Unclaimed Gift Certificates are Considered "Unclaimed Money" in Many States and Must Be Turned Over to the Government

Do your gift certificates specifically say that they cannot be redeemed for cash? If not, you better change that practice!

The state of Colorado says that all money from any unclaimed gift cards and gift certificates (except for gift certificated that state they cannot be redeemed for cash) are considered "unclaimed property" and the cash value must be turned over to the government after five years. This money would go into the state's unclaimed property fund.

Pennsylvania requires businesses to turn over money from gift certificates two years after the expiry date, or five years after being issues on cards/certificates without an expiry date.

However, some states do not allow expiry dates, or only allow the date to be two or more years away from the date the certificate/card is issued.

Other states that require money from unclaimed gift certificates be turned over to the government include Tennessee, California, Massachusetts, Delaware, Connecticut, Alaska, Nebraska, Utah, Wyoming, District of Columbia, Illinois (in the process of introducing the legislation), Virginia Montana, and possibly a few other states I am missing.

If you use gift certificates, it is a good idea to find out the legislation in your own state regarding unclaimed gift certificates needing to be turned over, and if the "cannot be redeemed for cash" will eliminate the need for you to turn over this cash after a certain number of years.

This definitely raises some issues for those who issue gift certificates in their business.

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