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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 Asks: What Gets You Through Fall Reporting Season?

Posted By Administration, Thursday, September 15, 2016

Periodically, UPPO asks members to respond to a question, sharing their ideas, insights, and experience. The recurring UPPO Asks feature is a compilation of their responses.

 

We recently asked several members: “What gets you through fall reporting season?”

 

“My team of three who manage the Eaton Corporation annual compliance process stated that the following gets them through the fall reporting process:

  • Perseverance and teamwork gets me through fall filing.
  • Timely processing of DDL responses and holding weekly status meetings with the team.
  • Teamwork, organization, time lines and blocking the calendar.”

—Laura Lane, manager, unclaimed property, Eaton Corporation – North American Financial Services Center

 

“The fantastic software that I use really keeps me on track and I try to stay ahead on what reports are due and when. Staying on top of things makes my life a lot easier and less stressful!”—Victoria Blann, accounting assistant, Murphy USA

 

“We have several things that help us get through the fall filings:

  • Internal schedule. We have a set schedule that we follow internally that gives us some leeway in case anything comes up such as technological issues, scheduling conflicts, or upcoming projects. We plan our schedule well in advance so that we can prepare ahead of time if we know of any upcoming projects or time off.
  • Organization. We are very organized with our filings. We have a folder for each state that organizes each annual filing with all details and copies of items that are needed.  
  • Customer Service. We are a very customer service based company. We are motivated to get money back to customers. We allow ourselves extra time for responses to due diligence letters as well as any necessary follow-up.
  • Recognition. We are very good with motivating, praising, and rewarding employees. They work very hard because they know they are appreciated, and it feels good when they get to hear they did a great job and everything was filed on time with no major issues.
  • Caffeine.
  • Set procedures. Having procedures in place on how items are handled makes things a lot smoother. Everything is consistent between different individual's work and helps when reviewing before report submission.

I think overall, the biggest key to getting us through, especially with multiple items due around the same time, is organization. It is a lot of work at once and staying organized and having a schedule helps alleviate some of the stress of how will I finish all of this, when should I start this, will I have enough time for other things, what if I get sick, or what am I going to do if this can't get done.”—Shannon Shellberg, unclaimed property team lead, Uline

 

“Responsible, dependable co-workers who pay keen attention to state statute changes.”—Bianca Lopez, managing director of client tax reporting, Charles Schwab & Co.

 

“Several things:

  1. Planning and preparation
  2. Review of the state UCP regulations and remittance instructions to ensure any changes in the law have been captured
  3. Having a calendar of events and deliverables taking into consideration your volume.  (Project plan)
  4. Organization and focus on the tasks due and to be completed.
  5. Automation  (where possible)
  6. On-time delivery of reports, files and property”

—Craig Keller, manager of unclaimed property, Computershare

 

Now it’s your turn. What gets you through fall reporting season? Add a comment to this post to share your response.

 


Tags:  unclaimed property  UPPO Asks 

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Recent state law changes may affect fall reporting

Posted By Administration with contribution by Marcella Easly, senior compliance advisor at UPCR, Thursday, September 8, 2016

With Labor Day weekend signaling the end of summer, fall reporting season is rapidly approaching. A handful of changes to unclaimed property laws in states with fall reporting deadlines have gone into effect since last reporting season. Following is a brief summary of some of the relevant changes.

 

Colorado

Effective on Aug. 10, 2016, H.B. 1090 includes rules regarding the premium, also known as a “finder’s fee,” that a person may charge for offering assistance in recovering the balance of the purchase price of foreclosed property after all liens and claims against the property have been satisfied. The bill also reduces the dormancy period during which the public trustee must hold the funds from five years to six months. It also voids any contract for payment of a finder’s fee during the first six months of the public trustee’s custody of the fund and during the first two years of the state treasurer’s custody of the funds. It caps the finder’s fee at 20 percent of the amount recovered once these periods expire. For amounts that have been in custody of the state treasurer for three years or more, the finder’s fee may be up to 30 percent.

 

Idaho

Effective on July 1, 2016, S.B. 1347 revises existing law to allow transfer of authority and responsibility of handling excess proceeds from tax deed sales to the state treasurer and to provide duties of the board of county commissioners. The revision states, “Once the tax deeded property has been sold, the board of county commissioners shall immediately transfer the excess proceeds to the state treasurer's office. The county shall then deliver all unclaimed funds to the unclaimed property division of the office of the treasurer of the state of Idaho. The state treasurer's office shall be responsible for the safekeeping and distribution of any requests for the excess funds in accordance with chapter 5, title 14, Idaho Code.”

 

Rhode Island

H.B. 7832 and companion bill S.B. 2753 became effective on July 11. They specify the procedure for the escheat of unclaimed U.S. savings bonds, requiring that such bonds escheat to the state three years after becoming unclaimed property.

 

Wisconsin

A.B. 721, effective on April 1, 2016, provides that a savings bond that remains unredeemed by the owner for more than five years after the date of final maturity is presumed abandoned. “Final maturity” means the date a bond stops earning interest upon reaching its final extended maturity date. The adopted substitute amendment provides that the five-year abandonment provision in the bill applies only if the three circumstances for abandonment under current law do not apply. If one of the three circumstances under current law applies, then the applicable abandonment period under current law applies.

 

Wyoming

Effective on July 1, 2016, H.B. 95 removes the scheduled repeal date on provisions governing the abandonment of gift certificates, merchant store value cards and credit memos.

 

For the latest information about these and other noteworthy unclaimed property bills, visit UPPO’s govWATCH website.

 

About the contributor

Marcella Easly, senior compliance advisor at Unclaimed Property Consulting & Reporting (UPCR), contributes to UPPO’s regular legislative update blog posts. Easly has over 30 years of unclaimed property experience with special focus in state legislative tracking and resolving client-state advocacy issues. She was Unclaimed Property Manager for the State of Oregon for 14 years.  She was active in the National Association of Unclaimed Property Administrators (NAUPA), serving as President, and Regional Vice President.  She was instrumental in the creation of the NAUPA property type reporting codes.  She has been with UPCR for 10 years, and has been active in UPPO for over 12 years.

 

Tags:  fall reporting  legislation  unclaimed property 

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Delaware addresses Temple-Inland’s effect on VDA program

Posted By Administration, Tuesday, September 6, 2016

In response to the recent Temple-Inland opinion and subsequent settlement, Delaware Secretary of State Jeffrey Bullock issued a two-page statement, addressing their effect on the state’s voluntary disclosure agreement (VDA) program.

 

Highlights include:

  • Beginning immediately, VDAs will limit their look-back period to 10 years plus dormancy from the date a holder enrolled.
  • The secretary of state and Department of Finance will propose changes to the state’s unclaimed property laws, upon the Delaware General Assembly’s January return. Proposed changes will address a record revision provision for unclaimed property reports tied to the current statute of limitations and, possibly, a negative reporting requirement. 

Bullock’s statement also addresses the use of estimation:

“As outlined in our Implementing Guidelines, we expect holders to ‘reasonably estimate’ liabilities for periods in which the holder’s records are unavailable or insufficient to prepare a report of presumed past due unclaimed property liability. There is no estimation involved for non-Delaware domiciled entities, and all estimated unclaimed property for the period a holder determines it does not have available records would be reportable to the holder’s state of incorporation or formation. This rule is a bright line between what is owed to Delaware and what is owed to any other state to ensure that a holder does not pay twice for the same unclaimed property.”

 

UPPO will continue to monitor and report on the effects of the Temple-Inland decision. 

Tags:  audits  Delaware  unclaimed property  VDA 

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Litigation update: Delaware remains in the litigation hot seat

Posted By Emily Lee, UPPO, Thursday, September 1, 2016
Updated: Tuesday, September 6, 2016

Litigation continues to take aim at Delaware’s controversial unclaimed property practices. In addition to the recently settled Temple-Inland lawsuit, three cases involving Delaware have recently taken the spotlight.

 

Office Depot v. Cook

Like many retailers, Office Depot established and continues to use a special purpose entity for oversight and management of its gift cards and gift certificates. The gift card management company, North American Card and Coupon Services (NACCS), was incorporated in 2002 in Virginia, which exempts gift cards from unclaimed property reporting. NACCS does not collect names and addresses of gift card or certificate purchasers.

 

As part of an audit that began in 2013, Delaware’s third-party auditor, Kelmar, requested information from Office Depot that included detailed records regarding NACCS transactions. Office Depot declined to provide this information, arguing that NACCS transactions fall outside of Delaware’s jurisdiction under the priority rules established by the U.S. Supreme Court in Texas v. New Jersey.

 

As a result of Office Depot’s refusal to turn over requested NACCS documentation, Kelmar subsequently referred the issue to Delaware’s attorney general for “enforcement action.”

 

On July 18, 2016, Office Depot and NACCS filed suit against Delaware unclaimed property officials, seeking a declaratory judgment that the state’s unclaimed property practices violate the Fourth Amendment and federal common law. The plaintiffs argue that:

  • The defendants’ information request amounts to unreasonable search and seizure.
  • Delaware’s unclaimed property laws violate the priority rules established in Texas v. New Jersey.

Marathon Petroleum v. Cook

Issues similar to the Office Depot case are at play in Marathon Petroleum v. Cook. Marathon uses a gift card management company incorporated in Ohio, another state that exempts such property from escheatment. After Marathon objected to an $8 million estimated liability for gift certificates for which the company said it had issuance and redemption records, Kelmar—on behalf of Delaware—requested records related to the gift card company’s creation and operations.

 

Among the information requested were contracts, meeting minutes, vendor agreements and accounting records. Marathon refused, arguing that such request is outside of Delaware’s jurisdiction. Again, Kelmar suggested it would turn over the issue to the attorney general for enforcement action.

 

In February, Marathon filed suit. Like in the Office Depot case, the plaintiffs argue violation of the federal priority rules and the Fourth Amendment. The Marathon case also takes issue with the state’s estimation practices.

 

According to Delaware Law Weekly, Delaware argued on Aug. 10, 2016, that the Texas v. New Jersey applies only to disputes between states, not audits of private entities. The defendants also reportedly argued that Marathon’s claims are premature, as they would have their chance to make their case in state court if they continued to resist turning over requested documents. Attorneys for Marathon took issue with the state’s interpretation of federal law and compared the nine-year audit of the company to a “fishing expedition.”

 

Plains All American v. Cook

A limited partnership incorporated in Delaware, Plains All American Pipeline, received notification in 2014 that Kelmar would be conducting an audit of the company on behalf of Delaware. Plains objected to the initial information request, claiming, in part, that the company was being audited not because of any suspicion of wrongdoing, but rather because of its profitability. When Delaware dismissed the company’s objections, Plains filed suit.

 

Among the complaint’s allegations, Plains argues that Kelmar’s request for information about subsidiaries organized outside of Delaware constitutes illegal search and seizure under the Fourth Amendment. The company argued that the state and its agent have no right to that information and, if they did, they would need to have reasonable grounds to search for it. The complaint also directly challenged Delaware’s right to use estimation.

 

On Aug. 16, 2016, the U.S. District Court for the District of Delaware dismissed the lawsuit. In part, the court said the plaintiffs brought their suit based on potential threats and not actual threats. For example, Plains challenged the state’s right to use estimation before it had done so, as the lawsuit was brought immediately following Kelmar’s initial information request. Regarding the Fourth Amendment claim, the court said the state’s decision to examine businesses based on their profitability was legitimate, as those companies are logically more likely than others to hold large amounts of unclaimed property.

 

About the contributor

Sam Schaunaman, senior manager at Ryan AUP and member of the UPPO Government Relations and Advocacy Committee, contributes to UPPO’s monthly litigation update blog posts. Schaunaman has over 26 years of unclaimed property experience in all aspects of unclaimed property and is a frequent author of unclaimed property articles and whitepapers. Schaunaman is a member of the Oklahoma Bar Association and American Bar Association.    

 

Disclaimer: This case summary contains a general description of the case, and neither UPPO nor Ryan, or any of their affiliated or related entities, by means of this summary, is rendering business, financial, legal, tax, reporting or compliance or other professional advice or services.  This summary blog is not a substitute for such professional advice.

 

Tags:  audits  Delaware  gift cards  litigation  unclaimed property 

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UUPA addresses data security and confidentiality concerns

Posted By Administration, Thursday, August 25, 2016

Nearly every week, at least one major data breach makes the news. In the first eight months of 2016 alone, 600 data breaches have put more than 21 million records containing personal information at risk, according to the Identity Theft Resource Center. Companies of all sizes and doing business in all industries are at risk, and the long-term effects include significant damage to a company’s bottom line and reputation.

 

With so much sensitive information at play, unclaimed property is especially susceptible to potential data leaks. Consider the vast amount of information transferred between holders and states, using a variety of systems, formats and media. Add service providers and third-party auditors to the mix, and even more opportunities for data breaches arise.

 

Unclaimed property holders voiced these concerns to the Uniform Law Commission (ULC) as it worked on writing the 2016 version of the Uniform Unclaimed Property Act (UUPA). The ULC responded by addressing data confidentiality and security in Article 14.

 

“This is an extremely positive addition to the Uniform Unclaimed Property Act,” says Karen Anderson, UPPO Government Relations and Advocacy Committee co-chair. “Article 14 really helps modernize the Act, which is one of the goals of the ULC Drafting Committee. It also provides some of the protections holders really need.”

 

The provisions in Article 14:

  • Define which information state administrators and their agents must keep confidential.
  • Establish the conditions under which an administrator can share confidential information.
  • Specify that people under examination may require anyone who will access their records to sign confidentiality agreements.
  • Establish that holders must transmit confidential information required by state administrators by a secure means.
  • Spell out responsibilities in the event of a security breach.
  • Provide indemnification for holders if information in the possession of the administrator or its agents is breached.

Holders are very reticent to provide data in an audit because the state doesn’t necessarily have a requirement to receive it in a secure manner or hold it securely,” Anderson says. “If the states adopt this, the holders will have more assurance and more confidence that data they provide is going to be sent in a secure manner, but also that the state will safeguard it. Even more important, the third-party agents they hire, like auditors, will be required to do so as well.”

 

Many of the UUPA’s new confidentiality and security provisions reflect recommendations from data security experts. Companies are responsible for keeping sensitive data secure and taking reasonable measures to ensure it doesn’t get into the wrong hands. When unclaimed property holders transfer that sensitive data to state administrators and, in the event of an examination, to third-party agents, they have less control of the information than when it simply resides in their internal systems.

 

“When you’re dealing with third parties, the most important thing to do is ensure you have an appropriate agreement in place that sets out the data protection measures you expect them to follow,” says Douglas Bloom, director of cybercrime and internet response for PricewaterhouseCoopers. “If you’re not doing that, you’re not protecting yourself.”

 

Having appropriate confidentiality and data protection agreements in place should be a standard part of working with third parties. However, in the case of unclaimed property audits, where the third parties act on behalf of the state administrators, holders aren’t in a position to mandate such agreements today. The new provisions in the UUPA not only allow for such agreements, but also put much of the responsibility on state administrators to ensure they have proper protocols and agreements in place.

 

In addition to providing holders with increased protection when dealing with auditors, the new data privacy provisions may accelerate the transition of states to strictly online transmission of unclaimed property reports as well.

 

“States, and the government agencies in general, are often way behind in adopting new technologies and new processes and procedures, which is unfortunate,” Bloom says.

 

While most states already refuse hard copy reports, some still allow for reporting via electronic media, such as CD-ROM. Online report submission is not perfect. States are inconsistent in their format requirements, and most don’t allow for easy batch submission by service providers on behalf of multiple companies. However, it eliminates the data privacy concerns associated with physical media and shipping of that media from one location to another.

 

Because unclaimed property holders maintain personal information about their customers, employees and business partners, data security and privacy concerns will continue to be an important aspect of their business. If adopted the new UUPA provisions will provide additional protections and welcome relief from some security challenges that are currently out of their control.

 

Tags:  data privacy  data security  RUUPA  ULC  unclaimed property 

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