Minnesota Unclaimed Property Program Has Commenced
The state of Minnesota began a new unclaimed property program around June 1, 2021, to identify noncompliant companies that are incorporated, have locations or carry business permits in the state. Companies that have failed to file unclaimed property reports regularly or have filed incomplete reports with the state may be contacted by the Minnesota Department of Commerce notifying them that they may come into compliance by performing a self-audit. Companies that receive notices like this one from the state of Minnesota should act quickly to address the issue, as the notice permits 45 days for a holder to respond.
How to Prepare
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 from July 1, 2010 to present. A third-party audit firm is assisting the state with the self-audit program. When preparing to respond to the state, companies should review the following (not an exhaustive list):
- Prior unclaimed property filings
- Unclaimed property policies and procedures
- Record retention policies
- Business operations, customers, vendors and employees in Minnesota
- Organizational structure, including states and dates of incorporation
- Merger and acquisition history
- Unclaimed property liability owed to all states – including Minnesota
- Source documentation, including but not limited to:
- Check registers and/or other banking data for check disbursement accounts
- Accounts receivable agings
- Write-off accounts
Minnesota Unclaimed Property Q&A
1. Does the state have a business-to-business (B2B) exemption for accounts receivable and accounts payable transactions among business associations?
No, Minnesota does not have a statutory B2B exemption for any property type. As a result, all transactions are subject to unclaimed property reporting, including those where the holder has an ongoing business relationship with the owner.
2. What is the record retention period?
Minnesota typically requires holders to retain records for 10 report years plus the corresponding dormancy period by property type. The instructions to the self-audit provide that all records from July 1, 2010 to present should be reviewed.
3. What is the statute of limitations period?
Minnesota’s statute of limitations matches its record retention period – 10 report years plus the corresponding dormancy period by property type. The instructions to the self-audit provide that all records from July 1, 2010 to present should be reviewed.
4. What if I don’t have records for the full statute of limitations period?
Historically, Minnesota would extrapolate the liability for years for which records are not available using the gross method of extrapolation. Instructions to the self-audit provide that a holder may use any reasonable method of estimation to determine unclaimed property due in any year for which records are not available.
5. What if my company has subsidiaries with business activity?
If your company has subsidiaries, your self-audit should include property held by those subsidiaries. If it would be too difficult to coordinate the inclusion of subsidiary information into your self-audit response, each subsidiary may submit a separate self-audit.
6. What is the state's interest provision?
Minnesota law provides for a 12% per annum interest rate. Successful completion of the self-audit process will result in waiver of interest on amounts reported.
7. How much time does a company have to complete the self-audit process?
Minnesota has established a 45-day window for a holder to complete the self-audit process. Holders may request an extension of time if additional time is needed.
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