California Cracks the Unclaimed Property Whip with New Law


California will require taxpayers filing a corporation franchise/income tax return, partnership return, or LLC return to disclose whether they have historically filed unclaimed property reports with the State Controller’s Office (SCO). The law passed last summer and is effective January 1, 2022 for 2021 tax returns. The unclaimed property reporting is significant as it will allow the Franchise Tax Board (FTB) to share information with the SCO that will likely lead to unclaimed property audits of taxpayers that have not filed unclaimed property returns.

California’s unclaimed property system is one of the most unforgiving in the United States with no current voluntary compliance program, a 10-year lookback, and an annual interest rate of 12% on unreported property. There is speculation around the new reporting law that California may consider offering a voluntary compliance program to incentivize property holders into reporting unclaimed property. Reports suggest a mere 2% of businesses comply with the state’s reporting laws.

If your business has California unclaimed property or you are unsure, now is the time to review your records. Assessing the potential liability for the unclaimed property will allow you to evaluate risk and prepare for the reputed voluntary compliance program if it comes. Please contact HBK’s SALT Advisory group at with questions.

About the Author(s)
Matt Dodge is a member of the HBK State and Local Tax (SALT) practice with a focus on sales/use tax. Matt has vast experience in the construction, oil & gas, manufacturing, retail, service provider and transportation industries. He can be reached at 724-934-5300, or by email at
Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.