California voluntary compliance program takes another step towards implementation

On March 14, 2023, the California State Controller (SCO) website added a link to complete a Voluntary Compliance Program (VCP) Interest Form for companies interested in participating in the recently enacted VCP, along with additional details and information about the program.

Steps to participate in the VCP

Interested holders need to complete a quick survey demonstrating their interest in the VCP to receive an official application that would then be reviewed and approved or denied by the SCO. Based on the information available, it appears that the SCO may try to run the initial VCP enrollees concurrently with normal California compliance deadlines, including a holder training that must be done in advance of reporting and remitting any past-due property to the state. Per the SCO website, once a holder receives the application form, the holder must complete the form and be sure to include:

• Staff members who will attend training and submit reports
• Estimated value of inactive properties and accounts in your records

After reviewing applications and approving enrollment, the SCO will provide due dates for required deliverables that appear to coincide with the standard unclaimed property reporting cycle. Per the SCO, this will be an on-going program, so if a holder is unable to meet the due dates for the current reporting season, the SCO will continue to accept applications and provide deadlines to subsequent enrollees that are likely to be consistent with future report year due dates.

According to the SCO, the dates below will be assigned to initial enrollees for the upcoming report year:

• July 31, 2023 – Required training completed
• September 30, 2023 – Due diligence completed
• Before November 1, 2023 – Notice Report submitted
• June 1-15, 2024 – Remit Report and remittance submitted

When deciding whether or not to apply to the VCP, holder’s need to note the eligibility requirements, and that the SCO will NOT consider applications from holders that:

• Are currently subject to an unclaimed property examination
• Are currently subject to civil or criminal investigation
• Currently have unpaid interest assessments from the past five years

For more information about the VCP, see the SCO’s VCP website and flyer.

About the California VCP

California Assembly Bill 2280 (AB 2280) was signed into law by Governor Gavin Newscom on September 13, 2022, creating a long-awaited opportunity for holders of unclaimed property reportable to the State of California to report the property without the assessment of mandatory interest at the rate of 12 percent per annum, which can often exceed the value of the underlying past-due property being reported. The last time holders had an opportunity to report past-due property to the state without the mandatory assessment of interest and penalties was in the early 2000s, when CA AB 1888 authorized a one–year amnesty program beginning in January 2001 that allowed holders to come into compliance without incurring fees. The program proved so successful that it was extended for a second year—through December 2002.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.