Unclaimed Property   Our office has received numerous inquiries from our clients regarding the receipt of a letter from the Michigan Department of Treasury with the heading, “Notice Regarding Unclaimed Property Voluntary Disclosure Program.” While the issue of “unclaimed property” is legal in nature and we, as certified public accountants, do not provide legal advice outside of the tax arena, we want to provide assistance where we can in understanding this issue.  Our state professional society, The Michigan Association of Certified Public Accountants (MACPA) maintains committees in various areas, including state and local taxation.  Their State & Local Tax Task Force (with which our firm participates) has provided the following explanatory information:   BACKGROUND: Many businesses have unclaimed property resulting from normal operations.  Any asset, tangible or intangible, belonging to a third party that remains unclaimed for a specified period of time is considered unclaimed property.  For example, un-cashed payroll checks are expected to be turned over to the State after one year; most other property types, such as vendor checks and accounts receivables credit balances, must be turned over after three years.  Government entities must turn over all unclaimed property, regardless of property type, after one year. Michigan's Uniform Unclaimed Property Act, Public Act 29 of 1995, as amended, requires businesses and government entities to report and remit to the Michigan Department of Treasury abandoned and unclaimed property belonging to owners whose last known address is in Michigan.  In addition, every business or government entity that is incorporated in Michigan must report and remit abandoned property belonging to owners where there is no known address. Entities holding property that has gone unclaimed beyond its statutory dormancy period are required to report and remit those properties to Treasury by July 1st of each year.  If an entity did not have unclaimed property to report, an Attestation of Compliance with Unclaimed Property Reporting (Form 4305) was to be filed with Treasury by July 1, 2011. The Department of Treasury is currently conducting a Voluntary Disclosure Program which will waive all penalty and interest on property voluntarily remitted pursuant to the enrollment in this program.  To enroll, the entity must complete and return Form 4869, Unclaimed Property Voluntary Disclosure Agreement. If you are certain you do not have unclaimed property to report and remit, enrollment in the Voluntary Disclosure Program is not necessary; however, you must complete and return form 4305 (Attestation of Compliance).  The deadline for submitting either of these forms is January 31, 2012.   Questions have been raised regarding the Department of Treasury’s statutory authority to require such reporting, its power to enter into voluntary disclosure agreements, and the impact of such reporting or disclosure on the look?back period for prior year liability.  Section 31 of the Uniform Unclaimed Property Act provides the administrator (Treasury) substantial discretion in determining reporting requirements, mandating the filing of forms to verify whether there is unclaimed property not previously reported and in conducting examinations of the entity’s records to determine whether the person has complied with the act, including contracting third party auditors to conduct the examination on behalf of the administrator. Complicating this matter is a 10 year statute of limitations for look-back in the event unclaimed and unreported property exists, and no assurance that voluntary filing of the Treasury forms will have any favorable impact on the possibility of an audit over this period.  Further, although penalties and interest are being waived under this program, the statute does not appear to authorize the administrator to reduce the look?back period and in fact Form 4869, Michigan Unclaimed Property Voluntary Disclosure Agreement, specifies “Treasury does not waive its right to audit the holder after July 1, 2012 or anytime after the submission of the unclaimed property reports filed under this voluntary disclosure program.” Members of the MACPA’s State & Local Tax Task Force have been lead to understand that the State may provide the names of businesses not responding to these notices to a third party auditor which the State has engaged. Such third party auditors are commonly compensated on a contingent fee basis, and often examine a recent period and extrapolate a computed error rate against the total population of possible under?reporting in past years. Because of the complexity of the issues presented, we are suggesting that if you have received one of these notices that you consult with a member of our firm to determine the appropriate course of action.