Abandoned Property – What Is It? How Do We Account For It?

Abandoned Property – What Is It? How Do We Account For It?

            How many times have you written a check to someone, who either loses it or forgets to cash the check? After a certain amount of time, that check is considered stale and can no longer be presented to be cashed. It sits in your QuickBooks file uncleared on the bank statement reconciliation, now what?

            You call the person, ask them to cash it. You may even re-issue the check so they have another chance to get paid, but then you find out they moved away and you don’t have their address, now what?

Uncashed checks to vendors, payroll checks to employees, contractors, dividends, and distributions to stockholders all are potential unclaimed or abandoned property. Every state has their own escheatment laws that require businesses and organizations to hand over to the state, the abandoned property that has been in their possession for a certain period of time. If a check goes uncashed, that does not mean the property no longer belongs to that individual and the obligation that the employer has to compensate the employee does not go away.

            In the state of New Hampshire, you are required to notify the owner of the abandoned property. No more than 120 days prior to filing, all holders must send a written notice to the owner of the property having a value of $50.00 or more. In this notice you must verify the nature of the property and how to retrieve it and avoid abandonment to the state. If this attempt at notifying the owner is unsuccessful, you will then move forward to reporting the abandoned property to the state.

How to Report Abandoned Property in New Hampshire

            To begin the process of reporting abandoned property, you must fill out the State of New Hampshire form for abandoned property which is Form T-1. Below is a link for your convenience to click on and review this form and/or print it.

https://www.nh.gov/treasury/documents/abandonded-propert-t1-form.pdf

            For detailed instructions on how to fill out this form, we have also provided you the necessary link that will walk you through, step-by-step for filling out NH Form T-1.

https://www.nh.gov/treasury/documents/abandonded-property-t1-instructions.pdf

            The first column on the form asks for the correct code for the property type. Here is a link that will show you which code is appropriate for your abandoned property.

https://www.nh.gov/treasury/documents/property-type-codes-t1-a.pdf

How to handle Abandoned Property in QuickBooks

            It is important to remember that abandoned property does not belong to the company. That property is either owed to the state or owner. Uncashed checks should never be voided. Making sure your bank accounts are reconciled on a monthly basis will help you monitor uncashed checks. Once that property amount is sent to the state or given to the property owner, it can then be cleared from your bank reconciliation.