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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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Litigation Update: Chancery Court Sides with Univar, Takes Issue with Delaware

Posted By Administration, Thursday, May 16, 2019

State of Delaware, Dept. of Finance v. Univar, Inc., C.A.

On Dec. 3, 2018, Univar Inc. filed a lawsuit against Delaware Department of Finance officials in a Delaware District Court, alleging that several aspects of an unclaimed property audit initiated by third-party auditor Kelmar in 2015 on Delaware’s behalf are unconstitutional.

According to Univar’s complaint, for more than two years Delaware rejected or ignored objections it had made to document requests from Kelmar. In December 2018, Delaware issued a subpoena for the records Kelmar had previously requested. Univar filed suit, raising constitutional issues regarding:

  • Delaware’s retroactive application of amendments to the Delaware Abandoned and Unclaimed Property Law.
  • The state’s estimation methodology.
  • The state’s use of a third-party auditor that simultaneously represents other states in a multi-state audit.
  • The state’s contingent-fee arrangement with its third-party auditor.
On Dec. 7, 2018, Delaware responded to Univar’s lawsuit by filing its own lawsuit in Delaware Chancery Court, seeking to force Univar to comply with its subpoena. Univar filed a motion asking the court to put Delaware’s lawsuit on hold until the constitutional issues at play in its original lawsuit were resolved.

Following a hearing on April 8, 2019, the Chancery Court judge granted Univar’s request. Delaware responded by requesting an interlocutory appeal – an accelerated appeal of the ruling, which can be granted in extraordinary circumstances. On May 6, 2019, Vice Chancellor Joseph R. Slights III denied the request and took exception with Delaware’s actions.

“The State continues to press its strategy of having two courts litigate the same constitutional challenges to the same Delaware statutes at the same time. The inefficiencies of this approach are apparently lost on the State. They are not lost on the Court,” Slights wrote in his decision.

UPPO will continue to monitor and report on the Univar case as noteworthy developments occur.

Tags:  audits  Delaware  estimation  litigation  Univar 

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UPPO Advocacy Update: May 2019

Posted By Administration, Thursday, May 9, 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).

 

Colorado Passes RUUPA-Inspired Bill

Colorado Governor Jared Polis signed S.B. 88 into law on April 16, 2019. The RUUPA-inspired bill includes provisions that eliminate the state’s previous reporting deduction, allow for estimation, reduce several dormancy periods, define virtual currency and stored-value cards as escheatable property types, and maintain the state’s gift card exemption. 

 

The new law becomes effective on July 1, 2020, allowing holders to become familiar with its provisions and appropriately adjust their practices. 

 

Other Noteworthy Bills on the Move

Texas H.B. 3598 revises unclaimed property recordkeeping requirements and provides guidelines for affiliated group reporting. It stipulates that the state may not begin an unclaimed property examination after the seventh anniversary of the date a person filed a property report and removes the condition that the existence of unclaimed property be unknown to the holder for longer than three years for it to be presumed abandoned. On May 3, 2019, the House passed the bill and subsequently sent it to the Senate. 

 

Two additional states recently introduced RUUPA-inspired bills. Following the trend set by other states that have introduced RUUPA-inspired legislation, these bills deviate from the intent of RUUPA to provide uniformity across the states and to establish consumer-friendly practices that are also reasonable for holders and the states. 

 

Maine’s Judiciary Committee is currently reviewing L.D. 1544, the state’s RUUPA-inspired legislation.

 

Vermont’s RUUPA-inspired bill, H.B. 550, was fast-tracked through the House. Following its initial committee reading on April 26, the House passed the bill just five days later and sent it to the Senate for review. The bill includes language that may be problematic for holders in the financial services industry, as it appears to eliminate the linkage provision allowing customer activity on one account to also act as activity on the customer’s other accounts held by the same company.  

 

GRAC Develops New Structure

Seeking to refine its processes and operate as efficiently as possible, GRAC is in the process of implementing a new structure consisting of four sections. The committee has established responsibilities for each section and a process for section leaders to report to the GRAC co-chairs. The four GRAC sections are:

  • Issue Identification: Identifies important issues and determines legislative, regulatory and legal issues to address.
  • Position and Policy Drafting: Determines the strategy for addressing identified issues and writes support materials for doing so.
  • Strategy Implementation: Executes the strategy, working with legislators, regulators and other officials to promote UPPO’s position.
  • Communication: Works with UPPO staff to update members about advocacy initiatives. 

 

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:  Colorado  Maine  RUUPA  Texas  unclaimed property  Vermont 

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Making the Case for a California VDA Program

Posted By Administration, Thursday, May 2, 2019

In March, California’s Legislative Analyst’s Office issued the report, Increasing Compliance with Unclaimed Property Laws, in which it recommends the state legislature consider providing one-time amnesty for holders seeking to come into compliance voluntarily. UPPO supports and has been working to encourage implementation of a voluntary disclosure agreement program in California.

 

The LAO report provides a compelling case for offering a VDA program, focusing on two areas:

  • Holder compliance with the state’s unclaimed property law is extremely low.
  • Increasing holder compliance solely by increasing audits is not viable. 

 

The California State Controller’s Office reported that 16,555 of the state’s estimated 900,000 businesses – approximately 2 percent – filed an unclaimed property report in 2016. According to the LAO report, the Controller’s Office cites lack of awareness and willful noncompliance as the main reasons for low compliance and speculates that high interest rates (12 percent per year) on unreported property may contribute to businesses choosing to remain noncompliant. 

 

Although revenue from unclaimed property in California has remained relatively flat for a few decades, the state significantly benefits from escheated property. 

 

“The value of property remitted to the state always exceeds the value of property reunited with owners,” according to the LAO report. “This difference provides a monetary benefit to the state… The amount that is not reunited with owners or used for unclaimed property administration provides a source of General Fund revenue.” 

 

Increased compliance with unclaimed property laws would benefit California citizens and the state itself. As more holders report, more owners would be reunited with what is rightfully theirs, and state revenue would increase because only a fraction of reported property is ever actually claimed.  

 

California’s governor has proposed increasing compliance by adding 11 positions and $1.6 million annually for unclaimed property audits and support activities. The LAO report points out that, while audits are an important deterrent, the scale of audits is too great to adequately address the lack of compliance. 

 

“With only a couple of dozen audits conducted each year, SCO cannot change the behavior of the hundreds of thousands of California businesses that are not complying with unclaimed property law,” the report says. “As such, this approach is unlikely to result in much additional compliance relative to current trends.”

 

The LAO offers two solutions:

  1. Amend the state’s tax law to require businesses to respond to a question about unclaimed property compliance as part of their annual tax filings. The question or series of questions would be purely informational, intended to increase awareness of unclaimed property responsibilities. 
  2. Provide a one-time amnesty for noncompliance holders. Such a program would waive the 12 percent per year interest penalty for holders coming into compliance. A two-year amnesty program in 2001-02 resulted in 4,927 holder reports valued at $196 million, representing about a quarter of the property escheated during those years. 

Approximately 30 U.S. jurisdictions currently offer holder VDAs. UPPO supports legislation to implement one in California. Such programs benefit citizens, holders and states alike. 

 

UPPO has supported past legislation that would establish a VDA program, has offered its assistance to help develop a mutually beneficial VDA program and recently registered as a lobbyist in the state of California to continue working on this issue. 

 

UPPO will continue to provide member updates on this issue as developments occur. Please see UPPO’s Advocacy page for additional information about the association’s advocacy work and how you can get involved. 

Tags:  california  VDA  voluntary disclosure agreements 

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Meet 2019/20 UPPO President Troy Wangen

Posted By Administration, Thursday, April 25, 2019
Updated: Wednesday, April 17, 2019
Like many UPPO members, Troy Wangen didn’t anticipate a career in unclaimed property upon graduating from college and seeking his first professional position. In fact, he barely knew what unclaimed property was when he applied for a job at Deloitte & Touche LLP, which was hiring in Bismarck, North Dakota, after graduating with a BA in accounting and business administration from University of Mary.

“I applied because I wanted to work at a ‘Big Four’ accounting firm,” Wangen said. “I got the job and, lo and behold, working with and learning from people like Val Jundt, Pam Wentz and Heela Popal –  staples in UPPO and the unclaimed property world – led me down this path. Thirteen years later, I’m the president of UPPO.”

Troy worked at Deloitte in Boston from 2006 – 2009, when the company sold its unclaimed property practice to Thomson Reuters, where he stayed until the end of 2010. In 2011, True Partners Consulting hired him to start an unclaimed property office in its Chicago headquarters.

Troy currently serves as a managing director in True Partners Consulting’s Unclaimed Property Practice. He specializes in the development of strategic defense for unclaimed property audits, including working directly with state administrators/representatives on audit issues and negotiating settlement agreements.

“What really makes me want to come to work every day are my client relations and building those up,” Wangen said. “For a lot of them, unclaimed property compliance was something they had assigned to them. Helping them show they can be successful at managing unclaimed property is rewarding.”

In 2010, Troy attended his first UPPO Annual Conference. He quickly experienced the benefit of networking and learning how other companies were dealing with the same issues he worked on at Deloitte. Soon, former Deloitte coworker Heela Popal asked him to get involved in UPPO’s new Virtual Learning Subcommittee. Eventually, he became chair.

His committee work led to an appointment to the board’s secretary position in 2015, when the current secretary, Carla McGlynn, was elected as second vice president. Two years later, Troy was elected second vice president, resulting in his progression to first vice president last year and, today, 2019/20 president. 

This is a significant year for UPPO, as the organization kicks off a new, three-year strategic plan. The plan includes a new vision statement – “UPPO is the bridge between our members and the states to identify and implement common ground solutions to benefit all stakeholders” – along with goals in the areas of advocacy, public perception, state relations and education.

“A lot of work has been done in some of the areas covered by the plan, but now we get to take that work and really drive it forward,” Wangen said. “As states are implementing their legislation inspired by RUUPA, continuing to build relationships with the states is very important. Our new vision statement highlights that. Also, our board this year is really going to look at who our members are and what that means for dues, service offerings and education. We need to really understand who is benefiting from UPPO and what we can do to help them be more successful.”

When Troy isn’t focusing on the world of unclaimed property, he has a wide variety of hobbies that keep him busy. He loves to travel, whether for weekend trips within the United States or longer vacations internationally. He tries to see as many Broadway shows in New York and touring versions in Chicago as possible, and he enjoys Chicago’s fantastic restaurant scene.

“Although it may be perceived as the opposite of some of my other hobbies, I’m also a NASCAR fan,” Wangen said. “After attending one race with friends, I was hooked. Although a lot of the drivers my friends and I follow have retired, we still try to take in a race or two a year.”

 

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Unclaimed Property News Roundup

Posted By Administration, Wednesday, April 17, 2019

Unclaimed property often makes news headlines beyond the frequent reports of states trying to return money to their citizens. Following is a recap of some recent stories getting news coverage from local and national media outlets. 

 

The IRS is sitting on an estimated $1.4 billion in unclaimed tax refunds

On March 19, 2019, CBS News reported on an estimated $1.4 billion stockpile of unclaimed property held by the Internal Revenue Service. The funds represent income tax overpayments withheld from employee paychecks but not refunded because they neglected to claim their funds by filing a tax return. 

 

Louisiana residents receive unclaimed property checks

On March 19, 2019, several Louisiana news outlets reported on 44,000 residents receiving checks totaling $4.2 million from the state. The surprise payments represent returned unclaimed property resulting from 2018 legislation allowing the state Treasury and Department of Revenue to cross-reference information for the sole purpose of returning unclaimed property. An October 2018 mailing include 85,000 checks totaling $15 million. 

 

Don’t Mickey Mouse around with recovered unclaimed funds

On Feb. 20, 2019, ABC 12 reported on Genesee County (Michigan) County Clerk John Gleason’s unusual press conference regarding the use of recovered unclaimed property. Dressed in a (rather sad excuse for a) Mickey Mouse costume, Gleason expressed dismay over the authorization by the county commissioners to use funds returned to the county by the state to send three employees to Orlando, Florida, for five days of leadership, engagement and customer service training. 

Tags:  IRS  Louisiana  Michigan  taxes  unclaimed property 

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