Escheat Due Diligence

Overview

According to Massachusetts Abandoned Property Law, any financial asset that has been inactive for more than 3 years is declared abandoned and turned over to the State Treasury. All uncashed checks (non-payroll) are considered Abandoned Property after 3 years, and we are required by law to due diligence on these checks.

Due Diligence

It is our responsibility under Massachusetts law to perform due diligence on checks >$100 (non-payroll) before they are turned over to the state after 3 years every Oct 30th. We first need to determine if the money is due to the vendor/individual and if so, we are required to make every possible attempt to notify the vendor or individual that they have an uncashed check, determine if we have the correct address on file and send them a replacement check.  Escheat Due Diligence letters need to be issued (for all checks >$100) notifying the vendor/individual of their uncashed check within 60 days of being turned over to the state every October 30th (per table below). 

Escheat Process

Checks (non-payroll) that are not cashed after 6 months of being issued become stale dated and are no longer valid. The checks are voided and then reissued to a “Harvard Suspense Account”.  At no point in the process is the check credited back to the 33 digit code. Once we legally owe an entity funds we cannot reclaim them. After 6 months, the check appears on the Escheat Due Diligence Report with a status of ‘blank’.  At the beginning of the new fiscal year, if the check(s) haven’t been requested to be reissued or re-deposited, their status is updated to “escheatable” and will stay on the report for 3 years until it is either turned over to the state or the department uses a reissue/re-deposit request.

NOTE: If you issue a stop payment and reissue this does not impact your Detail Listing report as it was already charged when the first check was initially processed.

Timing of Checks turning over to the state

If the check remains uncashed after 3 years, Harvard must turn the checks over to the state as abandoned property. This happens October 30th every year. For example in October 2018, FY15 (July 1, 2014 - June 30, 2015) checks were turned over:

Escheat Turned over to State

Check Fiscal Year

October 30th 2016

FY13 (July 1, 2012 - June 30, 2013)

October 30th 2017

FY14 (July 1, 2013 - June 30, 2014)

October 30th 2018

FY15 (July 1, 2014 - June 30, 2015)

October 30th 2019

FY16 (July 1, 2015 - June 30, 2016)

Department Responsibilities:

  • To prevent the checks from being sent to the state, departments need to review monthly any checks (non-payroll) that have not been cashed within 6 months and take action. Departments are responsible for researching and resolving all outstanding items.
  • Make sure services were rendered and the vendor is still due the payment. For example, the department may determine that the payment was processed via another requisition (duplicate payment) and you don’t want to reissue the check but instead notify AP to credit back the funds to the appropriate GL account. If this is the case,  use the Check Inquiry Form to redeposit the check back to the coding provided in the initial payment. Central has also requested that you include a copy of the Detail Listing with the check inquiry form so it gets applied correctly

 

How to research duplicate Payments?

  • If services were rendered, use the OBI Vendor Invoice Detail Dashboard to determine if there was a duplicate payment
  • Run the Vendor Invoice Detail Dashboard for the vendor/individual who you are researching, and make sure that a duplicate payment was not issued. The Vendor Invoice Detail Dashboard includes invoice and payment information by vendor including check numbers, check dates and also if the check was cashed.
  • If it is determined that a payment is due, individuals and vendors listed with checks having an ‘Escheatable’ status must have an Escheat Due Diligence letter  issued (for all checks >$100) notifying them of their uncashed check within 60 days of being turned over to the state on October 30th (per table above). The department must research and send the letter to the most recent address.  Click here - Sample Letter
      • Since we turn over checks on October 30th, all letters should be sent by August 31st (60 days from October 30th)
      • Requests for reissues/re-deposits should be made by September 30th

 Escheat Due Diligence Report – OBI

OBI Escheat FolderOBI Escheat Parameters

 

 

Search Criteria For Escheat

 Run the reports on All Column Values so that you can also see items with no status . A ‘blank’ status is a check that has not been cashed after 6 months. Possible status fields on your report may include:

  • ‘blank’ – check that is older than 6 months and was never cashed but not yet escheatable. Checks with this status are added continuously to the report. You can be pro-active with reviewing these items before they turn into ‘escheat’ status
  • Reissued – a department submitted a request to central to reissue the check to a known correct address
  • Not Due to Vendor/Redepost – department submitted a request to re-deposit the check to a 33 digit coding. Usually this is the result of services cancelled or a duplicate payment
  • Escheatable – check is deemed escheatable (to be turned over to the state). This status is given at the start of every FY (July 1) to any uncashed check in the report based on the check date.  By state law, attempts must be made to contact the vendor/individual before it is turned over to the state. The status of this check can be changed to either ‘reissued’ or ‘not due to vendor/redeposit after requests are made using the check inquiry request form by September 30th

Reference Materials:

Escheat Due Diligence OBI Wiki

Check Inquiry Form

escheat_letter.docx46 KB