A Guide to Unclaimed Property Rules

By: Christian Spencer

It's tempting to think of those uncashed checks your organization cut years ago as free money, but there are strict guidelines on how and when you can close the books on them. Knowing the law on unclaimed property can help you avoid fines and accounting headaches.

Recently the accounting manager of a large organization and I were discussing the size and volume of her organization's outstanding check list, which contained more than $200,000 in checks with issue dates preceding 2002. The organization's accounting policies and procedures manual indicates that any checks outstanding longer than five years would be cancelled and recorded as income. This policy had been crafted over a decade ago with the thought that five years was more than enough time to permit a reasonable person to convert the check to cash. In addition, if the check had been lost by the payee, the payee would have contacted the organization by then to obtain a replacement. ...