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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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Developing a Strategy for Effective Asset Recovery

Posted By Administration, Wednesday, February 6, 2019

Unclaimed property compliance is a necessary, but expensive responsibility for many companies. However, unclaimed property professionals can help offset some of the costs associated with their role by taking on the holder. Seeking and recovering property owed to the company can turn an area that is normally a cost center into a profit center. 

 

Finding and claiming unclaimed property requires a well-planned and systematic effort. Some states publish unclaimed items only when they’re over a certain age or dollar amount, but these thresholds aren’t consistent from state to state. In addition, searchable data excludes a substantial amount of property held by cities, counties and other entities.

 

The complexities associated with a company’s structure and history compound these challenges. Property may not be listed only under the company’s current name. There may be property attached to numerous subsidiaries and other entities with different names, plus additional companies, subsidiaries and entities tied to mergers and acquisitions. Don’t forget about alternate spellings (or misspellings) and acronyms. 

 

Once property is located, recovering it can also prove challenging. Demonstrating that the property rightfully belongs to your company and that you have the authority to claim it carries another set of roadblocks. 

 

So, how should an unclaimed property professional approach this complicated task? Following are a few tips for making the process less cumbersome. 

 

Understand your company 

Having a comprehensive knowledge of your company’s business activities, holdings and history can help clarify the types of unclaimed property it is likely to have. Similarly, knowing the company’s legal names, DBAs, and merger and acquisition history is essential to conducting complete and effective unclaimed property searches. 

 

"To maximize recoveries, you must know your company,” said Kim Sawyer, consultant for PricewaterhouseCoopers. “Understand your M&A history, learn your corporate structure, identify all fictitious and previous names, appreciate your primary business lines and ascertain significant physical locations. Based on that information, create search and source lists. A search list consists of legal entities and fictitious name under which unclaimed property may be found. A source list narrows down where you are going to do these searches, based on clients, vendors and agencies that may owe you a refund.”

 

Build a reference library

Unclaimed property claims frequently require documents that verify the company’s relationship to its subsidiaries and predecessor companies. Maintaining a library of these documents makes the process easier and more efficient. The library should include: merger and acquisition filings, name change and fictitious name filings, an Internal Revenue Service letter containing the tax ID number, and a list of current and past real estate holdings.

 

Typically, the person signing for the unclaimed property must demonstrate the authority to do so. Depending on the holder or agency, proof may be as simple as company bylaws, but in many cases a secretary certificate or other specific documentation will be required. The signatory usually needs to provide a driver’s license for identity verification as well. 

 

“If you’re searching for a predecessor company that no longer exists, you’ll need documentation that the company was 100 percent owned by your company before it dissolved and, in some cases, you may have to legally revive the company before a source may pay out a claim,” Sawyer said. “When dealing with acquisitions, you’ll need to show documentation that your company is entitled to recover property that exists under the predecessor company’s name. Maintain these documents in an organized fashion because you’ll have to access them repeatedly.”

 

Get organized

A well-designed unclaimed property recovery system includes a thorough tracking document or database containing detailed, up-to-date information about searches, data requests and submitted claims. It should include property IDs, amounts, owner names and addresses, contact names and phone numbers, and scheduled follow-up dates.

 

Exercise care with third parties

If your company decides to seek assistance from a third-party specialist, perform due diligence to ensure you’re dealing with a reputable firm. Make sure you have a detailed explanation of the fee structure before signing any agreements. 

 

“It’s important to conduct background checks when considering a relationship with a third-party vendor,” said Donna Greenhalgh, unclaimed property supervisor with AT&T. “Seeking recommendations and feedback from other departments within your company may also be beneficial, since they may be using vendors that perform services for other purposes, such as tax services or audit support. Checking to see if they are UPPO members is also another worthwhile step.” 

 

Join UPPO for an in-depth look at recovering unclaimed property during the Recovering Assets for Your Company webinar at 1 p.m. EST on Feb. 13. Presenters Kim Sawyer and Donna Greenhalgh will provide insight and practical tips to help unclaimed property professionals find and recovery assets for their companies. Register today

Tags:  asset recovery 

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UPPO Advocacy Update: January 2019

Posted By Administration, Thursday, January 31, 2019

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).

 

More States Consider RUUPA-Inspired Legislation

With state legislatures back in session, it’s not surprise new RUUPA-inspired bills have begun moving. 

 

In Colorado, S.B. 88 would significantly revise the state’s unclaimed property statutes, including shortening of some dormancy periods and changes due diligence and reporting requirements. The bill has been assigned to the Business, Labor & Technology Committee for review. 

 

Likewise, Washington H.B. 1179 would update the state’s unclaimed property statutes, including provisions covering presumptions of abandonment, reporting requirements and due diligence requirements. The bill is scheduled for a Finance Committee hearing on Jan. 31.

 

A Noteworthy Trend

Two bills – North Dakota H.B. 1187 and Oregon S.B. 454 – would move administration of their states’ unclaimed property functions from the land commissioner and Department of State Lands, respectively, to the state treasurer. It’s not known whether this legislation was promoted by the National Association of State Treasurers, but the simultaneous consideration of two bills with essentially the same goal seems noteworthy.    

 

Priority Issue Workgroups

In preparation for the new congressional session, the GRAC Priority Issue Workgroups are finalizing talking points and single-page position papers about key issues. These materials will be used to help consistently demonstrate support or opposition of state legislation that is likely to affect unclaimed property compliance. 

 

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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Litigation Update: Univar Takes on Delaware

Posted By Administration, Thursday, January 24, 2019

Univar Inc. v. Geisenberger, et al.

 

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

  • Delaware’s retroactive application of amendments to the Delaware Abandoned and Unclaimed Property Law (DUPL), amended on Feb. 2, 2017. 
  • 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. 11, 2015, Delaware notified Univar it would be subject to an unclaimed property examination, conducted by Kelmar. Upon receiving document requests from Kelmar, Univar objected, citing confidentiality concerns, Kelmar’s self-interest, the estimation process and other aspects of the audit. According to Univar’s complaint, Delaware rejected or ignored the objections and continued to do so for more than two years. On Oct. 30, 2018, the state issued a subpoena for the records Kelmar had previously requested. 

 

The Univar case includes several issues that have been part of other recent cases, including Temple-Inland v. CookPlains All American v. Cook and Marathon Petroleum v. Cook. However, unlike those lawsuits, the Univarcase was filed after the February 2017 DUPL amendments and, thus, questions the state’s ability to retroactively apply those amendments to audits that were initiated earlier.  

 

“The subpoena power that Delaware is relying on to force production of records from Univar was not effective until February 2017,” said Jameel Turner, one of the attorneys with Bailey Cavalieri who is representing Univar in this case. “The February 2017 amendments also created a 10-year record retention requirement for unclaimed property records. Prior to that time there was no record retention requirement. Delaware is using estimation for holders that did not comply with a record retention requirement that did not exist until February of 2017. So, they are using estimation when holders do not have records for periods when the law did not require records to be kept. It simply does not make sense.”

 

Univar also picks up the challenge to Delaware’s estimation methodology where Temple-Inland left off. The Temple-Inland court ruled that the state’s estimation methodology was unconstitutional. Univar argues that Delaware merely added a 10-year look-back period but otherwise continues to rely on estimation practices already declared invalid.

 

Delaware and Kelmar also allegedly responded to Temple-Inland by rescinding its requests to holders for prior unclaimed property filings for all states because the court took issue with the practice. However, after the case was settled, these requests were reinstated and the state incorporated the right to request such prior filings into the 2017 DUPL amendments. 

 

“Delaware and Kelmar use prior unclaimed property filings for states not participating in the audit to increase the potential liability due and payable to Delaware,” Turner said. “Univar is asking a judge to confirm that the way they are using those prior filings is unconstitutional and that prior filings in nonparticipating states are not relevant to whether a holder has liability due and payable to any participating state.”

 

One of the issues in the Univar case that was also a factor in other recent litigation is the concept of ripeness. The Plains All American case also questioned Delaware’s use of estimation. The court said Plains may have valid complaints, but because the state had not yet formally taken steps to request records or force Plains to comply with the audit, the case was not yet ripe. 

 

“One of the reasons the Plains All American case was dismissed was because Delaware had not made a formal demand for compliance with the audit request,” Turner said. “Univar has been served with a subpoena, so Delaware has taken steps to formally compel Univar to provide records. That’s a significant factor that distinguishes Univar’s situation from that of Plains All American.”

 

Ultimately, a decision in the Univar case may provide clarity for unclaimed property holders regarding the state’s audit and estimation practices. 

 

UPPO will continue to monitor and report on the progress of the Univarcase as noteworthy developments occur.  

Tags:  audits  Delaware  estimation  litigation  Plains All American  Temple Inland  Univar 

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Unclaimed Property News Roundup

Posted By Administration, Wednesday, January 16, 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 property: It’s not just for individuals and companies

On Dec. 19, 2018, KMBC news in Kansas City, Mo., reported that the Kansas and Missouri unclaimed property owner lists included many schools and municipalities. In addition to the news story, reporter Matt Flener tweeted that more than 900 schools in Kansas are owed more than $143,000; more than 500 Kansas cities are owed more than $195,000; and Missouri has undetermined amounts owed to more than 600 schools and more than 1,400 cities.

 

Fraudsters hit Arkansas unclaimed property coffers

On Dec. 15, 2018, several Arkansas outlets reported that the state auditor’s office paid out at least $40,000 in fraudulent unclaimed property claims. The scammers used stolen identities to claim the funds. In response to the discovery, Auditor Andrea Lea told state officials her office had enhanced its verification process.

 

It’s not easy retrieving green

On Nov. 29, 2018, NBC Connecticut reported on challenges one of its viewers had claiming $138 in unclaimed property despite following the state’s instructions. The television station’s consumer reporter intervened and successfully helped the fund owner get her money.

 

Fame, fortune and uncashed checks

A popular, recurring unclaimed property news story highlights celebrities who appear on state unclaimed property lists. One of the latest examples of this appeared in the Nashville Tennessean on Nov. 21, 2018. The newspaper discovered that Tennessee’s unclaimed property list included two checks totaling $179 owed to musician Keith Urban, a $100 manufacturers rebate owed to singer Trisha Yearwood, and $150 in telecommunications payments waiting to be claimed by hockey player Pekke Renna.

Tags:  Arkansas  fraud  Kansas  Missouri  municipalities 

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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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