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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: April 2019

Posted By Administration, Wednesday, April 10, 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).

 

Industry Groups, Including UPPO, Submit Joint Comments Regarding Minnesota RUUPA Bills

On March 31, 2019, UPPO along with organizations representing life insurers, bankers, shareholder services professionals and transfer agents submitted a letter regarding RUUPA-inspired legislation to the Minnesota Department of Commerce. The coalition raised several concerns with Article 13 of H.F. 2208 and companion bill S.B. 2611. Learn more.

 

The language from H.F. 2208 has since been amended to a different House bill, H.F. 2538. 

 

More RUUPA-Inspired Bills on the Move

In Colorado, S.B. 88 was introduced in January. The RUUPA-inspired bill includes the reduction of some established state dormancy periods and retains some Colorado-specific sections from the current version of state’s unclaimed property statute. The Colorado Senate passed the bill in February and sent it to the House, where it passed with amendments. On March 26, the senate concurred with the House amendments and repassed the legislation. 

 

In Washington, D.C., B. 225 was introduced on March 27. The RUUPA-inspired bill has been assigned to the Finance and Revenue Committee for review. 

 

California Report Makes a Case for Amnesty

On March 20, 2019, the Sacramento Bee published an article discussing the estimated $24 billion in unreported unclaimed property in California. According to the article, only 2 percent of unclaimed property holders reported to the state in 2016, leaving more than a million businesses out of compliance with the state’s unclaimed property laws. 

 

The state’s Legislative Analyst’s Office recommended in a March 15 report, Increasing Compliance with Unclaimed Property Law, that the state implement “a one-time amnesty for holders who voluntarily report past‑due unclaimed property by temporarily waiving the penalty associated with delinquent reports.”

 

UPPO supports adoption of a voluntary disclosure agreement (VDA) program in California and recently registered as a lobbyist in the state to promote VDA legislation on behalf of its members.

 

Hawaii Bill Proposes Changes to Handling of Low Value Property

In the Hawaiian legislature, H.B. 1130 was introduced on Jan. 24, proposing a minor language change that could have a significant effect for Hawaiian residents. If enacted, unclaimed property valued under $100 would be transferred directly to the state’s general fund, and the unclaimed property administrator would be exempted from having to advertise such property. 

 

Currently, Hawaii escheats amounts of less than $100 to the general fund, but only after it has remained unclaimed for 10 years. 

   

Arkansas Adopts Law Calling for Immediate Liquidation of Securities

On March 15, Arkansas Gov. Asa Hutchinson signed H.B. 1427 into law. The bill allows the state unclaimed property administrator to sell securities upon receipt from holders. It states that a claimant to such securities may receive the securities if they remain in the custody of the administrator, or alternately may receive proceeds received from the sale of the securities, less any fees and expenses incurred from the sale. 

 

This legislation conflicts with the consumer protection intent of unclaimed property programs, as it prevents property holders from being able to take steps to recover the full value of their shares and creates irreversible tax consequences. It also raises constitutional issues addressed by the U.S. Supreme Court in the Taylor v. Yee decision regarding due process. 

 

GAO Calls for Clarity Regarding Unclaimed 401(k) Plan Tax Treatment

On Feb. 19, 2019, the U.S. Government Accountability Office issued a 59-page report calling on the Internal Revenue Service, Department of Treasury and Department of Labor to provide clarity regarding the tax treatment of unclaimed 401(k) plans transferred to states. Learn more.

 

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:  401(k)  Arkansas  California  GAO  Hawaii  Minnesota  Washington D.C. 

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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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UPPO seeks clarification about Arkansas advisory on abandoned mineral proceeds

Posted By Administration, Thursday, August 11, 2016

In a May 16, 2016, letter to holders of abandoned mineral proceeds, the Arkansas auditor’s office provided information about recent changes to the state’s unclaimed property laws for mineral proceeds. The notice included this advisory:

 

“If a mineral interest was derived from a well physically located in Arkansas (as evidenced by the legal description of the well) and the owners last known mailing address is UNKNOWN, the abandoned mineral interest should be reported to the Arkansas Auditor of State Unclaimed Property Division.”

 

UPPO recently responded to the Arkansas auditor’s office, raising concerns about the state’s guidance and seeking clarification. The association’s letter notes that the state’s position on property with an unknown address conflicts with federal law. Specifically, Arkansas’s guidance runs contrary to the unclaimed property priority rules established more than 50 years ago by the U.S. Supreme Court in Texas v. New Jersey:

 

        First Priority Rule: Abandoned property must be escheated to the state of the owner’s last known address, as determined by the holder’s books and records.

        Second Priority Rule: The property is paid to the state of corporate domicile if the owner’s address is incomplete or unknown, or if the owner’s last known address is in a state that does not provide for escheat of the property owed.

 

Coincidentally, Texas v. New Jersey was a case related to mineral proceeds. The state of Texas argued that at least the intangible obligations (royalties, rents and mineral proceeds) derived from land located in Texas should be escheatable only by that state. In the footnotes to its opinion, however, the Supreme Court said, “We do not believe that the fact that an intangible is income from real property with a fixed situs is significant enough to justify treating it as an exception to a general rule concerning escheat of intangibles.”

 

“It puts the holder in difficult position to have a state claim this property, knowing it’s owed to the company’s state of incorporation,” says William King, senior manager, state and local tax, unclaimed property for KPMG LLP.

 

The communication from Arkansas is certainly not the first time a state has issued guidance conflicting with federal law or even this specific issue. The 1988 case of American Petrofina v. Nance addressed an Oklahoma law requiring that proceeds held for owners with unknown addresses and generated from mineral interests in Oklahoma should be escheated to the Oklahoma Tax Commission.

 

The U.S. District Court ruled, and the Tenth Circuit Court of Appeals affirmed, that the Oklahoma law violated the U.S. Constitution’s supremacy clause and that the federal common law established in Texas v. New Jersey preempted the Oklahoma law.

 

In its letter to the Arkansas auditor’s office, UPPO expressed concern regarding the apparent conflict between the state’s guidance and the federal priority rules. The association hopes to gain prompt clarification for its members.

Tags:  Arkansas  compliance  mineral proceeds  priority rules  unclaimed property 

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Arkansas decreases the dormancy periods of most property types

Posted By Administration, Thursday, May 28, 2015
Updated: Thursday, July 30, 2015

Update: The post was updated on July 30, 2015, to reflect three additional property types (SD01-SD03) that weren't originally listed under the exception to the wide-spread dormancy changes. 

 

In April, the Arkansas legislature passed H.B. 1782 (Act 1039), which alters the dormancy periods of most property types, adds reporting requirements for holders reporting unclaimed mineral proceeds, and requires all holders to submit reports electronically. Changes will be effective July 22, 2015.

Below is a summary of the changes made by Act 1039:


1) Reporting format
Holders are required to submit reports electronically in the NAUPA standard format. 


2) Dormancy period changes
All property types with a dormancy period of five years now have a three year dormancy period. The exceptions are:

  • SC 08: Shares of stock (returned by the post office)
  • SC 09: Cash for fraction shares
  • SC10: Unexchanged stock of successor corp.
  • SC11: Other cert of ownership
  • SC12: Underlying shares or other outstanding certificates
  • SC15: U.S. Government securities
  • SC16: Mutual fund shares
  • SC19: Dividend reinvestment plans
  • SD01: Safe deposit box contents
  • SD02: Other safekeeping 
  • SD03: Other tangible property

3) Holders reporting unclaimed mineral proceeds must now include the following information when reporting:

  • The name, and last known address of the property owner
  • The applicable well name, uncontrolled lease name, or unitized area name as recognized by the Oil and Gas Commission
  • Either  (Note: Arkansas would like this information put in the description or comment fields on electronic reports)
  • The county, section, township, and range of the well
  • The county, section, township, and range from which the abandoned minerals were severed or produced  
  • Any other information required by the auditor of state

Questions? Contact the Arkansas Auditor of State’s Unclaimed Property Division at holders@auditor.ar.gov or call 501-682-9174.

 

Want more information like this?

Tags:  Act 1039  Arkansas  dormancy period  H.B. 1782  unclaimed property 

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Arkansas Adds Educationally-Geared Program to its Voluntary Filing Options

Posted By Administration, Tuesday, November 25, 2014

Arkansas is giving holders the opportunity to have past unclaimed property reports reviewed for inaccuracy and compliance with its unclaimed property rules. Arkansas’ new Voluntary Review Program (VRP) is intended to educate holders on compliance requirements using their previously submitted reports as the basis of the discussion.

The VRP is open to non-first time filers, not in receipt of an audit notice or in the midst of an audit. Enrolled holders will self-submit reports filed in the past 10 years for a thorough review by Arkansas’ unclaimed property officials. The review is intended to confirm compliance with Arkansas’ regulations and law and educate the holder on inaccuracies and potential liability on past reports.

For holders looking to better understand the reporting process or needing to train new employees, the VRP offers significant benefit and an opportunity to have continuous two-way dialogue with state officials otherwise not available. “Historically, we’ve had requests from holders for education. This [program] doesn’t use up too much of our resources and still provides what holders are looking for,” says Josh Wood, compliance officer, Arkansas Auditor of the State.

The VRP is intended to last less than one year. “Walking out of the conference, we’ll offer any problem items and a recommendation of next steps,” says Wood. The suggested next steps will likely include enrolling in either the Voluntary Compliance Program or Voluntary Disclosure Program.

Holders interested in the VRP need to apply by Dec. 31. The application process is simple and asks basic information about the holder be submitted via email. There are a limited number of spots (20 – 25 companies) available in the program.

Direct questions to Josh Wood, compliance officer, Arkansas Auditor of the State by email or phone (501) 371 – 2129.

 

More Resources

Register for the 2015 UPPO Annual Conference, March 8 - 11, to meet other state unclaimed property officials

Tags:  Arkansas  compliance  unclaimed property  voluntary review program 

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