States with budget shortfalls are increasing revenues without increasing taxes by pursuing unclaimed property. In Delaware, for instance, unclaimed property collections are the state's third largest source of revenue. A case pending involves McKesson, incorporated in Delaware, pharmaceutical distributor in North America. McKesson was the subject of a Delaware unclaimed property audit. The auditor focused on inventory-related property and used extrapolation to determine McKesson owed Delaware over $4.5 million in unreported unclaimed property, not including any penalties or interest. McKesson filed a declaratory action (McKesson Corp. v. Cook, Delaware Chancery Court, No. 4920 (filed Sept. 25, 2009)), challenging the assessment Delaware's characterization of the inventory-related property as unclaimed property, the extrapolation methodologies used by Delaware, and the constitutionality of Delaware's actions on procedural and substantive due process and unlawful taking grounds.
Unclaimed property consists of property held by a business for a statutorily mandated holding period subject to escheat when there is no communications with the true owner.
Examples of unclaimed property:
• Uncashed travelers checks;
• Uncashed customer credits;
• Unused gift certificates;
• Uncashed employee payroll checks;
• Uncashed vendor checks;
• Uncashed dividend checks;
• Amounts distributable from employee benefit plans.
Businesses are responsible for reporting unclaimed property to the states annually. Some states require the business to communicate with the rightful owner prior to the filing of the report.
For a consumer to reduce the amount of unclaimed property, pay for services at the time of use instead of making pre-payments, such as purchasing gift cards.
