Michigan Treasury Is Increasing Audits of Unclaimed Property for Non-Filers — Is your Dealership a Candidate?
Auto Dealer Alert, May 2006

Have you received a notice from the Unclaimed Property Division?

The Unclaimed Property Division (UPD) of the Michigan Department of Treasury has begun actively pursuing companies to determine if they are compliant with Michigan’s Uniform Unclaimed Property Act. Many of our auto dealer clients have already received this notice. If you haven’t received one yet, it’s highly likely that you will receive one soon.

What is unclaimed property?

Any person, company, or governmental entity that’s in possession of “abandoned property” is subject to reporting requirements under the Michigan Uniform Unclaimed Property Act. “Abandoned property” is defined as tangible or intangible property that is unclaimed by its rightful owner and includes, but is not limited to, items such as unclaimed payroll checks, accounts payable checks, accounts receivable credits, security deposits, interest and dividend checks, unredeemed gift certificates, and inactive checking and savings accounts.

When is property considered “abandoned”?

Property is considered unclaimed after a dormancy period has elapsed with no activity. The dormancy period required to deem property “abandoned” varies depending on the type of property in question. The range is between 1 and 15 years; however, most types of property are deemed to be “abandoned” after 5 years, as referenced on reverse side. An activity that will end a dormancy period can include making a deposit or withdrawal of money or sending a written memorandum stating known ownership of the property. If an entity has “abandoned property” as of June 30 in any year, a report with payment of any amounts due must be submitted by November 1.

What is the risk if my dealership doesn’t report unclaimed property?

We are aware that the UPD has recently distributed notices to auto dealers that have significant activity in the state, regardless of the company’s state of commercial domicile. These notices inform dealers of the opportunity to file past due reports and pay amounts due for the last 4 years without interest or penalties. The UPD has also stated their intent to increase the number of unclaimed property audits. If selected for audit, the UPD can look back for a period up to 10 years and assess penalties up to 25 percent of the value of the property that should have been reported by the dealer, plus interest. If you receive a notice from the UPD and have questions concerning this matter, please contact your Plante & Moran advisor, or call Jeff Brogley at 248.223.3349 for assistance.