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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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UPPO Advocacy Update: September 2019

Posted By Administration, Thursday, September 26, 2019
Updated: Thursday, September 26, 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).

 

Whistleblower Litigation

Among the issues GRAC has been closely monitoring is the increase of whistleblower court cases related to unclaimed property. Bloomberg Law recently covered one such case, which involves allegations surrounding JPMorgan Chase’s unclaimed property liability in New York. 

 

UPPO is concerned that the case could result in unintended consequences affecting unclaimed property compliance: 

  • The outcome of the case could diminish the incentive to voluntarily come into compliance. 
  • The case also raises issues regarding multiple state agencies interpreting the same statute differently.
  • The case could result in new operational burdens for both holders and administrators.

Please watch the UPPO blog in the coming weeks for more information about whistleblower cases and steps holders can take to protect themselves. 

 

Texas H.B. 3598 Questions

Earlier this year, the Texas legislature passed H.B. 3598. Among other things, the legislation outlines requirements for combined reporting of unclaimed property for affiliated companies. The new law raises many questions for holders and service providers. GRAC has begun compiling a list of these questions, which will be used to request clarification from the state. UPPO will email members shortly with additional information and an invitation to contribute questions to GRAC. 

 

Do You Have Ideas for GRAC?

GRAC is interested in your feedback. To make it easier for members to submit ideas and issues for the committee’s consideration, UPPO has added a form to the advocacy web page. Please use this form to share advocacy suggestions, ideas and issues for GRAC to consider. 

 

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:  consolidated reporting  litigation  qui tam  Texas  whistleblower 

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Unclaimed Property News Roundup

Posted By Administration, Thursday, September 19, 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. 

 

Unclaimed gift cards become a gift to state budgets 

On Aug. 27, 2019, The Atlantic published an article discussing states’ use of unclaimed property – with a focus on gift cards – to strengthen their budgets. The article discusses Delaware’s unclaimed property practices, the Overstock.com case and the debate over states spending unclaimed funds. 

 

Lost items resurface at unclaimed property auction 

On Aug. 28, 2019, Orlando Sentinel reported on the strange tale of an elementary school teacher who discovered items from her safe deposit box, which her bank lost years earlier, were part of Florida’s unclaimed property auction.  

 

Consumer reporters shine the light on unclaimed property claim challenges 

On Aug. 28, 2019, ABC 7 News in San Francisco reported on a citizen’s difficulties claiming funds from an unclaimed cashier’s check after receiving notification from California’s Unclaimed Property Division. After claim denials, the state promptly returned the man’s funds when the television station’s consumer reporters sought answers. 

 

Famous people have unclaimed property too

A Sept. 4, 2019, Outline article discusses the treasure trove of unclaimed property waiting to be claimed by celebrities in California. Searching the state’s database, the website discovered nearly $100,000 available to more than 200 celebrities, escheated by an out-of-business board game manufacturer.

 

Cryptocurrency and unclaimed property 

A Sept. 11, 2019, Accounting Today article discussed the need for companies to consider the effects of cryptocurrency’s rising popularity on their practices, including unclaimed property compliance. 

Tags:  cryptocurrency  gift cards  safe deposit boxes  unclaimed property 

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Pennsylvania Reaffirms Reporting Standards for Retirement Accounts

Posted By Administration, Wednesday, September 11, 2019
Updated: Wednesday, September 11, 2019

Brian Munley, Pennsylvania's director of the bureau of unclaimed property, recently issued a notification and reminder of the state’s Policy Guidance – Reporting Standards for Fiduciary Accounts. The notice reaffirms that Pennsylvania's guidance from September 2016 is still in effect and should be followed until further notice from the state. 

 

Following is Pennsylvania’s September 2019 notification:

 

In September 2016, in response to amendments made to the Commonwealth’s Disposition of Abandoned and Unclaimed Property Law, Treasury issued a Policy Guidance with a particular emphasis designed to ensure that IRAs and other types of retirement account owners would not be subject to negative tax treatment as a consequence of an escheatment of retirement-related assets to the Commonwealth. This Guidance protects an account owner under the age of 59 ½ by preventing the reporting/distribution of certain re-tirement accounts which my otherwise be subjected to the Internal Revenue Code’s 10-percent additional tax for early distributions. IRC §72(t)(2)(A)(i).

 

The following is a restatement of the Policy Guidance, which remains in full force and effect: 

Treasury will neither demand nor accept any retirement account that is presumed abandoned and unclaimed, except as follows:

  1. An individual retirement account (including a retirement plan for self-employed individuals) of which the beneficiary cannot be located for a period of three (3) years following the death of the owner and that is not subject to a mandatory distribution requirement; or
  2. An individual retirement account (including a retirement plan for self-employed individuals) of which the owner has attained seventy and one-half years of age and is not subject to a mandatory distribution requirement.

Accordingly, until further notice, retirement accounts are to be reported only if either of the above requirements are satisfied. It is Treasury’s objective to prevent the reporting of property that is not truly abandoned or unclaimed. In so doing, Treasury notes its authority to exercise its discretion to refuse the acceptance of certain types of unclaimed property. §72 P.S. §1301.17.

 

Questions pertaining to this notification may be directed via email to bmunley@patreasury.gov.

Tags:  Pennsylvania  retirement accounts  unclaimed property 

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City of Chicago Faces Accusations of Hiding Unclaimed Property

Posted By Administration, Wednesday, September 4, 2019

The city of Chicago is accused of failing to escheat more than 22,000 uncashed city checks totaling more than $11 million to the state of Illinois, according to a recent Chicago Sun-Times article. Class action attorney Clint Krislov discovered the checks as part of the discovery process for a longtime dispute with the city over retired city employees’ benefits.

 

On August 19, 2019, Krislov Law filed a complaint in the Circuit Court of Cook County against the City of Chicago for failing to comply with the Illinois Uniform Disposition of Unclaimed Property Act and the Revised Uniform Unclaimed Property Act.

 

The lawsuit accuses the city of using the funds as an indefinite “cash float” and failing to give the public an opportunity to find and claim the funds. 

 

According to the complaint, “[Freedom of Information Act] requests to a number of other Illinois municipalities show that the City of Chicago’s intentional omission of reporting these amounts is a deviation from the norm, rather than some justifiable exercise of the City’s home rule powers.”

 

Krislov reportedly told the Sun-Times that state attorney general was aware of the city’s unreported property and, thus, shared in the responsibility for not making it available for the owners to claim. 

 

Although he didn’t comment on the specific accusations raised by the lawsuit, representative for the Chicago Law Department Bill McCaffrey told the Sun-Timesthat the city has enacted its own unclaimed ordinances and procedures, which are not preempted by the Illinois Revised Uniform Unclaimed Property Act.

 

The lawsuit complaint awaits a response from the city of Chicago. 

 

 

Tags:  Chicago  Illinois  municipalities  unclaimed property 

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Colorado Auditor Identifies Unclaimed Property Division Problems

Posted By Administration, Thursday, August 22, 2019

In July 2019, the Colorado Auditor’s Office issued a 60-page report identifying several problems within the state’s Unclaimed Property Division. The audit was intended to determine whether the unclaimed property claims were processed and paid timely and properly according to state statutes. 

 

Findings included:

  • More than 90% of the 429,526 unclaimed property claims records provided to the auditor for review contained missing or inaccurate information, due in part to IT system conversion issues. 
  • The division did not act on 48% of the 17,128 claims tested within 90 days as required by state statute. Payout of claims ranged from same day to 1.8 years following approval. 
  • The division has not mailed notifications since March 2005 to approximately 1.6 million owners of unclaimed property as required by state statute. 
  • The division accepts unclaimed property from holders with an “unknown” or “unidentified” name, even if the property would be expected to have an owner name. 
  • The division had not taken physical custody of approximately 1,085 tangible unclaimed property items it should have taken under state statute. 
  • The division did not sell tangible unclaimed property within three years as required by state statutes. 
  • Treasury accounting staff recorded claims and interest distributions incorrectly, and has not determined the amount of the error or made necessary adjustments. 

 

The report offered several recommendations for remedying identified deficiencies. Colorado Treasurer Dave Young, who took office in January 2019, agreed with the findings and recommendations, telling the Denver Post, “We have been moving rapidly to change the course of the work in the office.” 

 

Some of the recommended fixes may affect unclaimed property holders. In addition to working with its software vendor to resolve data issues resulting from its 2017 conversion, the division may contact holders to seek additional information about previously reported property. 

 

The division also plans to implement steps to flag reports that identify property owners as “unknown” or “unidentified” for property types for which the holder is expected to have such information, including payroll checks and safe deposit boxes. The division will follow up on flagged reports to request the owner information. 

 

Colorado’s Unclaimed Property Division intends to implement the auditor’s recommendations by the end of 2020. 

 

Tags:  Colorado  reporting 

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