Illinois Unclaimed Property Program Has Commenced
Updated January 2024
The state of Illinois began a new unclaimed property enforcement program around July 1, 2021, to identify noncompliant companies that are incorporated, have locations or carry business permits in the state. Shortly thereafter, under SB 338, Illinois required most companies to file an unclaimed property report even when they have no property to report.
Companies that have failed to file unclaimed property reports regularly or have filed incomplete reports with the state may be contacted by the Illinois Treasurer’s Office notifying them that they may become compliant by performing a self-audit. Companies that receive Response Required to Avoid On-Site Examination notices from the state of Illinois should act quickly to address the issue, as the notice provides 15 days for the holder to respond. Similarly, Unclaimed Property Compliance and Reporting Outreach notices like this one from 2021 give the holder a 30-day response window. Failure to respond may result in direct third-party examination of the holder’s books and records. Under the current program, the holder would then have 90 days to complete the self-audit process and file a return. Extensions may be granted at the discretion of the state.
The requirement under SB 338 to file an unclaimed property report in Illinois when there is no property to report applies to businesses that meet any of the following criteria:
- Annual sales of more than $1 million
- Securities that are publicly traded
- Net worth of $10 million or higher
- More than 100 employees
The revisions under SB 338 also added financial deposits, including auto-renewing deposits, to the definition of unclaimed property with a three-year dormancy period. In addition, they granted the administrator the authority to examine certain financial organizations in certain cases.
Holders should conduct a review of their historical filings, accounting practices and policies and procedures before filing any return with the state. It is important to note that the Illinois look-back period is 13 years, and filing of $0 reports where proper analysis of records and due diligence is not done may result in audit and financial risk.
How to Prepare for a Self-Audit
Companies that receive a notice of noncompliance will be expected to conduct a self-review for all property owed to the state as reflected in the companies’ records covering the last 10 report years. A third-party audit firm is assisting the state with the self-audit program.
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