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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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Practical Insights and Deeper Dives Highlight Annual Conference Sessions

Posted By Administration, Wednesday, January 9, 2019

 

 

Unclaimed property continues to provide a maze of compliance challenges for the professionals charged with managing their companies’ escheatment responsibilities. This year’s UPPO Annual Conference agenda offers a wide variety of sessions designed to help navigate that maze and keep up with the latest trends.

 

Managing Relationships

If your company is using third-party agents for employee benefits, payroll, equity or other services, understanding the roles of each party and ensuring everyone is properly fulfilling their responsibilities is essential to the unclaimed property reporting process. The Managing Your Third-Party Administrator session will offer tips for managing this important relationship.

 

The Bridging the Gap session looks at another key relationship – the one between holders and the states. This session will help attendees gain insight into building positive relationships with state administrators and maintaining a compliance program that is mutually beneficial to the holder, the state and property owners.

 

Emerging Property and Account Types

Unclaimed property compliance involves much more than uncashed payroll checks and customer credits. Dive into the specific requirements and considerations for unique account types in the unclaimed property process during the Unique Accounts with Unique Requirements session. Attendees with explore developments related to traditional and nontraditional retirement/IRA accounts, beneficiary accounts, HSAs and FSAs, and the effects of linking activity between customer accounts. 

 

Another rapidly evolving area of unclaimed property compliance is the world of virtual currencies. The Virtual Reality, Real Unclaimed Property session will look at issues arising from virtual currencies, blockchain technologies and modern incentive programs. Attendees will get insight into regulatory changes and practical considerations related to cryptocurrencies, virtual wallets and customer loyalty programs. 

 

Audits and VDAs

Always hot topics, unclaimed property audits and voluntary disclosure agreements will take center stage in several sessions. 

 

Unclaimed property professionals who haven’t yet been fully exposed to the audit process can gain an understanding of the concepts, timelines and expectations at the Audit 101 session. This introduction to audits will explore the scope and methodologies used by states and their third-party auditors. 

 

Holders under examination or participating in a VDA may be subject to estimated liability. The Estimation Under Audits and VDAs session will explore estimation methodologies and considerations and examine how states differ in their estimation practices. 

 

With so many companies incorporated in Delaware, that state spends a lot of time in the unclaimed property spotlight, but other states can’t be neglected. The Non-Delaware Voluntary Compliance session will look at VDAs in other states and when an informal approach may be more beneficial than a formal VDA. 

 

Not all third-party auditors were created alike. In fact, their processes and procedures vary greatly. The Third-Party Auditor Differences session will walk through the many different document requests that holders can expect throughout the audit process and will examine conflicting auditor requests when under audit by multiple states using different firms. 

 

View complete details about educational sessions and other 2019 UPPO Annual Conference events. The early-bird registration deadline is Jan. 28, so register today for the best rate.

 

 

 

 

 

Tags:  audits  cryptocurrency  IRAs  state administrators  TPAs  UPPO Annual Conference  VDAs  virtual currency 

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UPPO Advocacy Year in Review

Posted By Administration, Thursday, January 3, 2019

UPPO’s Government Relations and Advocacy Committee (GRAC) had another busy year in 2018. 

Following are some of the most noteworthy highlights from the committee’s advocacy work.

 

January

UPPO submitted comments to New Jersey regarding proposed unclaimed property regulations. The comments raised issues related to the regulation’s stored-value card liability, exemptions and definitions, as well as bank cards and non-escheat-related consumer protections.

 

The comments encouraged New Jersey to revise the proposed regulations, thus avoiding potential conflicts with existing requirements and providing clarity for unclaimed property stakeholders. 

 

February

The Government Relations and Advocacy Committee compiled an issue-by-issue comparison of the Revised Uniform Unclaimed Property Act and the American Bar Association’s Unclaimed Property Model Act.  

 

In response to deviations from RUUPA included in Washington House Bill 2486, UPPO submitted comments to Rep. Paul Graves, voicing concern and suggesting changes to several important provisions.

 

April

To continue refining and improving UPPO’s advocacy work, GRAC established its top five priority issues. This list was developed using results from a membership-wide survey. Responding to the needs and desires of members, GRAC refined and prioritized the survey results. Establishing these priorities will help UPPO take a strategic, focused approach to important issues affecting unclaimed property holders. The priorities are:

  1. Record retention, statutes of limitations and use of estimation.
  2. Rules for taking custody of abandoned property and foreign property. 
  3. B2B exemptions.
  4. Derivative Rights Doctrine.
  5. Presumed abandonment of securities.

 

UPPO signed on as a sponsor of California A.B. 2773, a bill to establish a voluntary disclosure program in the state. The California State Controller’s Office subsequently expressed concerns with the bill’s language, leading Assemblyman Dante Acosta, the bill’s author, to pull the bill from consideration. 

 

May

After establishing its top five priority issues this spring, GRAC formed workgroups to establish goals for each priority issue. All of the workgroups discussed the need for focused outreach to educate key audiences – specifically legislators and unclaimed property administrators – about these issues and UPPO’s position on them. 

 

June

The biggest issue arising in June was the IRS Revenue Ruling stating that traditional IRA holders must withhold 10 percent tax and issue a 1099-R when reporting unclaimed property to the states. This ruling appears to be written with banks in mind, but it presents significant issues for the securities industry. UPPO is working with the Holders Coalition and other organizations whose members are likely to be affected by this ruling to formulate a strategy for raising these issues with the IRS and other agencies, such as the SEC and FINRA, which may have conflicting opinions on the practice. 

 

As GRAC’s priority issue workgroups’ work continued, they began identifying the messages and methods for most effectively discussing key issues, as well as materials the UPPO staff can develop to support these efforts. 

 

August

Preston Rutledge, assistant secretary of labor for the Labor Department’s Employee Benefits Security Administration, said the EBSA will work with businesses and trade groups to develop best practices regarding employers’ responsibilities to contact plan participants regarding their benefits. In response to this announcement, UPPO sent a letter to Rutledge, offering its support and assistance. 

 

September

The Holders Coalition – a group of organizations, including UPPO, whose members hold or represent owners of property – submitted comments  to Internal Revenue Service and Department of Treasury officials regarding IRS Revenue Ruling 2018-17. The comments sought clarification and guidance regarding compliance with the ruling, issued by the IRS in May.

 

Subsequently, Holders Coalition members, including UPPO members Jennifer Borden and Dana Terry, ICI and SIFMA representatives, met with IRS and Treasury officials. The meeting was productive, and the government representatives seemed to understand that the implementation timeline is tight and may consider delaying implementation. Discussion of other issues from the revenue ruling resulted in meeting participants agreeing to conduct additional research and reconvene. 

 

These efforts contributed to an extension of the compliance deadline from Jan. 1, 2019, to Jan. 1, 2020. In November, the IRS issued Notice 2018-90 announcing the extension.

 

During a U.S. Chamber of Commerce event focused on retirement, a Department of Labor benefits regulator announced that work is underway to develop guidance for employers who no longer have contact with former employees who remain enrolled in company retirement plans. 

 

UPPO also surveyed state unclaimed property administrators, requesting information about a variety of possible changes affecting holder reporting. Twenty-five states responded. The information they provided has been compiled and is now available. View the survey results

 

November

GRAC and other members of the Holders Coalition submitted comments regarding concerns with Illinois proposed rules developed as a result of the state’s RUUPA-inspired legislation, which passed in 2017. Among the noteworthy areas of concern for holders are issues related to treatment of tax-deferred retirement accounts, due diligence, audit practices and the state’s voluntary disclosure agreement program.

 

December

GRAC submitted comments to District of Columbia Council member Jack Evans, regarding bill B22-0654, the district’s version of the Revised Uniform Unclaimed Property Act. Introduced in January, the bill sat idle throughout much of the year until an October public hearing. As with many of the bills introduced nationwide in the wake of the RUUPA’s adoption by the Uniform Law Commission, the D.C. bill contains potential issues. GRAC’s comments addressed areas of concern, including provisions related to taking of custody, derivative rights and securities. 

 

Let Your Voice Be Heard

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 advocacy network. 

 

Responses will give us the ability to better provide you with the information you want and need, and will allow us to mobilize UPPO members when we are faced with legislative and regulatory challenges and opportunities. 

 

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Holiday Season Signs You’re a True Unclaimed Property Professional

Posted By Administration, Wednesday, December 19, 2018

For many UPPO members, managing unclaimed property isn’t just a job. It’s a significant part of who they are. You may not even realize how much the unclaimed property mindset has worked its way into all aspects of your life. The holiday season, however, is a perfect time to reflect, look inward and embrace that you are an unclaimed property professional through and through.

 

Following are several holiday season signs that you are a true unclaimed property professional.

 

Your relatives have begun making excuses why they can’t attend your traditional holiday address, “What Happens to the Value of Unredeemed Gift Cards.”

 

 

You refuse to let your kids open gifts until the end of the designated dormancy period.

 

 

You inadvertently sing, “RUUPA the Red-Nosed Reindeer.”

 

 

You view sending holiday cards to acquaintances you haven’t heard from all year to be a due diligence best practice.

 

 

You’ve implemented and followed detailed policies and procedures to ensure a successful “naughty or nice” audit.

 

 

You keep escheating unclaimed eggnog to your liver.


 

Happy holidays from UPPO!

 

All images from giphy.com

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UPPO Advocacy Update: December 2018

Posted By Administration, Thursday, December 13, 2018

To help members remain aware of UPPO’s advocacy activities, the Unclaimed Property Focus blog recently began including a 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).

 

Illinois Administrative Rules

In 2017, Illinois passed legislation inspired by the Revised Uniform Unclaimed Property Act. The Illinois treasurer’s office was charged with developing administrative rules intended to clarify how the law will be carried out. Far more detailed and comprehensive than most states’ administrative rules, the proposed rules have since been published for review and comments. 

 

The proposed rules include many areas of concern, addressed by GRAC and other members of the Holders Coalition in comments submitted on Nov. 12. Among the noteworthy areas of concern for holders are issues related to treatment of tax-deferred retirement accounts, due diligence, audit practices and the state’s voluntary disclosure agreement program.

 

The treasurer’s office is expected to issue final rules early in 2019. Because state unclaimed property regulations and practices are sometimes emulated by other states, and NAUPA has shown interest in the Illinois version of the RUUPA, holders and their legal teams may benefit from reviewing the proposed rules, even if they don’t immediately apply to their companies. 

 

Washington, D.C., RUUPA Bill Comments

On Jan. 5, 2018, District of Columbia Council member Jack Evans introduced bill B22-0654, the district’s version of the Revised Uniform Unclaimed Property Act. The bill sat idle throughout much of the year until an Oct. 10, 2018, public hearing. As with many of the bills introduced nationwide in the wake of the RUUPA’s adoption by the Uniform Law Commission, the D.C. bill contains potential issues.

 

GRAC is in the process of drafting comments regarding the bill. Areas of concern include provisions related to taking of custody, derivative rights and securities. 

 

Percolating Legislation

With November’s elections behind us and state legislatures preparing to convene in January, GRAC is keeping an eye on states where RUUPA-inspired bills are likely to arise. In early 2019, such legislation may be introduced in Colorado and Nevada. 

 

Priority Issue Workgroups

In preparation for the next congressional session, the GRAC Priority Issue Workgroups continue to refine talking points and developing single-page position papers about key issues. 

 

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.

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HIPAA and Unclaimed Property

Posted By Administration, Thursday, December 6, 2018

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is intended, in part, to protect patients’ privacy. The law establishes standards for handling and securing potentially sensitive protected health information (PHI).

 

HIPAA is not typically associated with unclaimed property. However, for property holders in the health care field or that work with the health care field, it’s important to understand HIPAA implications. Considerations related to HIPAA most often come into play when dealing with an audit or a voluntary disclosure agreement. Auditors or VDA administrators may ask for information that, when shared, could violate HIPAA provisions.

 

HIPAA precludes covered entities, such as health plans, insurers and providers from disclosing PHI to third parties, with a few narrow exceptions. According to the Department of Health and Human Services, PHI includes demographic information relating to:

  • An individual’s past, present or future physical or mental health or condition.
  • The provision of health care to the individual.
  • Payment for health care that may identify the individual.

 

PHI includes common identifiers, such as name, address, birth date and Social Security number, when they can be associated with health information. It can also include identifiers that could be used to trace an account to a specific medical issue, such as internal account numbers.

 

“There is a general prohibition on disclosure of records dealing with mental health, substance abuse treatment, genetic testing and HIV/AIDS under HIPAA and various federal and state laws, absent patient consent,” said Scott Heyman, partner with Sidley Austin LLP. “Those laws are very strict and without exception. Even if exceptions are available for providing other PHI to third parties, they are not available for those conditions.”

 

HIPAA violations are subject to civil and criminal penalties, so great care needs to be taken to ensure compliance.

 

Three exceptions to PHI disclosure without patient consent exist under HIPAA:

  • Disclosure to public health authorities.
  • Disclosure in health oversight activities.
  • Disclosure for law enforcement purposes.

 

State treasurers and controllers conducting unclaimed property audits are not public health authorities and are not engaged in health oversight activities, so the first two exceptions do not apply. 

 

The “disclosure for law enforcement purposes” exception is broad enough to cover unclaimed property audits. In order to disclose information under the law enforcement exception: 

  • PHI sought must be “relevant and necessary to a legitimate law enforcement inquiry.”
  • The request must be ”specific and limited in scope to the extent reasonably practicable in light of the purpose for which the information is sought.” 
  • “Deidentified information could not be reasonably be used.” 

 

Disclosure is permitted only to law enforcement officials, defined as “an officer or employee” of an eligible agency. Thus, PHI may not be disclosed to private government contractors without patient consent. In contrast, the public health and health oversight exceptions expressly permit disclosure of information to government contractors. 

 

PHI should be retracted from items provided to auditors. 

 

“If they insist that they need PHI for audit purposes, providing the information directly to the state and letting the state decide what to do with it may be a reasonable response,” Heyman said.

 

Redaction can be very time-consuming and one of the more burdensome aspects of an unclaimed property audit in the health care industry. 

 

“Often the information at issue includes things like explanations of benefits, where you’re proving out voids and reissuances,” said Heyman. “Those tend to be copies of paper documents. It means reading those documents and crossing out PHI with a black marker. It’s an intensively manual process, and knowing which boxes contain PHI and which don’t, and blacking them out appropriately, is essential.”  

 

Holders should refer to information from HHS for guidance on de-identifying PHI.

 

Unclaimed property compliance and audits are rarely simple. For holders in the health care space, HIPAA adds yet another compliance layer. 

 

The 2019 UPPO Annual Conference, March 24-27 in New Orleans, will include industry breakouts and an industry focus session for holders in the health care industry to discuss audit trends and compliance issues affecting them. Learn more and register today.

 

 

Tags:  audits  health care  HIPAA  unclaimed property 

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