Handling Unpaid Payroll Checks Can Be Tricky

Handling Unpaid Payroll Checks Can Be Tricky

When determining how to handle an unclaimed or uncashed payroll check, you need to review state law,the accounting for any voided checks, and W-2 issues, including Social Security and unemployment benefits.Each state has its own laws for unclaimed property. And there are specific rules for the accounting of a voided check. After a reasonable time, void the check and move the funds to an escrow account pending claim by the employee or submission to the state.Once the check is issued to pay the employee for his services, the money no longer belongs to the employer. Under no circumstances should the funds be returned to the general checking account.

Medicare, Social Security and unemployment taxes must be paid as if the employee had indeed claimed the check.