What do you do with uncashed paychecks?

By ThePayrollFactory
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A client asked me recently if I get to keep all of the uncashed payroll checks of my staff and my clients. He said, “I would think that would be a nice bonus for a payroll company every year”. No, I don’t get to keep the money and neither does the business owner.

Do you recall the ads that say old bank accounts found!, uncashed paychecks found! and state websites advertising you may have unclaimed cash? This is part of the escheatment laws of turning over unclaimed assets to the state.

The following is a list of items that need to be reported to the state if they cannot be paid out directly to an individual:

  • Uncashed paychecks
  • Unclaimed stock dividends
  • Dormat safe deposit boxes
  • Unclaimed insurance policies
  • Unclaimed or lost inheritance
  • Dormant membership fees
  • Court deposits
  • Credits or overpayments
  • Uncashed money orders
  • Unused travelers checks
  • Dormant/closed bank accounts
  • Unused and electronic gift certificates or stored value cards
  • Valuables which families have misplaced over the years, such as jewelry, rare coins, and stamps.

Each state has a website for individuals to search to see if they have any unclaimed property or assets that the state has attributed to them. The Pennsylvania site is:  http://www.patreasury.org/Unclaimed/Search.html.

It is important to make sure that you are keeping compliant with this law. On  June 29, 2002, Pennsylvania changed its  “Unclaimed Property Laws,” reducing the timeframe for reporting abandoned property from seven to five years and for reporting payroll checks that have not been cashed from seven to two years.

Businesses in Pennsylvania are required to report unclaimed property and last known contact information of the individual every year no later than April 15th.  If a business cannot locate the owner of unclaimed property then the property must be turned over to the state after the period specified by the state. After the state receives the unclaimed property an effort is made to contact the rightful owner.

It would really be nice if I got to keep the money or unclaimed property. But I don’t get to keep it and neither does the business owner.  It is our job to track  down any employee with uncashed paychecks  and make sure they get paid. If we can’t do that then it is required that those funds get reported to the state.

Allen R Noll, CPA, President

www.thepayrollfactory.com

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