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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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Appeals Court Sides with Federal Government Over States in Unclaimed Savings Bond Battle

Posted By Administration, Thursday, August 15, 2019

On Aug. 13, 2019, the U.S. Court of Appeals for the Federal Circuit ruled in favor of the U.S. Treasury in a dispute with Kansas and Arkansas over the handling of unclaimed savings bonds. 

 

The states sought to enforce escheat laws specifying that, if bond owners fail to redeem their savings bonds within five years after maturity, the bonds would be considered abandoned and would transfer to the states two or three years later. When the U.S. Treasury refused the states’ efforts to claim such bonds, the states filed suit. A U.S. Claims Court sided with Kansas and Arkansas, and the federal government appealed.

 

In its reversal, the Appeals Court provided two reasons for ruling in favor of the U.S. Treasury:

  1. Federal law preempts state escheat laws, meaning the bonds belong to the original bond owners rather than the states.
  2. Even if the states owned the bonds, they were not entitled to rights greater than the original bond owners, who must provide the serial number to redeem bonds six years or more past maturity. Because the states don’t have the physical bonds or serial numbers, the Treasury acted properly when denying their redemption request.

Despite the loss, states continue to pursue the estimated $25 billion in unclaimed savings bond funds. On Aug. 1, 2019, Sen. John N. Kennedy (R-Louisiana) introduced S. 2417, the Unclaimed Savings Bond Act of 2019. If passed and signed into law, the bill would give states access to information about unclaimed savings bonds for inclusion in unclaimed property databases and, ultimately, the ability to claim and redeem the bonds. 

 

Before serving in the U.S. Senate, Kennedy was state treasurer in Louisiana. His bill currently has two cosponsors, Sen. Jerry Moran (R-Kansas) and Sen. Bill Cassidy (R-Louisiana). S. 2417 has been assigned to the Senate Finance Committee, where it awaits further action.

Tags:  Arkansas  Kansas  legislation  litigation  savings bonds  U.S. Treasury  unclaimed property 

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States Score a Victory in Savings Bond Dispute

Posted By Administration, Thursday, September 7, 2017

On Aug. 8, 2017, U.S. Federal Claims Court Judge Elaine Kaplan issued a ruling in support of Kansas State Treasurer Jake LaTurner’s claim that the U.S. Treasury should turn over to the state approximately $150 million in unredeemed U.S. savings bonds. 

 

Kansas argued that the treasury should work with the states to identify and locate bond owners with last-known addresses in each respective state so they could reunite those citizens with the proceeds from their matured, unredeemed bonds. 

 

Among other things, the U.S. Treasury claimed its savings bond regulations do not permit transfer of ownership under the Unclaimed Property Act, and that because Kansas lacked possession of the bond certificates, its claims were invalid. The court disagreed, concluding that the U.S. government’s arguments “lack merit.” The ruling did not, however, grant the state permission to redeem the unclaimed bonds. 

 

“We wholeheartedly agree that the states are best equipped to reunite citizens with missing or unclaimed property,” LaTurner said in a statement. “The Kansas Treasurer’s Office is looking forward to returning the money in question to Kansans at the appropriate time. Kansas is leading the effort with many other states to hold the U.S. Treasury accountable. Not only is this a victory for the bond owners in Kansas but for bond owners across the country.”

 

Several other states have taken similar actions against the U.S. Treasury over their citizens’ portion of an estimated $19 billion to $23 billion in unredeemed bonds. 

 

Florida CFO Jimmy Patronis called Kaplan’s ruling, “a victory for Kansas and for Florida.” He wrote in his monthly newsletter that the ruling allows Florida to move forward with its efforts to reunite residents with proceeds from unredeemed bonds because the decision “addressed several of the same arguments that we have made.” The state estimates Florida citizens are owed approximately $1 billion for unredeemed bonds. 

 

Mississippi filed suit against the U.S. Treasury in 2016, seeking approximately $155 million. Judge Kaplan stayed that case while considering the Kansas case. 

 

In addition to legal action against the federal government, several states have passed legislation requiring unredeemed U.S. savings bonds to be escheated as unclaimed property. In 2015 and 2016 alone, Arkansas, Florida, Georgia, Indiana, Maine, New Hampshire, South Carolina, Rhode Island and Wisconsin passed such bills into law. 

Tags:  Florida  Kansas  Mississippi  savings bonds  unclaimed property 

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