Pujun Bhatnagar · October 27, 2023 · 6 min read
Are You Overlooking Hidden Risks That Could Cost Your Business Thousands?
Let’s face it—when you’re focused on growing your business, chasing down every opportunity, and satisfying customers, the last thing you’re probably thinking about is unclaimed property or sales tax compliance. But here’s the catch—ignoring these hidden risks could cost your business big.
We’re talking about unclaimed property (like forgotten paychecks, uncashed refunds, or dormant accounts) and sales tax compliance—two issues that often go unnoticed but can lead to penalties, audits, and reputational damage if mishandled.
Did you know that in 2023 alone, businesses had to turn over $11 billion in unclaimed property to state governments? And that $340 million was slapped on businesses in sales tax penalties last year? — IRS, 2023
The reality is that managing unclaimed property and keeping up with sales tax rules isn’t just a “check the box” exercise. It’s a key part of financial management that can directly hit your bottom line. So, the big question: Are you ready to take control of these risks and safeguard your business?
Let’s break down the risks and explore how automation can help you tackle these challenges head-on.
Unclaimed property doesn’t just appear out of nowhere. Every uncashed check, forgotten rebate, or dormant account has a dormancy period—the amount of time it must sit untouched before it’s considered "unclaimed" and handed over to the state.
The tricky part is that these dormancy periods vary by asset type and state. For example, a payroll check might be unclaimed after one year, while a savings account may not be considered unclaimed until three years have passed.
"In 2023, state governments took control of over $11 billion in unclaimed property." — NAUPA, 2023
Now, imagine your business holding onto some of that unclaimed property without realizing it. If you don’t manage it properly, you’ll be subject to fines, penalties, and audits.
Sales tax is every business owner’s favorite topic, right? Well, not exactly. But it’s something we all need to take seriously. With 45 states imposing sales taxes and over 12,000 tax jurisdictions in the U.S., keeping track of what’s taxable (and at what rate) is no small feat.
"The average combined state and local sales tax rate is 7.12%, but rates range widely from 4.44% in Hawaii to 9.55% in Tennessee." — Tax Foundation, 2023
The challenge? Each jurisdiction plays by its own rules, and what’s taxable in one place might be completely exempt in another. Manually managing all this? That’s a disaster waiting to happen.
Let’s get real: handling sales tax compliance manually is a recipe for mistakes that lead to penalties. That’s where automation steps in. Sales tax automation software is a game-changer if your business operates in multiple states.
Imagine you run an e-commerce business selling across the U.S. You’re dealing with hundreds of different sales tax rates and filing deadlines. Without automation, you’re bound to make a costly mistake sooner or later.
"Companies using tax automation reported 79% fewer errors, lower compliance costs, and a reduced risk of audits." — Deloitte, 2023
Automation helps you stay on top of ever-changing tax rates, rules, and exemptions, giving you peace of mind that your business stays compliant.
It’s not just fines. Non-compliance with unclaimed property and sales tax regulations can severely damage your business in ways you might not expect. Let’s take a look at the numbers:
"In 2023, businesses faced $340 million in sales tax penalties across the U.S." — IRS, 2023
"76% of companies reported that compliance failures hurt their brand reputation." — Deloitte, 2022
When your customers lose trust due to compliance failures, winning them back is incredibly hard (and expensive). The impact goes beyond financial penalties—it can erode your business’s long-term reputation and market position.
Yes, due diligence may feel like extra work, but it’s non-negotiable if you want to avoid costly mistakes. When it comes to unclaimed property, it means actively trying to return assets to their rightful owners before handing them over to the state. For sales tax, it means making sure you’re calculating, collecting, and remitting the correct amounts.
Failing to manage these obligations doesn’t just hurt your finances—it damages your brand.
The laws around unclaimed property and sales tax compliance are constantly changing, and it’s your job to keep up.
For instance, the U.S. Supreme Court is set to hear a major unclaimed property case—the first one in 30 years—which could significantly change how businesses manage unclaimed assets.
"With 50 states each having their own set of rules, navigating unclaimed property and sales tax regulations is like piecing together a puzzle with missing pieces." — Tax Foundation
How do you stay on top of this evolving maze? The answer is automation. Sales tax automation solutions aren’t just a luxury anymore—they’re necessary, especially if you operate across multiple states.
Managing unclaimed property and sales tax compliance isn’t just about avoiding fines. It’s about protecting your business’s future and reputation. Let’s look at the stakes:
"U.S. states collect $10 billion annually in sales tax penalties and unclaimed property fines." — IRS, 2023
"Audits for companies that failed to remit sales taxes correctly have increased by 50% over the past two years." — IRS, 2023
You can’t afford to fall behind on these ever-changing regulations. Staying ahead isn’t optional—it’s essential for survival.
The complexities of unclaimed property and sales tax compliance might seem overwhelming, but it doesn’t have to be. With the right strategies, tools, and automation solutions, you can turn these challenges into opportunities for growth and security.
Remember, it’s not just about following the rules — it’s about staying ahead of them.