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UPPO Advocacy Update: April 2019

Posted By Administration, Wednesday, April 10, 2019

To help members remain aware of UPPO’s advocacy activities, the Unclaimed Property Focus blog presents the recurring Advocacy Update when legislatures are active or significant advocacy activity has occurred. Following are recent activities and trends from UPPO’s Government Relations and Advocacy Committee (GRAC).

 

Industry Groups, Including UPPO, Submit Joint Comments Regarding Minnesota RUUPA Bills

On March 31, 2019, UPPO along with organizations representing life insurers, bankers, shareholder services professionals and transfer agents submitted a letter regarding RUUPA-inspired legislation to the Minnesota Department of Commerce. The coalition raised several concerns with Article 13 of H.F. 2208 and companion bill S.B. 2611. Learn more.

 

The language from H.F. 2208 has since been amended to a different House bill, H.F. 2538. 

 

More RUUPA-Inspired Bills on the Move

In Colorado, S.B. 88 was introduced in January. The RUUPA-inspired bill includes the reduction of some established state dormancy periods and retains some Colorado-specific sections from the current version of state’s unclaimed property statute. The Colorado Senate passed the bill in February and sent it to the House, where it passed with amendments. On March 26, the senate concurred with the House amendments and repassed the legislation. 

 

In Washington, D.C., B. 225 was introduced on March 27. The RUUPA-inspired bill has been assigned to the Finance and Revenue Committee for review. 

 

California Report Makes a Case for Amnesty

On March 20, 2019, the Sacramento Bee published an article discussing the estimated $24 billion in unreported unclaimed property in California. According to the article, only 2 percent of unclaimed property holders reported to the state in 2016, leaving more than a million businesses out of compliance with the state’s unclaimed property laws. 

 

The state’s Legislative Analyst’s Office recommended in a March 15 report, Increasing Compliance with Unclaimed Property Law, that the state implement “a one-time amnesty for holders who voluntarily report past‑due unclaimed property by temporarily waiving the penalty associated with delinquent reports.”

 

UPPO supports adoption of a voluntary disclosure agreement (VDA) program in California and recently registered as a lobbyist in the state to promote VDA legislation on behalf of its members.

 

Hawaii Bill Proposes Changes to Handling of Low Value Property

In the Hawaiian legislature, H.B. 1130 was introduced on Jan. 24, proposing a minor language change that could have a significant effect for Hawaiian residents. If enacted, unclaimed property valued under $100 would be transferred directly to the state’s general fund, and the unclaimed property administrator would be exempted from having to advertise such property. 

 

Currently, Hawaii escheats amounts of less than $100 to the general fund, but only after it has remained unclaimed for 10 years. 

   

Arkansas Adopts Law Calling for Immediate Liquidation of Securities

On March 15, Arkansas Gov. Asa Hutchinson signed H.B. 1427 into law. The bill allows the state unclaimed property administrator to sell securities upon receipt from holders. It states that a claimant to such securities may receive the securities if they remain in the custody of the administrator, or alternately may receive proceeds received from the sale of the securities, less any fees and expenses incurred from the sale. 

 

This legislation conflicts with the consumer protection intent of unclaimed property programs, as it prevents property holders from being able to take steps to recover the full value of their shares and creates irreversible tax consequences. It also raises constitutional issues addressed by the U.S. Supreme Court in the Taylor v. Yee decision regarding due process. 

 

GAO Calls for Clarity Regarding Unclaimed 401(k) Plan Tax Treatment

On Feb. 19, 2019, the U.S. Government Accountability Office issued a 59-page report calling on the Internal Revenue Service, Department of Treasury and Department of Labor to provide clarity regarding the tax treatment of unclaimed 401(k) plans transferred to states. Learn more.

 

As more and more legislatures and regulatory agencies take on issues affecting unclaimed property compliance, advocacy has become an increasingly important role for UPPO.

Please take a few minutes to complete our 
Government Relations and Advocacy Survey to help us build our grassroots network. Responses will give us the ability to mobilize UPPO members when we are faced with legislative and regulatory challenges and opportunities.

 

Tags:  401(k)  Arkansas  California  GAO  Hawaii  Minnesota  Washington D.C. 

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