OHIO’S UNCLAIMED PROPERTY LAW
In this month’s column I wanted to take a closer look into one of the regulatory compliance areas that we receive questions on at the ODA. By being a member of the Ohio Dental Association you have access to regulatory compliance guidance through communication with ODA staff and the “Ohio Dentist Advisor,” our regulatory compliance guide. For more information regarding that guide please see the article “The ODA provides resources to ensure dentists comply with laws and regulations.”
Throughout the year I have been contacted by dental offices who have been in contact with the Ohio Department of Commerce regarding unclaimed funds audits. These interactions always lead me to making sure that other members who have not called have the information necessary to comply with the unclaimed funds laws. Filing unclaimed funds reports is something that all offices must do on a yearly basis. I have talked to dentists who file their own reports and many who have their accountants file for the office; in either situation the information in this article is important to understand. Lastly, in the ODA’s regulatory compliance guide there is an in-depth checklist as to what it takes to file a report and how to do so.
All states including Ohio have some type of unclaimed property law that declares money, property or other assets to be abandoned after a period of inactivity. Abandoned or unclaimed property, although not considered a tax, has become a significant source of revenue for many states. Additionally, in the information age in which we live states have become much more effective in locating businesses that have not filed unclaimed property reports, which can lead to an audit. All businesses that are located in or operate in Ohio or who hold funds due to Ohio residents are required to file an Annual Report of Unclaimed Funds.
Assets in dental offices that could be considered unclaimed funds may include payroll, expense reimbursement checks, insurance proceeds due to an individual, credit refund checks, rebate checks, customer deposits, and other intangible interests or benefits. There are three types of accounts that are exempt from unclaimed funds reporting in Ohio. These accounts are wages less than $50 (issued after July 1, 2000), gift certificates and business to business transactions that are limited to funds paid or received as the result of the company’s receipt or issuance of an invoice. In Ohio, for almost all funds or accounts, dental offices should be aware that property is presumed abandoned if it remains unclaimed by the owner for three years and the practice cannot locate the owner. For payroll accounts, the asset is considered abandoned after just one year.
Reporting Unclaimed Property in Ohio
Ohio businesses have several responsibilities concerning unclaimed property. First, written notice must be sent to the apparent owner of the unclaimed property if known. The state requires that an OUF-8 Notice of Unclaimed funds form be sent to owners of dormant accounts with a balance of $50 or more before the funds are reported as unclaimed. If after the mailing the property is still unclaimed after 30 days, businesses must report the property to the Ohio director of commerce. The sending of an OUF-8 notice can be done prior to the three-year period if the office chooses to do so. Depending on the situation of each individual unclaimed fund the timing of sending the letter could be earlier than three years but should be done within the three-year time frame. The reports are due before Nov. 1 for the year as of the preceding June 30 and are filed using an OUF-1 Unclaimed Funds Reporting form. With that filing businesses are required to turn over all unclaimed property to the state. Businesses that fail to comply with any of these requirements are liable to face stiff penalties.
Filing a Negative (No Unclaimed funds) Report
Even if a practice’s records show that the business is not holding any unclaimed funds, or if all owners respond to the OUF-8 Notice of Unclaimed Funds mailing, a Negative (None) Report using the OUF-1 Unclaimed Funds Reporting Form still must be filed annually (by Nov. 1). The Ohio Department of Commerce, Division of Unclaimed Funds through the Ohio Business Gateway (OBG) offers companies the option of filing their Annual Report of Unclaimed funds electronically via the internet. If your business currently files reports with other state agencies through the OBG, you may use your existing account information to log in and file your unclaimed funds report. If by chance you are a first-time user you will need to create an account with the OBG prior to filing. Utilizing https://unclaimedfunds.ohio.gov/app/submit-a-report shows the forms that need to be filed and can walk through different scenarios.
In filing your business’ unclaimed funds reports it is always important to work with a professional. Talking through these situations with your accountant or attorney are important to ensure compliance with the law. The Department of Commerce website is also a great resource (https://com.ohio.gov/divisions-and-programs/unclaimed-funds). If you have any questions or concerns regarding unclaimed funds please contact the ODA legal department at (614) 486-2700. Members of the Ohio Dental Association should also utilize the regulatory compliance guide to fully understand the steps needed to successfully file reports and follow the law.
