BDO knows unclaimed property

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August 10, 2015
To all our clients and friends,
 
Background:
 
As many of you know, certain DE officials left the Delaware Department of Finance and joined Kelmar (3rd party auditor).  Since then, many other states are beginning to issue their own audits to companies that are either incorporated or domiciled in those states.  The biggest of late is Texas and we are seeing a lot of activity in the state in the last month.  We have 4 clients that have received audit letters in the last 10 days alone.  From what we understand, over 100 audit letters were issued with more coming.  Our understanding is that the audits are being performed by the following contract auditors (a) Kelmar; (b)UPCH; (c) SAS and (d) Audit Specialty Services.  Texas has a new department and personnel handling escheatment now as well.  This is a major shift from prior years and is expected to have a significant impact on many companies.  Given the decline in oil and gas of late, perhaps this is their way to plug the revenue gap.  
 
Who does this Apply to?:
 
1. Entities incorporated in TX
2. Entities that have significant income tax apportionment factors in TX (e.g., revenue, payroll, property)
3. Entities with significant # of vendors, customers or employees located in TX
3. Acquisitions of Entities in TX
 
What is My Risk?:
 
1. Receive audit notice from TX (auditor can piggyback other states on audit prior to execution of NDA)
2. Receive audit notice from other state (auditor piggybacks TX onto the audit prior to execution of NDA)
 
Once a company receives an audit notice, they can no longer participate in the VDA program.
 
Potential Risk Mitigation:
 
Notwithstanding, there are ways to mitigate the risk through compliance and VDA options (see links below for further information).  

 
 
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Texas Focusing on Unclaimed Property Audits
The Texas Comptroller of Public Accounts has begun pursuing companies for unremitted unclaimed property. 

Audits are now being performed by various contract audit firms for the state of Texas. Generally, these contract auditing firms are paid on a contingency fee basis as a percentage of the assessment ultimately imposed.  These contract auditors may also "piggy-back" other states on to the audit as well.

Companies at most risk include those incorporated in the state of Texas, or companies located in other states with significant operations in Texas.  

If you have already received a notice from the State of Texas, have not addressed your unclaimed property posture, or would like to learn more about Texas and other states' escheat climates, please contact BDO.
 
Tech-update

Reference:

TX Unclaimed Property Notice

TX VDA Decision Tree

CONTACT
Candace Lynch
210-308-7963

 
 
 
 
 
 
 
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Contact:
Candace Lynch, Business Development Manaer
(210) 342-8000