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Unclaimed Property: What Happens If You Can't Return Money to a Customer?

What is unclaimed property, and what should a dealer do if he or she cannot return this property to the customer? We examine the answers to these questions in this blog post.

Dealer Question: I sold a car in Dallas County and overcharged the customer for registration fees. Dallas County sent us a refund, and we need to send the overpayment amount to the customer. The check was returned to sender as undeliverable. We mailed it to the only address we have for the customer. How do we take care of this?
 
Answer: According to Texas Unclaimed Property, a division of the Texas Comptroller, unclaimed property is any financial asset that has been abandoned (i.e., no contact between the holder and owner) for a certain time period. In the case of unrefunded overcharges and/or refunds due, the abandonment period is three (3) years.
 
A holder is an entity/individual in possession of property belonging to another entity or individual.
 
If three years pass and the dealer has not had any contact with the customer who is owed the refund, then the dealer/holder must file a report with the Comptroller by July 1 in the year following the expiration of the abandonment period. Amount(s) due that individually are less than $25 may be reported in the aggregate.
 
Calculate the abandonment period as beginning on the date of the last contact with the customer. The steps for reporting unclaimed property are:
  1. 1.Determine whether three years have passed since you last had contact with the customer. If it has not been three years, then simply note the deal jacket and your financial records that the refund amount is payable.
  2. [If the refund amount is $250 or greater] Perform Due Diligence as defined by the Comptroller.
  3. Prepare Report.
  4. Submit Report and Payment to the Texas Comptroller.
  5. Archive Data for 10 years after reporting it to the Comptroller's office. 
If a dealer fails to report abandoned property within the timeframe, then s/he could face interest and penalties of a minimum of 15% of the property amount. Texas Unclaimed Property maintains Texas' official unclaimed property website, claimtexas.org. It has a thorough and easy to read Reporting Guide that contains all the information that a holder needs to report unclaimed property. Find it here: https://claimittexas.org/app/reporting-file

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