The Texas Comptroller has returned over $4 billion in Texas unclaimed property. While that number reflects successful reunification efforts, it also signals a significant compliance burden for businesses and institutions. If your organization is holding dormant accounts, refunds, royalties, or overlooked credit balances, Texas law requires annual unclaimed property reporting.
This guide breaks down what’s required, what’s unique about Texas, and how to avoid the costly consequences of non-compliance.
What Does Texas Consider Unclaimed Property? Here’s What Sets It Apart
Texas requires holders to report a wide range of unclaimed property types, including:
- Vendor and payroll checks
- Utility and security deposits
- Dividends, insurance proceeds, and credit balances
- Mineral proceeds and royalties
- A standout category, as many states do not include these in their unclaimed property laws
- Gift certificates
Quick comparison: Unlike Florida’s five-year dormancy for gift certificates, Texas uses a three-year period.
One Key Difference: Texas uses a single annual reporting deadline for all holders, regardless of industry or entity type. This contrasts with states like California or Illinois, which stagger deadlines based on business classification or property type.
Texas Unclaimed Property Compliance Rules for Holders — The Dos and Don’ts
Dormancy & Reporting Deadlines
Texas applies a three-year dormancy period for most non-payroll items and a one-year period for payroll. While those are the most common timelines, some categories may differ.
For example, traditional IRAs generally become reportable three years after the owner reaches the required minimum distribution (RMD) age and stops interacting with the account. Roth IRAs may not be reportable unless specific abandonment conditions are met. These timelines may vary based on federal tax rules or other triggering events. For dormancy periods by property type, refer to the Texas Dormancy Period Chart.
To meet Texas’s annual reporting requirements, businesses must:
- Review their records as of March 1
- Send required due diligence notices by May 1
- File their holder report with remittance by July 1
Due Diligence for Items ≥ $250
For property valued at $250 or more, holders must attempt to contact the owner by mail or email using the last known address. If no valid contact information is available, the notice isn’t required—but holders are still expected to document their search efforts. Acceptable documentation may include:
- Internal database queries
- Returned mail logs
- Notations of email bounces
Each notice should include the property type, its value, instructions for reclaiming it, and your contact information. Importantly, this step is separate from the reporting process—failure to send required due diligence notices can result in penalties, even if the holder report is filed on time.
Real-world example: A Texas-based retailer was fined over $10,000 for failing to send due diligence notices, despite filing their July 1 report on time.
Aggregate Reporting (< $25) & Negative Reports
Texas allows holders to simplify their filings by aggregating property valued under $25. This is not required, but it’s permitted under Texas law as a way to reduce reporting volume.
Instead of listing each individual item and owner, holders may report these small-dollar amounts as a single line item per property type. That said, proper recordkeeping is still expected. Even if you aggregate, you must maintain detailed records internally in case of an audit.
Additionally, holders with no unclaimed property to report are still required to file a negative report. Skipping this step is a common error that can trigger unnecessary audit scrutiny.
Penalties, Interest & Audit Triggers
Failure to comply with Texas’s unclaimed property laws can lead to steep penalties and interest:
- 5% penalty on property value for reports filed 1–30 days late
- 10% penalty for delays beyond 30 days
- Interest accrues until payment is received (rate set annually by the Comptroller)
- A daily civil penalty of up to $100/day may also be assessed for continuing to file late, under Texas Property Code § 74.709
Texas audits may be triggered by several common red flags, such as:
- Missing due diligence for property valued at $250 or more
- Failing to file negative reports
- Inconsistent reporting between departments or subsidiaries
- Omitting mineral proceeds and royalty payments
Real-world example: An oil company that overlooked $120K in royalty payments avoided the 10% penalty by acting quickly and documenting everything. However, because the funds were still submitted late, they paid over $8K in interest.
Voluntary Disclosure Agreements (VDAs)
The Texas Comptroller offers a Voluntary Disclosure Agreement (VDA) program that allows holders to self-report previously unreported property for up to five prior years. In return, penalties and interest may be waived.
To qualify, holders must:
- Initiate the process voluntarily (before an audit is underway)
- Provide complete and accurate documentation
This is an excellent option for organizations that identify gaps in past compliance and want to resolve them proactively.
Real-world example: A university that delayed filings across departments and skipped negative reports for 3 years initiated a VDA after discovering the issue. They reported $50K in unclaimed property and avoided nearly $8K in penalties.
Additional Real-World Scenarios: When Non-Compliance Gets Costly
These additional examples show how seemingly small mistakes can add up:
- A retailer who failed to send due diligence notices for five outstanding accounts totaling $350 was penalized more than $1,200 once fees and interest were assessed.
- A healthcare group that failed to file negative reports for multiple entities over two years received an audit inquiry and had to retroactively file across departments, uncovering $18K in dormant balances.
- A technology company opted to report hundreds of small vendor balances under $25 individually, rather than aggregating them. While this is within the rules, the added volume and manual entry increased the chance of errors and delayed the filing. As a result, the report was submitted late, and the company incurred over $3,000 in penalties and interest.
Even small oversights—like failing to aggregate small balances or skipping a negative report—can result in significant financial and reputational risk.
Next Steps for Texas Holders
To stay compliant, your team should:
- Review internal records as of March 1
- Identify any property that has reached dormancy based on Texas timelines
- Send all required due diligence notices by May 1
- File the unclaimed property report by July 1 using the Texas Comptroller’s online portal
If you’ve missed previous filings or requirements, consider using a Voluntary Disclosure to come back into compliance with minimal penalties.
For a complete breakdown of reporting categories, dormancy periods, and holder responsibilities, refer to the Texas Unclaimed Property Reporting Instructions (PDF).
Need help navigating the Texas unclaimed property reporting process or managing multi-state compliance, like in Michigan, New York, Vermont, or Pennsylvania? UPCR’s Unclaimed Property Reporting Services and UPNavigator® software can simplify the work and reduce risk.