Beginning in 2018 in Michigan, all companies with no unclaimed property will be required to file a zero or negative report. Under Michigan’s Unclaimed Property Act, anyone holding unclaimed property of another must report such property as abandoned to the State of Michigan under a process known as escheats. Therefore, a bank holding money for a depositor over a number of years, which determines the property is abandoned, must turn this property over to the State. The State of Michigan has been very aggressive in recent years in enforcing the escheat process and procedure as a method of revenue enhancement.
But now, all companies without any unclaimed property will be required to report that fact to the State as well by filing a zero or negative report.
Unclaimed property is any asset, tangible or intangible, belonging to a third party that remains unclaimed for a specific period of time by the rightful owner. The forms to be filed are Form 1223 – Annual Report of Unclaimed Cash and Safe Deposit Boxes, and Form 2011 – Holder Transmittal and Checklist for Annual Report of Unclaimed Property.
Companies will need to identify properties that may be reportable as unclaimed property as of March 31, 2018. By July 3, 2018, all companies will need to mail the electronic media containing the Annual Unclaimed Property Report and Remittance to the Unclaimed Property Division of the State of Michigan. In filing the reports, all properties reporting 10 or more unclaimed property accounts must report via upload, CD-ROM, or USB flash drive. Only entities reporting fewer than 10 properties will be allowed to file a paper report. However, companies making such disclosures are cautioned to retain copies of all such reports filed and supporting documentation on file for 10 years.
There is also Form 4869, which permits late filing for entities to voluntarily comply with the requirements of the Michigan Unclaimed Property Act by offering a voluntary disclosure agreement.
Citizens are particularly cautioned because they may have deposits with financial institutions in minor amounts for emergency access, which, because of inactivity, are deemed abandoned by the financial institution and may be transmitted to the State of Michigan. While a depositor whose assets have been forwarded to the State may make claim against the State, the process is cumbersome and requires documentation to support ownership and entitlement to the proceeds from the State of the surrendered property deemed abandoned by the financial institution.
Gerald C. Davis is a partner in our Livonia office where he concentrates his practice on corporate and business law, leveraged buy-outs, company reorganization and refinancing, analyzing investments for joint ventures, intellectual property, and drafting loan agreements. He may be reached at (734) 261-2400 or firstname.lastname@example.org.