Must a state finish an unclaimed property audit within the statute of limitations?

What Michigan's limitation statute says

The statute is short. "Except as otherwise provided in subsection (3), an action or proceeding shall not be commenced by the administrator with respect to any duty of a holder under this act more than 10 years, or, for the holder of records of transactions between 2 or more associations as defined under section 37(a)(2), more than 5 years, after the duty arose" (MCL 567.250(2)). An "association" for this purpose is "a business association, a public corporation, or any other commercial entity, including a sole proprietorship" (MCL 567.257a(2)). Subsection (3) shortens the period to 4 years for "eligible holders electing to participate in the streamlined audit process described in section 31b."

The duty the period runs from is ordinarily the annual reporting and delivery duty. A holder must file its report "on or before July 1 of each year for the 12-month period ending on the immediately preceding March 31" (MCL 567.238(4)) and must "at the time for filing the report pay or deliver to the administrator all abandoned property that is required to be reported" (MCL 567.240(1)). Each report year therefore carries its own clock, and the oldest years fall away one at a time.

The record retention rule tracks the period: a holder that has obtained an owner's last known address keeps the name and address "for 10 years, or, for the holder of records of transactions between 2 or more associations as defined under section 37(a)(2), for 5 years, after the property becomes reportable" (MCL 567.252(1)). The Treasurer may examine a person's records "at reasonable times and upon reasonable notice" and may contract with others to conduct the examination (MCL 567.251(2)). Nothing in the act sets a deadline for finishing an examination; the streamlined process discussed below carries an 18-month goal, not a deadline.

The Supreme Court's two holdings

The holders in the Michigan litigation received examination notices in 2013 covering records back to 2002. The examinations, run on a multistate basis through a contract auditor, took eight to nine years. In 2021 the Treasurer issued each holder a notice of examination determination that rejected its limitation defense; the Treasurer's position was that the period on commencing an examination reaches back 10 reportable years from the date the state notifies the holder. Neither holder sought reconsideration or an administrative appeal. Each instead sued for a declaration, under MCL 567.247, that MCL 567.250(2) barred any future enforcement action, and the circuit court and Court of Appeals agreed, holding that an examination is not an action or proceeding at all (345 Mich App 227 (2023); 345 Mich App 213 (2023)).

A unanimous Supreme Court reversed on the first point and agreed with the holders on the second.

An examination is a "proceeding." The court read "action" as a lawsuit in court but held that "the word 'proceeding,' as used in MCL 567.250(2) and elsewhere in the UUPA, encompasses a formal administrative proceeding or investigation as well as a formal legal action commenced in a court," and that "a proceeding includes an examination." The court declined to follow the commentary to the 1981 model act on which section 567.250(2) is based, which spoke of the administrator commencing "an action," because reading "action or proceeding" as one term would make "proceeding" surplus. It also pointed to the record retention rule: if the limitation period kept expiring on the oldest records while an examination ran, an examination could never cover the full retention period the statute requires.

Commencing an examination does not toll the period. Michigan's limitation statute has no tolling language, and the court declined to supply it, noting that the legislatures of Delaware and North Dakota wrote tolling into their own versions and Michigan's did not. The result: "the period of limitations as to a holder's annual duty to report and remit property under MCL 567.238 and MCL 567.240 continues to run during an examination."

Read together, the two holdings fix the start of the audit, not its end. The Treasurer "must initiate an examination to determine whether a holder has complied with their legal duty to annually report and remit presumptively abandoned property within 5 or 10 years (depending on the type of transaction) of the date that legal duty arose." A report year whose period had run before the examination notice is outside the examination's reach. A report year inside the period at the notice is reached, but its own clock keeps running while the audit proceeds.

That left the question the court could not answer on the briefing: if the clock on the annual duty keeps running, what period governs the Treasurer's effort to enforce the audit's result once the audit is over? The court agreed that nothing in the act requires the Treasurer to act further after issuing a notice of examination determination, but said that "does not necessarily mean that the Treasurer has an unlimited period to compel compliance." It framed the remaining issue as "whether MCL 567.251a and MCL 567.255 interact to impose a legal duty of postexamination compliance on a holder that is distinct from the annual duty to report and remit abandoned property," flagged a second question about "the scope of previously abandoned property that could be encompassed within such a duty," and remanded.

The second remand: a new duty and a new clock

The Court of Appeals answered the remanded question for the Treasurer. Section 567.251a(1) provides that when the Treasurer determines a holder has failed to report or deliver, the Treasurer "shall mail to the holder by certified or registered mail a notice of examination determination, which shall include the property deliverable," and that the notice "shall constitute a decision of the administrator." Section 567.251a(15) defines the notice as one "that states the property that is deliverable by the holder to the administrator as a result of an examination." The panel read those provisions as imposing "a distinct legal duty to deliver property to the Treasurer as a result of the examination."

The penalty section reinforced the reading. Section 567.255(4) makes it a misdemeanor for a person who "willfully refuses after written demand by the administrator to pay or deliver property to the administrator as required under this act." A penalty keyed to refusal after written demand, the panel reasoned, "contemplates more than a mere failure to comply with annual reporting and remittance obligations," and so reflects a separate duty to comply with the determination.

The holding on timing follows: "for purposes of filing a postexamination enforcement action, the 5-year or 10-year (depending on the type of transaction) limitation period begins to run on the date of the issuance of the notice of examination determination." Because the notices issued in 2021, a future enforcement action was not time-barred, and the panel reversed and remanded for entry of summary disposition for the Treasurer. It added that the merits of any enforcement action were not before it.

The joint motion for reconsideration was denied. Disney applied for leave to appeal, and on April 3, 2026 the Michigan Supreme Court denied the application because it was not persuaded that the questions presented should be reviewed by the Court. The Dine Brands docket shows no application for leave. The August 18, 2025 opinion, issued for publication, is the governing statement of Michigan law on the point.

What the Michigan framework means in practice

An invented example shows the mechanics. A holder's unclaimed payroll checks were reportable on its report due July 1, 2017, and the 10-year period applies. The Treasurer must commence a proceeding as to that report year by July 1, 2027. If the examination notice arrives in March 2027, the 2017 report year is inside the examination, and the 2016 report year (whose period ended July 1, 2026) is not. If the examination runs four years and the notice of examination determination issues in 2031, the annual-duty clock on the 2017 report year expired in 2027, partway through the audit, but under the Court of Appeals' holding the Treasurer has a new period, measured from the 2031 notice, to enforce the determination.

Three consequences follow for a holder under examination in Michigan.

The limitation defense is fixed when the examination begins. The holder's best limitation argument is report-year by report-year: which years were already outside 5 or 10 years when the examination notice arrived. That turns on when each duty arose and on which period applies, and it is worth settling at the start of the audit rather than at its end.

Duration costs interest, not limitation. A long audit no longer runs out the clock in the holder's favor. Interest under MCL 567.255(1) runs "from the date the property should have been paid or delivered," and during a request for reconsideration "interest continues to accrue on all undelivered property" (MCL 567.251a(5)). The Treasurer may waive interest and civil penalties (MCL 567.255(5)).

The determination has to be contested on time. The notice of examination determination opens a 90-day window: the holder may sue in circuit court or request reconsideration within 90 days after the decision is mailed (MCL 567.251a(1)), followed by an optional appeal to a delegate who may not be employed by or contracted with the department to provide auditing or administrative services, and a further 90-day route to circuit court (MCL 567.251a(8) to (13)). The holders in the Michigan cases used neither the reconsideration nor the appeal and litigated the limitation question alone. A holder with objections to the property found, the estimation used or the report years included raises them inside that structure.

One question remains open in Michigan: the scope question the Supreme Court flagged. The Court of Appeals held that the determination creates a new duty with a new clock, but it did not separately analyze which previously abandoned property a determination may lawfully include, and it reserved the merits of enforcement for future litigation. Under the Supreme Court's first holding, a report year whose period had already run when the examination began is outside the examination; a holder whose determination includes such years has a merits argument that the new duty cannot revive them.

The streamlined audit process is the one place the Michigan statute ties the audit's length to the period. An "eligible holder" is, in general terms, a business whose principal place of business is in Michigan as measured by 20 percent or more of its payroll or of its real and tangible personal property other than inventory, or by a majority of its directing officers being employed in Michigan, along with certain parent and subsidiary corporations (MCL 567.222(g)). An eligible holder under examination may elect the process "by executing a nondisclosure agreement acceptable to the administrator within 30 days from the receipt of the audit notice"; the audit is to be completed within a jointly developed time frame "with the goal of completing the audit within 18 months from the receipt of the audit notice" (MCL 567.251b), and the limitation period for those holders is 4 years (MCL 567.250(3)). The legislature made the 2015 amendments that added the process retroactive to audits in progress as of August 15, 2015, but not to contested determinations already in litigation (2015 PA 242, enacting section 1).

How other statutes answer the question

Statutes drafted from the later uniform acts answer the same question in different words.

Delaware tolls the period at the start. "The State Escheator may not commence an action or proceeding to enforce this chapter with respect to the reporting, payment, or delivery of property more than 10 years after the duty arose," and the period "is tolled by the earlier of the State Escheator's delivery of a notice of an examination to a holder under this chapter," the Secretary of State's voluntary disclosure invitation, or the holder's written election to enter that program, and it is also tolled "if the State Escheator reasonably concludes that the holder has filed a report containing a fraudulent or wilful misrepresentation" (12 Del. C. section 1156(b)). Once the notice is delivered, nothing in the section requires the examination to finish by any date. The library's article on Delaware's examination process covers how that tolling interacts with the lookback and estimation.

North Dakota names the examination and tolls it. The administrator "may not commence an action, proceeding, or examination with respect to a duty of a holder under this chapter more than ten years after the duty arose," and may not commence an action or proceeding on reported property "more than seven years after the holder filed a nonfraudulent report," a period the parties may extend by agreement in a record (N.D. Cent. Code section 47-30.2-39(2), (3)). Both periods "are tolled by the earlier of the administrator's delivery of a notice that a holder is subject to an examination or the delivery of notice of authorization to voluntarily disclose property" (section 47-30.2-39(4)). As in Delaware, the start is timed and the finish is not.

Illinois runs the clock from the report and uses "maintained." "An action or proceeding may not be maintained by the administrator to enforce this Act in regard to the reporting, delivery, or payment of property more than 10 years after the holder specifically identified the property in a report filed with the administrator or gave express notice to the administrator of a dispute regarding the property. In the absence of such a report or other express notice, the period of limitation is tolled. The period of limitation is also tolled by the filing of a report that is fraudulent" (765 ILCS 1026/15-610(b)). For a holder that never reported the property, the period does not run at all. For a holder that did, the verb is "maintained" rather than "commenced," which on its face reaches a proceeding still pending when the 10 years end, not only one begun afterward. How that word applies to a long examination is a question the statute leaves to be decided.

Washington times the determination itself. "If a holder files a report meeting the requirements under RCW 63.30.220, the administrator, absent a showing of fraud, may not issue a determination of liability under RCW 63.30.680 more than six years after the holder filed the report," a limit the parties may extend by agreement in a record. And "the administrator may not issue a determination of liability under RCW 63.30.680 or otherwise commence an action, proceeding, or examination with respect to a reporting obligation or other duty of a holder under this chapter more than 10 years after the duty arose," including where the holder failed to file, filed an incomplete report or filed a fraudulent one (RCW 63.30.410(2), (3)). The determination is the document the administrator "must issue" after an examination finds unreported property (RCW 63.30.680). Section 63.30.410 contains no tolling clause, and its current text, as amended by 2025 c 29, applies retroactively to January 1, 2023 (2025 c 29 s 28, noted at RCW 63.30.010). On the text, a Washington examination must produce its determination for each report year inside that year's period; an audit that runs past the tenth anniversary of a duty, or past the sixth anniversary of a compliant report absent an extension, appears to lose that year.

Whether a state must finish an audit within the limitation period therefore depends on what its statute times (the start of a proceeding, the maintenance of one, or the issuance of a determination), on what tolls it, and on whether its procedure creates a new duty at the end of the audit. In a multistate examination, each participating state's statute is read separately for each report year.

Practice notes

The first document in any unclaimed property examination is the notice, and its date is the reference point for the limitation analysis in every state that times the start. The sound sequence is a report-year schedule for each participating state, built at the outset, showing when each duty arose, which period applies, whether a filed report identified the property, and whether and when the state's statute tolls. In Michigan, the years already outside 5 or 10 years at the examination notice are the holder's limitation position, and the 90-day window after a notice of examination determination is where objections to scope, estimation and included years are preserved; a holder that skips reconsideration and appeal to litigate limitations alone takes the path the Michigan holders took. An eligible Michigan holder weighs the streamlined process within 30 days of the audit notice, accepting the required nondisclosure agreement in exchange for a 4-year period and an 18-month completion goal. In Washington, the six-year and ten-year limits on issuing a determination make any request to extend the six-year period a decision with limitation consequences, not an administrative courtesy. And wherever the statute times only the start of the audit, a long audit costs interest without running out the clock, which changes the value of cooperating promptly. G&G State Tax Group provides unclaimed property examination defense, including limitation analysis across participating states, alongside its state and local tax practice.