What to do with uncleared items on my bank reconciliation?

The answer depends on what the item is. If it was an error, like something entered twice, then it is okay to void, delete, and or make an adjustment for the item. I usually delete or make a deposit adjustment. If the item is money intended for someone else, like an un-cashed payroll check, customer overpayment, or un-cashed check, then there are state rules that govern what should happen to the money. Some states perform audits and some don’t.

All states have unclaimed property laws. These laws require that certain abandoned property be turned over (escheated) to the state after a period of time. Generally, you must report and pay these monies to your state annually. In some states, you must file a report even if you have no property to report.

Search your state’s Dept of Revenue website for more information. Click here to find a link to your State’s Unclaimed Property Division. Although these links are intended for people looking for money, it will get you to the general area of your state’s website to get the information you need.

This doesn’t mean you have to wait to notify someone of an uncashed check. It is good practice to send a notice sooner, I suggest in the 3rd quarter of your fiscal year. Ask the payee if they have it and, if not, would they like a replacement.

Here is one way to handle these transactions in QuickBooks:

Create a liability account to hold the money until it is time to pay the state (some states you must wait 1-5 years before sending the money)

Lists > Chart of Accounts, or Ctrl+A
Right Click and choose New
Choose Other Account Types, Other Current Liability (or Long Term if holding over a year)
Name it something like, Unclaimed Property Payable to State

Make a Deposit entry to offset the check written:

Go to Banking > Make Deposit
Fill out top of deposit form, in the memo line, enter “Adj. to unclaimed property for check #xxxx” or something similar
In the From Account, choose the Unclaimed Property Payable to State account you just set up
Fill out the memo line, you will need detailed info when paying to your state

During the bank reconciliation:

Check off the uncleared check and check off the deposit entry

You could set up a reminder under Company > To Do List in order to remember when to pay these amounts to your state, based on their rules.

Pay the State:

When it is time to turn over the money, simply write a check and use the Unclaimed Property Payable account in the check detail area.

Don’t forget to place a stop payment with the bank if needed.

Michigan Specific Unclaimed Propery Information

The due date for reporting property unclaimed as of 3/31/xx is 7/1/xx. The Michigan unclaimed property rules can be found here. You must attempt to notify the holder of the property that the money is going to be turned over to the state. Notice must be sent not less than 60 days, nor more than 365 days, before the filing of the report. This requirement only applies if all of the following conditions exist:

1. The address for the owner does not appear to be inaccurate.
2. The property has a value of $50 or more.
3. The statute of limitation does not bar the claim of the owner.

Early reporting is allowed after a two year holding period.
You can find a list of property type and MI dormancy periods here.