Lack Thereof)
Delaware Sues Blackhawk/Parago Over Rebate Audit
Overreaching State Authority in Unclaimed Property Audits