Unclaimed Property News and Discussion Blog
DE Proposes New UP Regs for Due Diligence & Audit Appeals!
by Tracey Reid on 01/05/12
Delaware has issued 2 proposed Regulations this week, one dealing with new Due Diligence Requirements for Securities & Related Property and the second addressing Unclaimed Property Audit Appeal Procedures.
The first proposed rule, Regulation 965, “Regulation on Practice and Procedure for Establishing Running of the Full Period of Dormancy for Certain Securities and Related Property,” creates an obligation for holders to perform due diligence on specifically listed items. This may seem like something you would already do, but Delaware has NEVER required due diligence in the past (so that they could hoard all of the unclaimed property they collected without having to return any to the true owners). The list of property that would be included in this new due diligence requirement, if the property is valued at $250 or more, includes:
1.
Intangible ownership interests in
corporations, whether or not represented by a stock certificate, bonds and
other securities
2.
Dividends, cash, stock and other
distributions made (or attempted to be made) by issuers of securities in
respect of the securities issued
3.
Certificates of membership in a
corporation or association
4.
Funds deposited by a Holder with
fiscal agents or fiduciaries for payment to Owners of dividends, coupon
interest and liquidation value of stocks and bonds and
5.
Funds to redeem stocks and bonds
The regulations propose requiring the
typical first class letter be sent no more than 120 days and no less than 60
days before reporting the property, for all items where the Holder has a good
postal address and has not sent other similar mailings in the past 90 days (as
might be required for some types of securities/related property under federal
law). The state does appear to be throwing Holders a bone in allowing a deduction
of up to $5.00 per mailing, against the value of the property, to over “reasonable”
administrative costs.
The other proposed regulation, Regulation
959, lays out the guidelines for appeals of any determination by the Unclaimed
Property Audit Manager. These appear to be intended to clarify and add meat to
the July, 2010, Delaware legislature amendment to §1156 that allowed, for the
first time, appeals of unclaimed property audit findings to the Secretary of
Finance. The proposed talk about deadlines, designation of an independent
reviewer, the form of submissions, hearings and evidence, the issuance of
proposed Findings of Fact and Conclusions of Law, post-hearing briefs and
appeals to the Delaware Court of Chancery. The entire proposed appellate
procedure can be found at: http://regulations.delaware.gov/register/january2012/proposed/15%20DE%20Reg%20959%2001-01-12.htm
Now is your chance to have your voice as a Holder heard! The state is requesting “Comments” on both proposed regulations. If you have such, you can submit your Comments, in writing, to Mark Udinski at the Department of Finance, Escheator of the State of Delaware, Carvel State Building, 820 North French Street, P.O. Box 8763, Wilmington, Delaware 19899-8763. Comments must be received on or before January 31, 2012.
Speak now or forever hold your peace.....
The Hidden Pitfalls of UP in M&A deals
by Tracey Reid on 09/13/11
I came across a GREAT article today on the hidden and often unforeseen pitfalls of Unclaimed Property in Mergers & Acquisitions. Click on the link above if you are interested. I highly recommend that you read it! It talks about all of the potential risks associated with unclaimed property when you are merging with or acquiring another company, including transfer of liability for unclaimed property, issues with re-incorporation or changing the state of incorporation, record availability and shareholder issues. This is great information to have in advance if you are in an acquisition mode. BUT, WHAT DO YOU DO IF YOU ALREADY BOUGHT AN UNCLAIMED PROPERTY PROBLEM? Some of the information in the article will help, but if you are in compliance and have been filing for years, your options for dealing with the past due property of an acquired company can be limited, since many states limit Voluntary Disclosure Agreements to first-time filers! You can still bring the old property to the attention of the states, and often get penalty and interest waived, even if your existing company has a filing history. It just takes a little more effort and negotiation! I am working on a couple of unclaimed property acquisition non-compliance issues right now. If you need some help of your own, drop us a line and I will share my experiences! In the meantime, get busy with your due diligence! There are only 45 days until those Fall Reports need to be mailed!
Illinois Slashes Payroll Dormancy to 1 Year
by Tracey Reid on 08/15/11
On
August 8, 2012, the Governor of Illinois signed Illinois H.B. 1560
which amends their Uniform Disposition of Unclaimed Property Act to
give ALL unclaimed wages, payroll, and salary in any form, will be reportable
after 1 YEAR. This is a deep reduction from the former 5 year dormancy for this
property type. There has been some confusion that this bill ONLY affected
financial institutions because of the bill's language, but the final law
affects ALL types of wages and wage-like property issued by ALL types of businesses!
While the bill is effective immediately, you won't feel the impact until next
Spring, unless, of course, you are an insurance company and file this Fall. You
insurance companies out there need to get all of your due diligence letters in
the mail ASAP! 5 years worth will certainly take longer to do than the typical
one year we deal with each reporting season! If you have any questions, let us
know! We'd be happy to help! Now, back to stuffing envelopes......
TX clarifies new UP Law & MO passes new UP legislation
by Tracey Reid on 07/15/11
The
state legislatures across the country are wrapping up for the summer by passing
some significant Unclaimed Property legislation. The State of Texas clarified
some of the changes to be wrought by TX HB
257, making it clear that the effective date to report items that meet the new
dormancy period is NOT required until 2012.
Holders will not be required to report these fast-forwarded dormancy items
for the report that is due on November 1, 2011, so they have enough time to
make system modifications. Last, but not least, the effective date to report
under the "new reporting deadline" won’t be until July 1, 2013. That gives all of us a little breathing room
for this fall filing season!
Missouri lawmakers have also been busy in the
unclaimed property arena. The Missouri
Governor signed SB 366, making some changes regarding cooperative associations
and how they deal with unclaimed property into law. See the link below for the entire bill: Missouri SB 366
New NC law gives pass to Holders with less than $250 to report
by Tracey Reid on 06/27/11
The NC Governor signed H.B.
692 into law on June 23, 2011, making a few changes to that state's unclaimed
property law that affect Fall reporting.
Effective October 1, 2011, Holders are REQUIRED to send in the following
information for EACH item of unclaimed property they report:
- Name
- Last
Known Address
- Social
Security Number or Taxpayer Identification Number AND DATE OF BIRTH
- Driver's
License or State Identification Number
- E-mail
address of each person who, from the records of the holder of the
property, appears to be the apparent owner of the property.
One provision
that should alleviate some of your filing burden allows holders with $250
or less in unclaimed property to report in a single year to hold it and then
report it in a future year when value of the property that the holder has to
report is $250 or more. This may seem
small, but it could be one less report you have to file this fall, even if you
DO have to collect A LOT more information for your unclaimed items.
New Oregon law requires cash back for Gift Card balances under $5
by Tracey Reid on 06/21/11The Oregon Governor signed SB 756 on June 14, 2011, further limiting how retailers can manage gift cards in the Beaver State. The new law will require retailers to refund balances of less than $5.00 to gift card holders that request it. The law forbids the sale of gift cards that cannot be redeemed for cash when the value declines to amount less than $5, provided that the card has been used for at least one purchase. Oregon already prohibited the sale of gift cards with expiration dates, service fees or the application of a balance reduction for the passage of time or inactivity. Consumers can rejoice, but retailers will be required to refund these small dollar items, causing tax issues and an overall increase in the cost of administering gift card programs. Another hit to the Holder community....
Texas Gov. signed HB257: reduces dormancy periods & changes reporting date!
by Tracey Reid on 06/20/11
The Texas Governor signed HB 257 on Friday, reducing dormancy periods for several property types and changing the Lone Star State's reporting date, which will drive a big shot of revenue back into the state's coffers starting this fall. Here are the shortened dormancy periods, effective SEPTEMBER 2011:
- utility deposits -- 18 months (reduced from 3 years);
- money orders -- 3 years (reduced from 7 years);
- bank deposits -- 3 years (reduced from 5 years);
- savings accounts -- 3 years (reduced from 5 years);
- matured certificates of deposits (CD's) -- 3 years (reduced from 5 years)
Your list of due diligence letters to be mailed next month for Texas "last known addresses" just got ALOT longer....
This new law will also result in a change to the reporting schedule effective January 1, 2013. Under this revised reporting schedule, reports will be due July 1, as of the previous March 1. Texas will now join Michigan in throwning a wrench into our compliance processes by using a July/March report date. Now, unclaimed property compliance has 3 Seasons.....SPRING, SUMMER AND FALL. Enough change for you yet? Stayed tuned...more to come from Illinois this week!
Texas & Illinois Trying to Shorten Dormancy Periods
by Tracey Reid on 06/14/11
The Governors of Texas and Illinois are both
considering bills to shorten the dormancy period on several types of unclaimed
property.
The Illinois House has passed a bill that would
shorten the dormancy period for payroll from three years to 1 year, which is
common across the US. On June 10, House Bill 1560 was sent to the Governor for
signature. The bill, which would take
effect immediately, says that "unclaimed wages, payroll, and salary, in
any form, shall be reported after remaining unclaimed for one year."
The Texas Governor is considering House Bill 257, which would shorten the
dormancy period for utility deposits from three years to 18 months; money
orders from seven years to three years; and bank deposits, savings accounts,
and matured certificates of deposits from five years to three years. That bill
has been approved by the state legislature and has been sent to the Governor for signature.
The summer has been BUSY in the Unclaimed Property
World. These shortened dormancy periods
will mean an increase in your upcoming Fall Reporting Due Diligence, so stayed
tuned for developments!
Michigan & Missouri Considering B2B Exemption for Unclaimed Property
by Tracey Reid on 06/01/11
The Michigan legislature is currently
considering House
Bill 4563. The bill would add a
"business-to-business" exemption to the Michigan Unclaimed Property
Act. The new law would consider transactions between 2 business entities to be exempt from unclaimed property reporting. The bill says: "This act does not apply to any property issued, held,
due, or owing in any commercial transaction between 2 or more business
associations or other business entities." That bill is still pending
before the Michigan House. With Missouri still considering their bill H.B. 401 to exempt B2B transactions, which was introduced back in February, this has made a very positive atmosphere for Unclaimed Property Holders across the country! Stay tuned for developments!
NY Reduces Dormancy Period on Several Property Types effective 4-1-11
by Tracey Reid on 05/31/11
Recent Changes to New York's Abandoned Property Law
- Effective April 1, 2011, the dormancy periods for bank, court and other miscellaneous property types were reduced from five (5) years to three (3) years.
Because of the reduction in the dormancy periods, during this reporting cycle from April 1, 2011 until March 31, 2012, holders will need to perform required due diligence and remit any abandoned accounts covered by the changes in the law which have been dormant for three, four or five years. The chart below lists the property types affected:
|
Code |
Property Type |
|
1A |
Demand Deposit Accounts |
|
1B |
Savings Accounts (includes Club, Security Deposit, and Retirement Accounts) |
|
1C |
Time Deposit Accounts |
|
1D |
Money on Deposit to Secure Funds (if separate from 1A and 1B) |
|
1E |
Unidentified Deposit (if separate from 1A and 1B) and Suspense Accounts |
|
1F |
Escrow Funds (Mortgages, Performance Guarantees, Surety Bonds, etc.) |
|
1G |
Credit Balances Arising from Loans (includes liquidated mortgages, consumer loans, remainder of collateral amounts, etc.) |
|
7A |
Trust Funds |
|
7B |
Bail Funds |
|
7C |
Funds for Support of Spouse or Child |
|
7D |
Condemnation Awards |
|
8D |
Surplus from the Sale of Pledged Property |
|
8E |
Lost Property (cash only) |
- Negative and preliminary reporting requirements were removed from banks, utility companies, insurance companies and condemnation award reports filed in this State.
- The Verification and Checklist (AC2709)notarization requirement was lifted.
To ensure compliance, every organization should review the New York State Abandoned Property Law, which can be found in McKinney's Consolidated Laws of New York, Book 2 ½, or on the Internet at: http://public.leginfo.state.ny.us/("Laws of New York,” then "ABP Abandoned Property”).
Contact the Office of Unclaimed Funds:
http://www.osc.state.ny.us/ouf/handbook_online/MyWebHelp/Content/Contacts/contacts.htm
