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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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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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New Tennessee Administrative Rules go into Effect

Posted By Administration, Thursday, March 7, 2019

On March 4, 2019, new administrative rules regarding unclaimed property went into effect. The rules are the latest in a series of updates to the state’s unclaimed property laws and practices, which also include the passage of H.B. 420, the state’s version of the Revised Uniform Unclaimed Property Act, and H.B. 2278, which changed the state’s unclaimed property reporting date from May 1 to Nov. 1. 

 

Noteworthy sections of the rules for holders include:

 

Reporting

  • Electronic reporting is required.
  • Negative reports may be filed. 
  • Reported cashier’s checks must include the name and address of the payee and purchaser, if known.
  • When filing initial safe deposit box reports, property should continue to be held for an additional year before filing a final report and turning over the property to the state.

 

Property Delivery

  • Most property should be remitted electronically via ACH or other method approved by the treasurer. 

 

Securities

  • Remitted securities shall include all dividends, interest, warrants or other rights, or associated cash payable by check or electronically.
  • Holders shall remit securities in such a form that future earnings will be delivered in cash rather than an increase in the number of shares. 
  • Holders shall remit securities in a form that allows the treasurer to sell them. 

 

Examinations

  • Holders will receive a notice of examination at least 30 days before an examination begins.
  • An examination will begin with an entrance conference at which time the examiner will identify other states participating; a tentative timeline and duration; a description of responsibilities; the potential types of records subject to examination; the lookback period; and an explanation of methods and estimation techniques that may be used.
  • An examination may include records of current accounts, dormant accounts and accounts that may have been closed and archived; agreements regarding the deduction of service charges; increases or decreases in account value; and interest payments; and policies and procedures.
  • If records are unavailable, estimation of liability may be used. The examiner will provide written notice of the estimation methodology and for which years. The examination subject may object to the estimation methodology by following the process defined by state law. 

 

Due Diligence

  • Holders are expected to conduct due diligence.
  • The return of first-class or superior mailing sent to the owner’s last-known address is considered evidence that the owner’s location cannot be ascertained. 
  • First-class or superior mailings that are not returned as “undeliverable” are considered owner contact and an indication of interest in the property. Examples include computerized account  or interest earning statements. 

 

Holders with unclaimed property reportable to Tennessee can access the new rules, related Tennessee laws and regulations, and additional compliance information on the state’s Treasury Department website.  

Tags:  audits  due diligence  examinations  reporting  securities  spring reporting  Tennessee 

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Common reporting errors in healthcare

Posted By Administration, Thursday, April 21, 2016

Nearly every holder that reports unclaimed property to the states faces certain nuances unique to their industry. Being aware of some of the challenges and potential pitfalls of those nuances can help ensure reports contain fewer errors. During the Industry Focus: Healthcare session at the 2016 UPPO Annual Conference, Leigh Underwood, senior manager of unclaimed property and insurance taxes for HCA Healthcare, shared some of the common reporting errors healthcare providers face.

 

Proper owner

Healthcare providers receive payments from multiple payers on a single account. They include patients, insurance companies, patient guarantors and, if the patient has passed away, estate executors. Doing sufficient due diligence is essential to ensuring the correct property owner is listed on the report.

 

“If you look at the account information and see that a patient’s birth date was seven years ago, you know that person isn’t making the payment,” Underwood says. “So you need to look at the patient account and see who the patient guarantor is.”

 

Social Security numbers vs. federal ID numbers

When remitting property to the state for an insurance company, ensure the field for a Social Security number or federal ID number lists the company’s federal ID number rather than the patient’s Social Security number. It is common for providers to inadvertently include the patient’s Social Security number, but doing so makes matching the account to the insurance company challenging.

 

Insurer’s last known address

The employees who enter information into the provider’s database are sometimes tempted to use shortcuts rather than thoroughly entering each piece of data properly. For example, they may enter “see address on insurance card” in the insurance company address field. Unfortunately, this presents a problem for the person filing the unclaimed property report, who doesn’t have access to patients’ complete records.

 

“Talk to the people who are gathering that information and make sure they understand the need for including complete information in the correct fields,” Underwood says.

 

Multiple patient addresses

If a patient’s record includes both a physical address and a mailing address, it is essential to be aware of any restrictions placed on use of the physical address. Patients may specify that they do not want any correspondence sent to the physical address for privacy reasons. Particularly in the case of providers specializing in sensitive areas such as psychiatric care, patients may not want other people who have access to mail sent to the physical address to know about the care they are receiving.

 

Multiple addresses also increase the chances of an incorrect city, state or ZIP code on the report. Ensure the information from these fields corresponds to the mailing address rather than the physical address.

 

Tools

UPPO offers several tools to help unclaimed property professionals meet their reporting requirements. The Jurisdiction Resource Guide outlines reporting requirements of U.S. and Canadian jurisdictions in one central location. Member forums provide an online medium to discuss reporting challenges and other issues with peers. The govWATCH legislative and regulatory tracking service helps members keep up with pending bills and enacted legislation that could affect reporting requirements.

 

More information

UPPO Jurisdiction Resource Guide

Identify and eliminate common reporting errors

How to avoid the five most common unclaimed property reporting and remitting errors

Tags:  compliance  health care  reporting  unclaimed property 

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State Legislatures Consider Priority Issues

Posted By Administration, Tuesday, March 8, 2016

With most state legislatures currently in session, lawmakers across the country are considering a variety of unclaimed property bills. Several of these bills address UPPO’s priority issues, including dormancy periods, reporting requirements, and states’ use of auditors on a contingent fee basis.

 

Dormancy periods

In Illinois, H.B. 4601 would extend the dormancy period from five years to eight years for certain property types. The bill also specifies that property is not presumed abandoned when certain actions occur:

  • A federal taxable interest statement sent to the owner was not returned;
  • A dividend check was cashed; or
  • Any automatic transaction took place.

H.B. 4601 was referred to the Rules Committee on Jan. 28.

 

The Connecticut House of Representatives is considering a similar bill. H.B. 5533 would extend the dormancy period for certain types of property from three years to seven years. The bill is scheduled for public hearing on March 11.  

 

Contingency fee auditors

Arizona H.B. 2343 and Massachusetts S. 1710 would each prohibit their state revenue departments and other agencies from hiring auditors on a contingency fee basis. In Arizona, the change would apply to unclaimed property, while in Massachusetts, it would apply to any duties related to assessments or taxation.

 

Arizona H.B. 2343 was engrossed in the House on Feb. 17, and Massachusetts S. 1710 is waiting a report out of the State Administration and Oversight Committee. UPPO submitted letters supporting both pieces of legislation.

 

Reporting requirements

The Hawaii Senate is considering S.B. 2619, which specifies that required notification from holders to owners of property valued at $50 or more could occur by mail, email or telephone. If the bill passes, holders would be required to include a statement confirming they have complied with this requirement when reporting unclaimed property to the state.

 

Hawaii S.B. 2619 was reported favorably from Ways and Means Committee on March 3.

 

UPPO continues to monitor all of the pertinent bills affecting members. For the latest information about these and other noteworthy unclaimed property bills, visit UPPO’s govWATCH website.

 

Tags:  audits  dormancy  reporting  unclaimed property 

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UPPO amicus brief to the Supreme Court requests clear state standards

Posted By Administration, Tuesday, September 29, 2015

On Sept. 8, 2015, UPPO submitted an amicus curiae brief (a brief that offers an additional opinion or support to a party involved in the case), to the U.S. Supreme Court, supporting a petition for writ of certiorari (a request made to the U.S. Supreme Court to review a decision made by a lower court) by the plaintiffs in Taylor v. Yee.

 

UPPO’s amicus brief supports the plaintiffs’ claim that, “California’s unclaimed property law violates the Due Process Clause of the Fourteenth Amendment by failing to provide constitutionally adequate notice to owners of property to be escheated, and by failing to take adequate steps to locate and notify property owners before liquidating their property.”

 

The association lays out three arguments in its request to the court:

 

1.   The seizure and liquidation of securities and other property under California’s unclaimed property laws harms property owners. In the case of tax-deferred accounts, the escheat may result in tax penalties.

 

2.   State procedures for notifying owners of escheated property are inadequate and violate due process. Even when previous mail has been returned as undeliverable, California sends its notice to the same address without taking additional steps to find a better address. Taylor argues that California’s unclaimed property law should require California should search its other databases for owners—Department of Motor Vehicle records, for example—to find better addresses for the state-sent notice.

 

3.   State laws requiring the liquidation of securities violate the Fifth Amendment’s Takings Clause because they fail to provide compensation to property owners. The liquidation of securities deprives owners of the value of appreciation, dividends and interest. States are motivated to liquidate securities quickly to boost revenues and meet budget requirements.

 

Through its amicus curiae brief, UPPO asks the court to establish clear standards the states must follow to notify property owners before seizing and liquidating property, and to define just compensation to be paid to owners whose property is liquidated.

 

"UPPO's leadership made the decision to file this amicus brief because of the importance of the issues, not only for its members and holder community, but for owners. The advocacy agenda of UPPO focuses on ensuring fairness and balance, clarity and the preservation of holders and owners constitutional rights. Filing the brief supports that,” says, Toni Nuernberg, executive director, UPPO.    

 

The U.S. Supreme Court has given California until Oct. 8, 2015, to file a response.

 

More information

Visit UPPO’s advocacy page for additional information on other advocacy initiatives.

 

Tags:  amicus brief  California  reporting  Taylor v. Yee  unclaimed property 

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