If we return an item on the nonpost list due to holds on an account (unavailable funds) or account closed, are we required to notify the customer? Does it matter whether we charge or not? My brain tells me we must notify the customer either way, but I can't seem to find any reg telling me that. Can someone help?

Because the item never hits the account, it is as if it never existed - nothing shows on a statement - especially if there is no charge.

Neither the model version of the UCC nor federal law require the bank to notify a customer in a dedicated message or on a bank statement that an item presented for payment was returned unpaid. The timing and content of any notice voluntarily provided is up to the bank, but it's a common courtesy.