Escheatment & Higher Education: Why Compliance Matters

Large corporations have become increasingly aware of their unclaimed property compliance obligations as states have increased enforcement over the past few decades. However, these laws do not only apply only to corporate giants. Any business, organization or entity possessing property owed to others is responsible for complying with unclaimed property laws, including colleges and universities.

The unclaimed property requirements of each state and several international jurisdictions specify when property is considered dormant based on a lack of contact with or certain action taken by the owner for a certain period of time. They also define the property holder’s responsibilities for owner outreach regarding the funds and, if contact is unsuccessful, reporting and remitting the property – a process known as escheatment – to the appropriate jurisdiction for safekeeping until the rightful owner files a claim. Requirements are complex, varying not only by state but also by property type.

Because institutions of higher learning have several business functions in common with other types of businesses, some sources of unclaimed property liability are similar as well, including:

Vendor payments
Payroll checks
General ledger credits

However, other property types are specific to educational organizations:

Tuition refunds
Student account credits (cafeteria and bookstore prepaid cards, for example)
Enrollment deposits
Student housing deposits or overpayments

Managing an organization’s unclaimed property program requires expertise and diligence. The more complex the college or university structure, the more resource-intensive unclaimed property management will likely be. Multiple campuses, satellite locations and online, remote learning programs can complicate an already daunting task.

Failure to properly report unclaimed property can result in substantial, costly penalties and interest charges, particularly if one or more states conduct an audit. As states continue to update their unclaimed property statutes, keeping stringent unclaimed property policies and procedures up to date and adequately following them is essential.

If an organization does not have knowledgeable personnel dedicated to managing a complex, ever-evolving unclaimed property compliance program or if staff needs help to ensure their policies, procedures and practices are thorough and accurate, retaining the expertise of dedicated unclaimed property specialists may be necessary.

Colleges and universities may also benefit from outside assistance with recovering property belonging to them. Uncashed vendor payments, donations and other funds are likely available and waiting to be claimed. Because higher education institutions often have dozens, if not hundreds, of different addresses for various departments, schools and campuses, identifying and returning this property can be incredibly challenging. Tax-exempt organizations may face additional difficulties, as the documentation requirements for proof of FEIN differ from those of other entities.

If you work for a college or university that needs help improving its unclaimed property compliance program, claiming its own funds or both, MarketSphere Unclaimed Property Specialists has the knowledge and experience to assist. Contact our team of unclaimed property experts today to get started.

Join MarketSphere on May 14^th for an insightful webinar. This session will provide essential information to help attendees understand unclaimed property compliance. The discussion will cover tools and strategies that can assist organizations in identifying gaps in their compliance programs and refining their procedures. Click here to learn more and register.

*Content contained in this article is considered accurate as of the publish date.