A check issued to an employee for money they earned becomes the property of the employee. If this check is never collected by the employee, this type of check is considered unclaimed wages (property of the employee) and cannot/should not be voided. This check must be held for the employee for a set period of time (may be up to 1 to 5 years) before it is turned over to the state. The tax money debited from this check (the employee portion) is tax money owned by the employee and not the employer; it is the employer's federal requirement to pay this tax money.
Escheat regulations vary from state to state. In general the laws require that such property, including the funds from uncashed or unclaimed payroll checks, be turned over to the state after a designated period. That period and possibly a minimum amount vary from state to state. The state then holds the items for the owner or heirs until a claim is filed to collect the property. You must contact your state agency
for rules governing escheatment in your state.
If an uncashed payroll check is voided, the money is then available in the company's checking account for use on other items. This also removes the information from the payroll and accounting data, which is no longer balanced because the employee did earn the funds. If later the funds are not available to pay the employee or to submit to the state, the company and its officers might be considered to have breached their fiduciary responsibility and face criminal charges.
A voided or re-created paycheck might require amendment with fees, penalties and interest. Once a paycheck is issued for wages to an employee, those funds no longer belong to the company in any way. Under no circumstances should the funds from uncashed paychecks be returned to the general checking account.
Escheat Example: I created a paycheck for an employee on February 1. I mailed the paycheck to the employee's last known address, and it was returned. I then hold the paycheck to see if the employee comes to retrieve it.
It is now January 20 of the following year and I still have the paycheck. I cannot void this paycheck; therefore, I check with the state for the escheat laws. These laws require me to attempt to deliver the paycheck, and if returned, hold the check for 2 years. I have held the check for almost 1 year already, so I must hold it until February 1 of the next year before I can remit it to the state, which will cash the check and hold the funds for the employee.