# Uncashed Checks Unclaimed Property Rules: When to Report - Author: PreciseBankFlow (https://precisebankflow.com) - Published: 2026-10-17 - Category: Bank reconciliation - Canonical: https://precisebankflow.com/blog/uncashed-checks-unclaimed-property > When uncashed checks become unclaimed property: dormancy periods, due diligence letters, reporting to the state and clearing them off the reconciliation. Uncashed checks become unclaimed property when they stay outstanding, with no contact from the payee, for the dormancy period set by state law for that type of payment. Before reporting, the business must try to reach the payee. The money then goes to the state, and the check leaves the reconciliation through a liability, not through income. ## When does an uncashed check become unclaimed property? An uncashed check becomes unclaimed property at the end of its dormancy period: a stretch of time, fixed by each state, during which the payee neither cashes the check nor contacts you about it. Until then it is an ordinary outstanding check. After it, the business holding the money must report it. The National Association of Unclaimed Property Administrators describes unclaimed property as money that reaches [the end of the dormancy period established by the state with no contact with the owner](https://unclaimed.org/reporting-overview/). The same page notes that businesses are required to identify and report the unclaimed property they hold. In this context the business holding the money is called the holder, and the payee is the owner. Two points follow for anyone preparing a bank reconciliation: - **The clock usually runs from the check, not from the reconciliation.** An outstanding check does not become safe by being carried forward each month. Every month on the outstanding list is a month closer to the reporting date. - **Contact resets the question.** If the payee calls to say the check was lost and you reissue it, the original is void and the new check starts fresh. Keep a note of any contact in the outstanding check file, because it changes the date that matters. The bank reconciliation is often where uncashed checks first become visible. A check that sits on the outstanding list for months is either in the post, lost, unwanted or never sent. The reconciliation cannot tell you which, but it can make sure someone asks. ## Dormancy periods for uncashed payroll and vendor checks Dormancy periods depend on the state and on the kind of payment. Wages, vendor payments, customer refunds and other checks are listed as separate property types, and a state can give each its own period. There is no single national figure, so the only reliable source is the current table for each state where you have payees. Unclaimed property administrators list [uncashed dividends and payroll checks among the common forms of unclaimed property](https://unclaimed.org/what-is-unclaimed-property/). In practice the outstanding check list of a business usually holds three groups: - **Payroll checks** to employees or former employees. These are often small, and former employees are the hardest payees to reach. - **Vendor checks** to suppliers. A vendor that never cashed a check may have been paid twice, or may never have received the first one. - **Refund and other checks** to customers. A refund that was never cashed is still owed to the customer. Keep these groups separate on the aging schedule later in this article, because each may run on a different clock. Where your payees live across several states, the rules of more than one state can apply; the association notes that many holders have property to report in multiple states. ## Due diligence letters to uncashed check payees A due diligence letter is a written notice, sent before the check is reported, telling the payee you hold their money and will send it to the state if they do not respond. Holders must make a good-faith effort to reach the owner first, and many states set the notice's timing and content. North Carolina is one example. Its [guide to unclaimed property due diligence](https://www.nccash.gov/documents/forms-and-guides/guide-unclaimed-property-due-diligence/download) says a written notice is required for most property types worth 50 dollars or more, sent to the owner's last known address. It says notices must be mailed 60 to 120 days before the November 1 report due date, and that the notice should describe the property, such as the check number, date, amount and payee. Other states set different thresholds and windows, so check each one. The association adds that outreach may be made by letters, phone calls, electronic communications or other methods. A useful letter is short and specific: - the business name and a contact person - the check number, date and amount - a statement that the check is uncashed and will be reported to the state if there is no reply by a given date - what the payee should do: confirm their address, ask for a reissue, or say the check is not owed Send it to the payee's last known address and keep a copy, with the date sent, in the outstanding check file. A reply changes what happens next. A returned envelope is useful too: it tells you the address is bad and should be recorded before the report is filed. ## Reporting uncashed checks to the state Reporting means filing a holder report with the state that lists each unclaimed item, and paying the money over, usually at the same time. Most states accept a standard electronic layout for the report, and deadlines and filing methods differ from state to state. The report covers every property type due that year, not only checks. The unclaimed property association says most states expect reports in the NAUPA standard format, named after the association, and that laws and reporting deadlines vary by state. In practice the work for an outstanding check list is: 1. Pull every check whose dormancy period has ended by the state's cut-off date. 2. Remove any check that cleared, was reissued or was answered after due diligence. 3. Group what remains by the state that is due to receive it. 4. Prepare the report in the format the state accepts, with payee name, last known address, check number, date and amount. 5. File the report and remit the total by the state's deadline. Place a stop-payment order on each reported check with your bank before you remit. Once the money has gone to the state, the original check should not also be paid if it turns up. ## How do you clear an escheated check off the bank reconciliation? An escheated check, meaning one that has been turned over to the state, leaves the reconciliation in two steps. First reverse the check back into cash and record a liability to the payee. Then, when you pay the state, reduce that liability and cash. The outstanding check list is shorter, and the ledger shows the obligation until it is paid. Using an example payroll check 5512 for 412.36, the entries are: ``` 1. Remove the check from the outstanding list Dr Cash - payroll account 412.36 Cr Unclaimed property payable 412.36 Check 5512, uncashed, held for escheat review 2a. Payee replies to the due diligence letter; check reissued Dr Unclaimed property payable 412.36 Cr Cash - payroll account 412.36 Reissue of check 5512 as check 5741 2b. No reply; amount remitted to the state with the holder report Dr Unclaimed property payable 412.36 Cr Cash - payroll account 412.36 Check 5512 reported and remitted to the state ``` Only one of 2a and 2b is booked, depending on what happens. Entry 1 is the one that touches the reconciliation: the check no longer sits on the outstanding list, and the bank and book balances move together. A check voided for other reasons follows a similar path; [voided checks on a bank reconciliation](/blog/voided-check-bank-reconciliation) covers voids that happen before any escheat question arises. Payroll and payables are often paid from a zero balance disbursement account, which shows no balance at the bank however many checks are outstanding. Old checks are easy to lose there, so the outstanding list needs the same review; [zero balance account reconciliation](/blog/zero-balance-account-reconciliation) explains how that account type is reconciled. ## Mistake: writing uncashed checks off to other income Writing an old uncashed check back to other income is the most common way businesses get unclaimed property wrong. It makes the outstanding list shorter and adds a small gain, but the money is still owed: first to the payee, then to the state. The write-off removes the record of a debt without removing the debt. The write-off also destroys evidence. If the state later reviews your records, the question will be what happened to checks that disappeared from the outstanding list. Income entries with no reissue, no due diligence letter and no report are hard to explain. A second version of the mistake is voiding the check and crediting the original expense, such as wages or supplies. That reduces an expense the business genuinely incurred, and it leaves the same unpaid obligation. The liability account in the entries above is the honest place for the money until it is paid to someone. A similar logic applies to unused customer balances held in other forms; [gift card liability reconciliation](/blog/gift-card-liability-reconciliation) deals with a balance that is likewise owed to someone else until it is used or reported. ## An outstanding check aging schedule for escheat review An aging schedule sorts every outstanding check by how long it has been open and shows the next action for each. It turns the outstanding list on the bank reconciliation into a work list: follow up, send due diligence, report, or leave alone. Update it each month with the reconciliation, and review it in full before each state's reporting season. The schedule below is an example as of 30 September 2026. The payees and amounts are invented, and the dormancy periods in the last column are assumptions for this example only, not any state's rule. | Check | Type | Payee (fictional) | Issued | Amount | Days open | Example dormancy | Next action | | --- | --- | --- | --- | ---: | ---: | --- | --- | | 5630 | Vendor | Brightline Fuel | 2 Sep 2026 | 2,300.00 | 28 | 3 years | None, recent | | 5512 | Payroll | J. Ortiz | 14 Mar 2026 | 412.36 | 200 | 1 year | Call, then letter | | 5390 | Vendor | Ridge Paper Co | 8 Nov 2025 | 1,260.00 | 326 | 3 years | Ask vendor if paid twice | | 5011 | Refund | M. Delacroix | 3 Jun 2024 | 88.15 | 849 | 3 years | Due diligence letter | | 4877 | Vendor | Elm Courier | 19 Jan 2023 | 45.00 | 1,350 | 3 years | Report and remit | A few habits make the schedule work: - **Age every check from its issue date.** A formula such as today's date less the issue date, in a spreadsheet, keeps the days column current; [how to do bank reconciliation in Excel with formulas](/blog/how-to-do-bank-reconciliation-in-excel) shows the matching and lookups that feed the outstanding list. - **Act long before the deadline.** A vendor check open for 90 days deserves a phone call, not a wait for the reporting season. - **Keep the evidence beside the row.** The date of each call, letter and reply belongs in the file, so the schedule explains why a check is still open. The aging schedule is only as good as the outstanding list behind it. [PreciseBankFlow](/) matches cleared statement lines to the ledger and lists the checks that have not cleared, which gives the schedule a complete starting point each month.