Labor and Employment Articles 

How to Handle Uncashed Paychecks Under Indiana Law 

by Sandra Perry
The Unclaimed Property Act, I.C. § 32-34-1 et seq., requires that personal property and money that has gone unclaimed for a certain period of time be turned over to the Attorney General’s Unclaimed Property Division. The Attorney’s General’s Office holds the property for 25 years, at which time if it has not been claimed by the rightful Owner it is deposited in the State’s Common School Fund and can no longer be claimed.

Included in the definition of property subject to the Act are uncashed checks. These uncashed checks (or the funds they represent) are the property of the State as unclaimed property if two requirements are met. First, if the paycheck payee (“Owner”) has not communicated in writing with the Employer (“Holder”) or given an indication of interest in the property for a period of one year after the compensation became payable. An indication of interest in property that is money in the form of an uncashed check generally amounts to depositing that check into a bank. (See I.C. § 32-34-1-20 2 B). Second, if the last known address of the Owner, as shown on the Holder’s records, is in Indiana. (See I.C. § 32-34-1-20).  

With respect to reporting requirements, the Holder must file a report regarding the unclaimed property with the Attorney General’s office “before November 1 of each year to cover the year preceding July 1 of the year in which the report is filed.” (See I.C. § 32-34-1-26). A Holder may obtain an extension on the date of filing the report if it makes the extension request before the due date and it has “good cause” for requesting the extension. A copy of the requisite “Annual Report of Abandoned Property” can be found on the Attorney General’s website located at http://www.in.gov/attorneygeneral/ucp/holder.htm. Instructions for completing the form are available on the site, but essentially it requires the: (1) Holder’s name (listed without using abbreviations); (2) address; (3) contact name and telephone number; (4) FEIN number (the corporation’s Federal Identification number); (6) signature of a corporate official authorized to sign for the corporation; and (7) dollar amount of the check representing the unclaimed money. Together with the Report, the Holder should enclose a check for the amount of the unclaimed money. The check must be made payable to the “State of Indiana.”

Along with the Report, the Holder should also submit a “Detail Sheet.” This Sheet is located at the above website. On that sheet should be listed: (1) the name of the Owner (last, first, middle initial); (2) the Owner’s social security number (if available); (3) the Owner’s identifying number (the check number); (4) a description of the property; (i.e. uncashed paycheck); (5) NAUPA Code (for checks that is CK01); (6) Date of abandonment (i.e. the date the check was issued); (7) total amount due the Owner. According to the statute, the Holder must also file an affidavit with the Report stating that it has “complied with the obligations (of I.C. § 32-34-1-26).”

In addition to filing the Report, the Holder is statutorily required to make efforts to contact the Owner to notify him or her of the existence of the property if the property value is at least Fifty Dollars ($50.00) and the Holder has the Owner’s current address. See (I.C. § 32-34-1-26). Specifically, the Holder must send written notice to the Owner stating that it is in the possession of property that is subject to this statute. This notification must take place not more than 120 days but not less than 60 days before filing the aforementioned “Annual Report of Abandoned Property.” Once the Holder has made good faith payment of the unclaimed amount to the Attorney General, it is “relieved of all liability with respect to the property.” See (I.C. § 32-34-1-29 b). 

A Holder that fails to pay or deliver the unclaimed property to the Attorney General’s office within the time required by the statute is required to pay interest for the time it is delinquent. (I.C. § 32-34-1-45). Moreover, a Holder that fails to “render any report or perform other duties required under this [statute]” is also subject to monetary penalties. The Attorney General is authorized to waive the penalty in whole or in part upon a showing by the Holder of good cause. (See I.C. § 32-34-1-45). The statute also provides for an additional penalty of ten percent of the value of the property for knowing or intentional failure to pay or deliver the property to the Attorney General as statutorily required. (See I.C. § 32-34-1-45). Again, this may be waived by the Attorney General.