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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: 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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District of Columbia Considers RUUPA Bill ​

Posted By Administration, Thursday, November 8, 2018
Updated: Wednesday, November 7, 2018

On Jan. 5, 2018, District of Columbia Council member Jack Evans introduced bill B22-0654, the district’s version of the Revised Uniform Unclaimed Property Act. The bill sat idle throughout much of the year until an Oct. 10, 2018, public hearing.  

 

If enacted, the new law would reflect a substantial overhaul of the district’s unclaimed property requirements, including changes to required due diligence practices, dormancy triggers and covered property types.

 

As with many of the bills introduced nationwide in the wake of the RUUPA’s adoption by the Uniform Law Commission, the D.C. bill contains potential issues, including several discrepancies related to the Derivative Rights Doctrine, which allows the state rights equal to, but not greater than, those of the owner.

 

For example, the bill includes gift cards under the definition of “stored-value cards,” requiring escheat of such cards that are redeemable for goods and services. Because the owner can’t redeem a gift card for money, it stands that the state shouldn’t be able to claim their cash value. The bill’s broad definition of “stored value card”  and “virtual currency” could similarly require escheat of property types not normally redeemable for cash by the owner. 

 

B22-0654 also would require holders to escheat property even if the owner’s rights to the property have expired under a contract, court order or other law. Much like with gift cards and stored value cards, this provision gives the government rights beyond those of the property owner. 

 

The bill may present other challenges as well. The American Council of Life Insurers, which supports the overall bill, has raised concerns that conflicts between regulators may arise as a result of the bill’s provision specifying that a death master file match be considered knowledge of death of an insured or annuitant.

 

With all significant unclaimed property legislation, UPPO’s Government Relations and Advocacy Committee evaluates bill language and develops a response on behalf of the organization. UPPO and GRAC will continue to monitor this legislation, and we will provide updates as appropriate. 

 

UPPO members can track the progress of this bill and all active unclaimed property legislation nationwide via our govWATCH service

 

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:  Death  Derivative Rights Doctrine  District of Columbia  DMF  RUUPA 

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Illinois Official Addresses Unclaimed Property Legislation Questions

Posted By Administration, Tuesday, November 28, 2017
Updated: Tuesday, November 28, 2017

On Nov. 14, 2017, Allen Mayer, deputy general counsel for the Illinois Treasurer’s Office, spoke to the Illinois Chamber of Commerce about the Illinois Revised Uniform Unclaimed Property Act. UPPO submitted several questions, most of which Mayer addressed during his presentation. Sara Lima and Freda Pepper, members of UPPO’s Government Relations and Advocacy Committee, attended the event.

 

According to Lima, Mayer’s attitude toward the state’s new law was exceedingly positive, as would be expected given that the law “favors the state’s position on many ambiguous legal issues.” Of particular note, Mayer described Illinois’ prior unclaimed property law as an “antiquated mess” and characterized the prior business-to-business exemption as a “loophole” that has now been closed.  

 

Has the legislature considered the constitutionality issues raised by the transitional provision? Requiring Holders to look back 10 years (five-year requirement plus five-year dormancy period) to report otherwise exempted property raises due process issues. 

Mayer said that, although he cannot speak for the Illinois General Assembly, he considers the lookback period to be eight years (five-year requirement plus three-year dormancy period under the new Illinois unclaimed property statues). He noted that he personally researched the constitutionality issue and believes the exemption can be retroactively revoked, citing Riggs Nat. Bank v. District of Columbia (581 A.2d 1229) in particular.

 

In attempting to comply with the transitional provision, records dating back to that period of time will most likely not exist, particularly because there has been no record retention requirement contained in Illinois’ unclaimed property law. What will be the consequences of not being able to “catch up” report when these records are no longer available?

Mayer responded that there has always has been a record-retention provision, although it was hard to find before the new Illinois unclaimed property legislation. He cited Section 11(h)(ii), which proscribes a five-year retention from when property is reportable. According to Mayer, holders who report “catch up” property on the 2018 report will not be subject to interest and penalties. He also invited feedback and suggestions on how the state should otherwise deal with the issue.

 

Has there has been any study of the impact of the transitional provision on the business community?

Mayer did not directly respond to this question.

 

Has there has been any study of the impact of the removal of the B2B exemption on the business community?

Mayer said there were some fiscal projections and that the exemption was not as significant as he believes many expected. He noted that he believes companies may not have been fully using the exemption in practice.

 

What specifically will the administrative rules be addressing?

Mayer did not provide any specific topics, but noted Illinois will be considering pay cards (possibly in new legislation) and is open to informal discussion about this topic.

 

Could you please provide clarification of when reports are expected to be filed by investment companies? Are they considered “business associations” that are required to file by May 1?

Mayer specified that investment companies are business associations, required to file by May 1. He said he would be open to including clarification in future legislation.

 

Tags:  Illinois  RUUPA 

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Tennessee Reduces Dormancy Period, Adds Requirements

Posted By Tim Dressen, UPPO, Thursday, August 10, 2017
Updated: Wednesday, January 9, 2019

Among the first states to pass a version of the Revised Uniform Unclaimed Property Act this year was Tennessee. On May 25, 2017, Tennessee Gov. Bill Haslam signed H.B. 420 into law, effective July 1, 2017. The new law includes several substantial changes to the state’s unclaimed property requirements. Noteworthy provisions include:

 

New property types: Among the new property types addressed in H.B. 420 are health savings accounts (HSAs) and stored value cards. HSAs are presumed abandoned if unclaimed three years after the earlier of either the date distributions must begin to avoid tax penalty or 30 years after the account was opened. Stored value cards (other than payroll or gift cards) are presumed abandoned five years after the later of: Dec. 31 of the year in which the card was issued or funds were last deposited; the most recent indication of owner interest in the card; or a verification of the balance by or on behalf of the owner. 

 

Due diligence: Holders must perform due diligence for property valued at $50 or more. Notices must be sent to apparent owners by first-class mail between 180 days and 60 days before the unclaimed property report is filed. Owners who have consented to receive electronic communications must be sent the notice by both first-class mail and email unless the holder believes the email address is invalid. 

 

DMF matching requirement: The new law specifies that life insurers must perform searches of the death master file and comply with the Unclaimed Life Insurance Benefits Act. 

 

Dormancy periods: Most property type dormancy periods have been reduced from five years to three years under H.B. 420.

  

Record retention: Holders are required to retain records for 10 years after the unclaimed property report was filed or was due to be filed. 

 

Promulgation of examination rules: The new law specifies that the state treasurer should develop rules for examinations, including procedures and standards for estimation, extrapolation and statistical sampling.

 

Sale of securities: H.B. 420 requires the treasurer to sell a security between eight months and one year after receiving it and giving the apparent owner notice. If the treasurer sells the security within five years, and a valid claim is filed before the five-year period expires, the owner will be entitled to receive a replacement of the security or its market value plus interest.

 

Informal conference provision: This law establishes provisions for an informal conference in situations where an examination results in a determination that a holder has failed to pay or deliver reportable property to the treasurer. It also allows for judicial review of the treasurer's decision. 

 

Exemptions: The law retains the state’s business to business and gift card exemptions. 

 

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

 

Tags:  audits  DMF  dormancy periods  due diligence  record retention  RUUPA  securities  Tennessee  unclaimed property 

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Illinois Passes New Unclaimed Property Act, Repeal Effort Underway

Posted By Administration, Thursday, July 20, 2017

On July 6, 2017, Illinois budget bill S.B. 9 became law after the House voted to override the governor’s veto. Among the provisions added to the bill shortly before passage was the Illinois Revised Uniform Unclaimed Property Act, which repeals the state’s current unclaimed property statute and replaces it with new language. 

 

S.B. 9’s unclaimed property provisions become effective on Jan. 1, 2018. However, a movement to repeal the Illinois RUUPA is already underway. 

 

Illinois RUUPA

Among the Illinois RUUPA provisions that are most noteworthy for holders are:

  • The new statute’s definition of escheatable “property” specifically excludes game-related digital content, loyalty cards and gift cards. The definition of “stored-value card” specifically excludes loyalty cards and game-related digital content but includes gift cards. Because stored-value cards are escheatable property, these opposing definitions present an obvious conflict for holders that deal with gift cards. 
  • The new statute defines “virtual currency,” and includes it within the list of escheatable property.
  • Tax-deferred accounts are considered abandoned under the new statute three years after either the required distribution date for avoiding tax penalties, or the 30th anniversary of the account’s opening date—whichever is earlier. Earlier abandonment dates are specified for deceased owners of such accounts. The statute specifically includes health savings accounts in the tax-deferred account provision. 
  • Similarly, the statute includes detailed provisions regarding custodial accounts for minors.
  • Holders are required to maintain records for 10 years. Retained records must include unclaimed property report information; the date, location and circumstances that led to the property rights; property value; last-known owner address; details for items that were not reported as unclaimed; and details related to money orders, traveler’s checks and similar instruments. 
  • The statute incudes a “transitional provision” that requires holders to file an initial report for property that was not previously reportable, but is reportable under the new statute for a period of five years from the effective date (Jan. 1, 2018). 
  • The state’s current business-to-business unclaimed property exemption is excluded from the new law. 

 

Repeal Effort

Before S.B. 9 passed, efforts to repeal the Illinois RUUPA provisions were already underway. On July 3, 2017, Rep. David McSweeney introduced H.B. 4078, which specifies that if S.B. 9 becomes law, the Illinois RUUPA provisions contained in S.B. 9 will be repealed, effective immediately. If passed, the state’s current unclaimed property law, the Uniform Disposition of Unclaimed Property Act, would remain in effect. Before the Illinois legislature’s recess, 19 representatives signed on as co-sponsors of the bill. 

 

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

 

 

Tags:  B2B exemption  gift cards  Illinois  RUUPA  unclaimed property  virtual currency 

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