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Unclaimed Property Focus
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UNCLAIMED PROPERTY FOCUS is a blog written by and for UPPO members, featuring diverse perspectives and insights from unclaimed property practitioners across the U.S. and Canada. We welcome your submissions to Unclaimed Property Focus. Please contact Tim Dressen via tim@uppo.org with any questions about submitting a blog post for consideration and refer to our editorial guidelines when writing your blog post. Disclaimer: Information and/or comments to this blog is not intended as a substitute for legal advice on compliance or reporting requirements.

 

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2020 Fall Reporting Guide Part 1 (Alabama – Hawaii)

Posted By Administration, Friday, August 21, 2020

Fall reporting season is again fast approaching. Most U.S. states require holders to file reports by either Oct. 31 or Nov. 1. Following are reporting deadlines for these states, along with helpful links. This list is not exclusive to a specific holder industry, so please check the states’ websites for information on industry-specific reporting information and deadlines. Because of the amount of information included, this guide will be published in four parts over the next two weeks:

 

Part 1 covers Alabama through Hawaii.

Part 2 will cover Idaho through Minnesota

Part 3 will cover Mississippi through Rhode Island.

Part 4 will cover South Carolina through Wyoming.

 

Alabama

Report due: Nov. 1, 2020
Extensions: Extensions may be requested in writing. Include reason for extension request and length of time needed.


Contact: unclaimed@treasury.alabama.gov or (334) 242-9614 or (888) 844-8400
Alabama holder resources


Alaska

Report due: Oct. 31, 2020
Extensions: Extensions may be requested by email. Include reason for extension request and length of extension needed.


Contact: ucpholder@alaska.gov or (907) 465-3726
Alaska holder resources 

Notes from UPPO's state administrator survey:

  • Permits both electronic uploads and encrypted email.
  • Alaska doesn't have a portal for uploads but there are commercial services available. Use ucpholder@alaska.gov for submitting encrypted reports via email.
  • Holders may want to mention in their due diligence notice that claimants can search www.missingmoney.com. When they see their name, only then is the property available for claim. Since Alaska unclaimed property personnel are in the office one day a week, there will be a delay in loading reports and entering manual reports. Once the report has been loaded and the receipt has been posted, the property will display on www.missingmoney.com.


Arizona

Report due: Oct. 31, 2020
Extensions: Extensions may be requested by fax or email by Oct. 1, 2019. Include company name, holder number or company FEIN, reason for extension and length of extension requested.


Contact: ReportingUnclaimedProperty@azdor.gov or (602) 716-6031
Arizona holder resources 

Notes from UPPO’s state administrator survey:


Arkansas

Report due: Oct. 31, 2020
Extensions: No details provided.


Contact: holders@auditor.ar.gov or (501) 682-6000
Arkansas holder resources 

Notes from UPPO’s state administrator survey:

  • Instruction manual/handbook has been updated.
  • Reporting website is now run by the Kelmar KAPS team, making reporting in Arkansas more similar to other states using the KAPS system.
  • COVID-19 temporary compliance changes: Granted extensions as requested
  • Please submit all reports electronically via our reporting portal at https://claimitar.com/app/submit-a-report.
  • Arkansas now offers an online payment option via its website.
  • Payment is due when the report is submitted.


California

Report due: Oct. 31, 2020, for Holder Notice Reports
Extensions: Extensions may be requested no later than 30 days before the due date.

Contact: updholderoutreach@sco.ca.gov or (916) 464-6088 
California holder resources

Notes from UPPO’s state administrator survey:

  • COVID-19 temporary compliance changes: Reporting timeframes changed: Life Insurance Notice postponed from April 30 to June 30. Remit from June 1-15 to June 1- Aug 15. Life insurance Remit postponed from December 1-15 to February 1-15, 2021.
  • Holders may submit a report via sFTP or by encrypted email.
  • For one-on-one assistance with the contents of your report, contact the Reporting Unit: (916) 464-6284 or UCPReporting@sco.ca.gov.


Colorado

Report due: Nov. 1, 2020
Extensions: No details provided.


Contact: Holders@state.co.us or (303) 866-6070 or (800) 825-2111
Colorado holder resources 

Notes from UPPO’s state administrator survey:

  • Instruction manual/handbook has been updated.
  • All holders must submit their files online through the web portal at colorado,findyourunclaimedproperty.com.
  • COVID-19 temporary compliance changes: Treasury employees are all working from home for the foreseeable future. This makes telephone contact difficult so the best way to communicate with the office is via e-mail.
  • Due diligence threshold change: Owners owed more than $24.99 must receive a notice. Previously, the threshold was $49.99.
  • Notices must be sent out at least 60 days prior to the report due date and must give the owner 30 days in which to contact the holder and recover property.
  • There is specific language that must be substantially included in the letter's header. This language is specified at 38-13-502 C.R.S.
  • All insurance companies now have a reporting due date of May 1.
  • With the push for electronic filing, many holders are failing to report statutorily required information, such as an owner address or Social Security number because the computer program doesn't list those fields as “required.” There is confusion in the holder community between statutory requirements and programming requirements. Holders need to fill in information for all fields on a program even if it is not marked required in order to avoid corrective actions needing to be employed against the file. p>
  • All reports must be electronic and submitted through the online portal at colorado.findyourunclaimedproperty.com.
  • Holders should report and remit at the same time.

 

District of Columbia

Report due: Oct. 31, 2020
Extensions: Extensions may be requested by email to holders.ucp@dc.gov.


Contact: DCUnclaimed.Property@dc.gov or (202) 442-8181
District of Columbia holder resources 

Notes from UPPO’s state administrator survey:

  • Instruction manual/handbook has been updated.
  • COVID-19 temporary compliance changes: Granting Extensions and VDA on an as needed basis.
  • Report file type change: Reports should be uploaded using the Web Portal at DC.findyourunclaimedproperty.com to remit a report or key a manual report; txt file only.
  • When filing a report online, you can also make or send a wire/ACH.
  • While the stay-at home-order has been lifted, and the District of Columbia has entered Phase 1 of reopening, the unclaimed property office is still under the telework operational status until further notice. Although operating remotely, the unclaimed property operations are functioning and are available at the listed email and phone number.

 

Georgia

Report due: Nov. 1, 2020
Extensions: No details provided


Contact: ucp.reporting@dor.ga.gov or (855) 329-9863
Georgia holder resources 

Notes from UPPO’s state administrator survey:

  • Instruction manual/handbook has been updated.
  • New forms/information: UP-1 MV UP-2 MV UP-SR.
  • Electronic report submission permitted through UpExchange/UpExpress only.
  • Holders who are having difficulty reporting due to COVID-19 are encouraged to request an extension.


Hawaii

Report due: Nov. 1, 2020
Extensions: Extensions may be requested by mail on company letterhead. Approvals will extend the reporting deadline until Jan. 1.


Contact: Varies by island 
Hawaii holder resources 

 

For detailed information about reporting deadlines, dormancy periods, due diligence requirements, exemptions and deductions, electronic filing and much more, UPPO members can refer to the Jurisdiction Resource Guide.

Tags:  fall reporting  unclaimed property 

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Identifying Records for Unclaimed Property Review, Part II

Posted By Administration, Wednesday, August 5, 2020

When trying to identify outstanding unclaimed property obligations, property holders should conduct a periodic review of areas where potential exposure lies. Unclaimed property can result from property types other than the common areas discussed in last week’s blog post.

 

To help ensure that all potential property types and sources are being captured in the unclaimed property review process, following are several additional unclaimed property risk areas where to review.

 

Gift Cards

Sales of gift cards and gift certificate transactions may result in escheatable property. Review gift card or gift certificate reports that identify unredeemed gift card balances, whether generated internally or as part of services provided by a third-party administrator.

 

Holders should review the unredeemed gift card or gift certificate report to identify cards and certificates that have been inactive and are soon to become dormant. The dormancy period for unredeemed gift certificates and gift cards varies by state.

 

Dormant unredeemed gift cards and gift certificates may be escheatable. If the holder retains the owner or gift recipient’s address information, the unclaimed property laws for that address’s state will apply. If the holder does not retain address information, the laws of the holder’s state of incorporation or domicile will apply. 

 

Some states do not require the escheatment of unredeemed gift cards. A vast majority of those states simultaneously require that the cards and certificates do not expire. This allows an owner to redeem the gift certificate or gift card into perpetuity. The holder should identify the applicable state law to determine whether the transaction is escheatable and what limitations may be put on the redemption of the card or certificate.

 

Equity

When evaluating equity for potentially escheatable property, include in the review outstanding dividends, other payments that are owed and outstanding to the shareholder, as well as the underlying shares. Many states require that if a dividend check is dormant and escheatable, the holder also escheat the underlying share related to the dividend.

 

Most holders employ a transfer agent to oversee their equity. The transfer agent’s duties usually include escheat review and annual compliance filing. Holders should request and maintain copies of all annual unclaimed property reports filed by the transfer agent on the holder’s behalf. 

 

If the holder is conducting its own analysis of potentially escheatable equity transactions, review the report of shareholder activity. This report should include the date of the shareholder’s last account activity, as well as list the outstanding dividend check payments.

 

States vary on what information is considered sufficient contact to identify the shareholder’s last activity date, so check the applicable state provision for that determination.

 

Mineral Rights and Royalties

Some holders may hold potentially escheatable property in the form of mineral rights and royalties. If so, review the list of suspended accounts resulting from contact with the property owner. The determination of lost contact may vary depending on applicable state law, so the always verify what is considered lost contact.

 

Similar to the analysis of equity transactions, if the royalty is determined to be dormant and escheatable, be aware that some states require holders to remit all owed royalties with the outstanding payment. Some states have more stringent guidelines for reporting mineral rights and royalties, so be sure to research state statutes.

 

Insurance

Insurance companies have a number of unique transactions from other types of businesses that may become escheatable property. Besides the traditional unclaimed property scenario of uncashed checks resulting in unclaimed property, insurance companies need to conduct analysis on agent commission liability accounts to identify any dormant unpaid commission balances.

 

Also obtain and review records related to life insurance policies. The purpose is to identify policies that have matured but were not paid to the policy holder due to lost contact. These policies may be escheatable.

 

Obtain a listing of life insurance policies for which the death notice was received but the claim not paid. This often occurs because the beneficiaries cannot be found. Many states have enacted the Life Insurance Benefit Act, which requires companies to check policy inventory against the Death Master File on a regular basis.

 

Further, the holder should obtain and review a listing of unpaid annuities and inactive retained asset accounts to identify transactions that have become dormant and may be escheatable to the states. As with all property types, dormancy and escheat requirements vary by state, so holders should confirm the law with the applicable state.

 

 

Tags:  equity  gift cards  insurance  mineral rights  records  unclaimed property 

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Identifying Records for Unclaimed Property Review, Part I

Posted By Administration, Thursday, July 30, 2020

When trying to identify outstanding unclaimed property obligations, property holders should conduct a periodic review of areas where potential exposure lies. To help ensure that all potential property types and sources are being captured in the unclaimed property review process, examine trial balances, general ledger and bank statements.

 

Bank Accounts

The review should identify all open and closed bank accounts used to distribute checks and electronic payments. For open accounts, verify that outstanding checks associated with the accounts are being captured in the unclaimed property procedures. Review closed accounts to determine the resolution of outstanding items. Examine voids to ensure they are well-supported and not being issued to circumvent unclaimed property. 

  

General Ledger Accounts

Review general ledger accounts to identify accounts that have been established to capture unknown, unreconciled, write-off or suspense balances. If accounts are noted in the system, conduct additional research to verify whether the balances represent unclaimed property.

 

Uncashed and Voided Checks

Looking at uncashed checks is intrinsic to every unclaimed property review. Research checks outstanding more than 180 days to determine whether the funds remain due and payable to the payee. If the distribution is still owed, confirm payee name and address and conduct outreach to contact the payee about the status of the outstanding check. If the payee lost or destroyed the original check, void the original issuance and reissue payment. Always maintain notes pertaining to the reissuance in the accounting records, along with the date the reissued check cleared.

 

Review transactions voided greater than 90 days from issuance to verify that the reason for the void is documented in the accounting records and not simply because it was outstanding and not cashed.

 

Checks issued by third parties on behalf of the holder can create unclaimed property exposure for a company if responsibilities are not well-defined. Review third-party contracts to verify the duties are clearly outlined and documented, and those responsibilities are executed based on the contract terms. If the third party is reporting on the company’s behalf, request and maintain copies of the unclaimed property reports, detail of the reported property, and all associated payments and remittances to the state. Ultimate responsibility for the outstanding checks tends to fall back on the company unless adequate supporting documentation can be produced.

 

Credit Balances

Accounts receivable credit balances tend to be one of the most complicated accounting types in unclaimed property as a result of states holding various positions regarding when or if property is deemed reportable. In some states, accounts receivable credit balances are not reportable while there is an active relationship with the customer, but the state may not provide a thorough explanation of what constitutes an active relationship. Other states consider all credits as potential unclaimed property, no matter the account relationship, and want the holder to confirm that the customer is aware of the credit and has the opportunity to use it.   

 

Most states also allow credits owed to a customer to be offset by balances owed to the company, but they have to be for the same customer. For example, a company cannot take Jim’s credit balance to pay Mary’s bad debt. Debits due from the customer that were written off to bad debt during the same time period can be used to offset the credit balance write-offs. 

 

When conducting an analysis of the accounts receivable transactions that are potentially escheatable, look at transactions that may no longer be included in the receivables account. For example, such transactions may include credits that were reclassed out of accounts receivable and into accounts payable because they were refunded to the payee. The process should include reviewing reports that contain any unresolved credits that were reclassified out of the receivables account. 

 

The holder should review the general ledger detail to identify any credit balances that were reclassified because these transactions may represent unclaimed property. The states do not accept write-offs to income as sufficient to remove the credit balance and, therefore, prevent the credit balance from being escheated to the state as unclaimed property.

 

Unapplied Cash Detail

Review the unapplied cash detail, also commonly referenced as an unidentified remittance, to identify any receipts that are stale-dated and have not yet been applied to a customer’s invoice to offset the credit. The determination of when the transaction is stale-dated may vary by state. The unapplied cash detail analysis may not be applicable if the holder maintains unapplied cash on the accounts receivable aging reports. In that case, review the aging reports on a regular basis.

 

Next week’s UPPO Unclaimed Property Focus blog post will discuss additional records to examine for potential unclaimed property.

Tags:  records  unclaimed property 

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Chancery Court Voids Overreaching Delaware Subpoena

Posted By Administration, Thursday, July 23, 2020

In a July 10, 2020, decision in Delaware Department of Finance v. AT&T Inc., a Delaware Chancery Court ruled in favor of AT&T, voiding a Delaware subpoena for information requested during an unclaimed property examination.

 

History

In 2012, the Delaware Department of Finance began an unclaimed property examination of AT&T via its third-part auditor, Kelmar. AT&T provided most of the information requested but declined to provide two categories of documents. 

 

Among the information sought by Kelmar was identification of all general ledger accounts used by AT&T since 1992 – a 20-year lookback – to track its rebate accrual and expense activity, along with the time period each account was used for that activity. This request also asked AT&T to identify each third-party administrator used to issue rebates. 

 

Another request sought information for every check AT&T had issued from 27 accounts since 1992. The request required AT&T to identify each check issued, the general ledger account to which it was recorded, the disposition status, the payee name and address, and the amount. It also sought information regarding checks marked void, cleared, stopped, or void and reissued.

 

AT&T initially worked to provide the requested information, including the rebate and disbursement requests. However, the state notified AT&T beginning in May 2019 that of requests that had not been fulfilled and warned that the company’s participation in an expedited examination, initiated by AT&T after Delaware updated its escheat law following the Temple-Inland decision, could be terminated. 

 

In November 2019, Delaware issued an administrative subpoena. AT&T refused to comply and filed action in U.S. District Court. Delaware responded by filing action to enforce the subpoena. AT&T asked the court for relief. 

 

Decision

The court granted one of three requests for relief requested by AT&T – that the subpoena be quashed or modified because the Department of Finance exceeded the authority granted to the escheator in the state’s escheat law. Although the state’s law gives the escheator subpoena power, AT&T successfully argued that the subpoena was so expansive that enforcement would be an abuse of power. The court quashed the subpoena in its current form.

 

In its 63-page decision, the court noted multiple concerns, including the state’s lack of meaningful involvement in the information request and the contingency nature of Delaware’s relationship with Kelmar.

 

“The Department appears to have lent the State Escheator’s investigatory authority to Kelmar to use as it sees fit. Kelmar is compensated contingently,” the court wrote. “That arrangement benefits the State by minimizing fixed costs, but it gives Kelmar an incentive to engage in aggressive enforcement tactics. It potentially creates a pernicious incentive for Kelmar to serve broad information requests and engage in expansive audits that impose substantial burdens on companies, thereby inducing settlements that generate income for Kelmar. The breadth of the Subpoena in this case is suggestive of such tactics.”

 

In quashing the subpoena, the court gave Delaware the ability to issue a subpoena with a narrowed scope or appeal the decision, so this saga may continue. UPPO will continue to monitor and report on developments. 

 

Additional Resources

Tags:  AT&T  Delaware  Kelmar  litigation  subpoena 

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Considering and Evaluating Third-Party Administrators

Posted By Administration, Thursday, July 16, 2020

Third-party administrators provide useful services to businesses who may not have the capabilities or desire to handle their own unclaimed property responsibilities. TPAs provide a broad variety of services, including:

  • Compliance services, such as assisting with policies and procedures and preparing holder reports.
  • Reporting services, including due diligence and record keeping, full-service reporting for all property types, or reporting for select property types.
  • Accounting services, such as issuing checks and administration of voided and reissued checks.
  • Audit services, including assistance with unclaimed property audits or voluntary disclosure agreement programs.

Deciding whether to hire a third-party administrator begins with assessing your company’s current unclaimed property compliance capabilities. Consider the areas where you need the most help. Do you need assistance only with due diligence, or reporting as well? Do you need help with all property types or just a few? What budget is available? Does working with a third-party fit your company’s strategies and capabilities better than hiring one or more employees to fill the same role?

 

When interviewing potential partners, ask important questions regarding the TPA’s services, such as:

  • Does the TPA track, implement and share legislative, regulatory and legal changes?
  • Will the TPA indemnify your company for late or erroneous reports?
  • What is the TPA’s experience with companies similar in size and in the same industry?
  • What is the TPA’s experience tracking dormancy triggers?
  • What is the TPA’s experience defending its reporting in an audit?
  • What relationship does the TPA have with state administrators?
  • How does the TPA keep your data secure and will it indemnify your company in the event of a breach?
  • What reports will the TPA provide to ensure standards are being met?
  • Does the TPA use address verification services in advance of due diligence outreach?
  • What is the fee structure and total annual cost?

When evaluating whether working with a TPA makes sense, it’s especially important to understand that hiring a TPA does not absolve a company of its reporting responsibilities. Even with contracts requiring the TPA to handle unclaimed property, states still consider the company the unclaimed property holder. Responsibility ultimately falls on the unclaimed property holder.

 

If the TPA fails to fulfill the obligation, states will hold the holder accountable to fulfill outstanding obligations. As such, setting clear expectations when contracting with a TPA is essential at the outset. Identify who owns reporting-related functions internally and externally and ensure roles and responsibilities are clearly defined in the contract.

 

Because many companies have limited internal resources for unclaimed property management, third-party administrators play a vital role in the compliance process. Taking proactive steps during the evaluation process helps ensure a positive, long-term relationship between the holder and TPA.

 

To learn about UPPO members offering TPA services, visit our Service Provider & Vendor Directory. 

Tags:  servi  third party administrators  TPAs  unclaimed property 

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