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Where do 3rd Party Rebates fall in the determination of Unclaimed Property Reporting to States?

My company processes small rebate checks for a number of our clients. They write the rules, we open an account with their name on it, they fund the account, and we are charged with receiving and distributing the funds based upon the program guidelines. When the program is over any undistributed funds are returned to the client and you would hope all the small checks would be cashed. The reality is that two years later there are lots of small checks outstanding and we are left with the dilemna of closing the account and returning the outstanding balance to the client, or turning them over to the state as unclaimed property.

What is the appropriate way to handle?

If the recipient locates their check in a random desk drawer several years down the road, they will see our client's name on it. If the recipient has the original paperwork that comes with directions for how to obtain their rebate, the contact information will be for our company. Who they reach out to and who they expect to make good on these outstanding payments is a bit dependant on how they identify what is outstanding.

My preference is to refund the monies to our client with a list itemizing who got what so they can deal with it later. Is that ok to do as far as the states are concerned?


Art Hughes
Title: Chief Accounting Officer
Company: Buffco Production
(Chief Accounting Officer, Buffco Production) |

In response to your question, Sara, the answer, at least in Texas, is NO. You are required to send the state the funds, together with a listing of what is owed to whom. The funds do NOT go back the your client company because it has already been disbursed to the ultimite payees. The states are very clear about this, because they are all in budget deficit situations, and are quite greedy for the money. If one of the people who was due a rebate calls later, you need to tell him or her to get their money from the state to which you escheated it - you may have to send money to all 50 states! It can be quite a pain. The stste governments are counting on the fact that 75% or so of the money will never be claimed, so they can spend it.

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

Unfortunately, this is probably a state by state question. Given the current state of finances in most states, I would say they want the money. You see, most of the time, these escheated funds go directly into the general funds of the state.

Go figure. :)

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