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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 Scholarship Recipient Attends Penn State

Posted By Administration, Thursday, October 8, 2015

Now that Erica Murphy, the 2015 UPPO Scholarship recipient, has nestled into college life at Pennsylvania State University, exciting opportunities await.

 

She’s considering studying abroad in Singapore next summer as a participant of an Engineering Design program. “For me it [UPPO Scholarship] has opened up doors. It’s allowed me to explore my interests in college and pursue things that I never thought about pursing – like the Singapore trip,” says Murphy, daughter of UPPO member Andrew Murphy.

 

Erica Murphy, a first-year, is pursuing a major in chemical engineering and considering adding a concentration in biomolecular studies, in the hopes to work on a drug development team that is tasked with creating medicines and vaccines.

 

To complement her academic career, she has joined the Society of Women Engineers. The organization offers academic and professional development to women studying engineering, and has made it easy for her to meet peers with common interests. Erica says, “There’s also bonding activities to encourage us to meet others. Next week, I’m helping to make a float for the Homecoming parade!”

 

“I’m really enjoining it [college] so far. I came from a small high school, and now I’m somewhere that I get to meet new people every day,” she says.

 

To people considering applying for the UPPO Scholarship, Erica says, “I would say go for it, and apply. Seize any opportunity to reduce the expense of college, because it will open doors down the road, like allowing you to volunteer somewhere or study abroad.”

 

Congratulations, Erica, on beginning your college career! We hope you can continue exploring new opportunities and interests.

 

The 2016 UPPO Scholarship Program will open on Nov. 1 and remain open until Dec. 31, 2015. Through the program, UPPO awards one, renewable, $1,000 scholarship every year to a current UPPO member or a current UPPO member’s dependent to ease the financial burden of continued education. Learn more about the past recipients and the program qualifications.

 

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Tags:  Erica Murphy  UPPO Scholarship Program 

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Debrief of UPPO’s ULC Issues Refinement Submission

Posted By Administration, Tuesday, October 6, 2015

The Uniform Law Commission (ULC) is holding its drafting committee to revise the Uniform Unclaimed Property Act (drafting committee) meeting, Oct. 9 – 10 in Washington D.C. In preparation for the meeting, UPPO honed in on the issues most important to holders at this moment, and addressed them in its latest submission, titled UPPO Issue Refinement – 1995 Uniform Unclaimed Property Act Revision. 

 

The document tackles 15 issues, including, securities-specific issues, enforcement recommendations, property exemptions, and more, and provides draft language or changes when applicable for the drafting committee to consider in future drafts of the revised Uniform Unclaimed Property Act (RUUPA).  

 

Below are summaries of UPPO’s stance on select issues included in the document, and when applicable an explanation of how the issues have been altered or addressed in the latest version of the RUUPA, which was released Sept. 29, 2015. View the latest UPPO submission for additional detail.

 

Definition of securities
As stated in the latest version of the RUUPA, a suggestion was made from the floor during the ULC Annual Meeting in July, to include a definition of security in the RUUPA. Since the Annual Meeting, three definitions have been submitted, one from NAUPA, the Investment Company Institute, and UPPO.

 

The following definition was crafted by UPPO and key industry stakeholders: Securities means an instrument, whether certificated or uncertificated, that represents an ownership position or rights to ownership in a corporation, trust, plan, or other legal entity, any customer security account held by a broker-dealer, and any interest in an investment company under the Investment Company Act of 1940.

 

See page 22 of the current RUUPA version for the other two definitions.

 

ERISA Exemption
UPPO supports the exclusion of ERISA-protected assets from unclaimed property reporting requirements. 

 

B2B exemption
In UPPO’s latest submission, UPPO recommended the drafting committee adopt Alternative B (c) as the singular B2B exemption in the RUUPA, which would have been a blanket B2B property exemption.

 

Since then, the drafting committee has revised the current version of the RUUPA to exclude both Alternative A and B, and instead allow the adopting state(s) to include a current B2B property exemption or adopt another form of a B2B exemption. This issue will likely see discussion during the upcoming drafting committee meeting. An update will be provided following the meeting.

 

Contact
Currently, there are brackets (indicating that it’s optional for states to adopt) around a provision which would allow making a deposit or withdrawal from an account in which the property is held, including automatic deposits or withdrawals previously authorized by the owner and any automatic reinvestment of dividends or interest, to be considered as an indication of owner’s interest.

 

In our latest submission, we recommend removing the brackets and make this an acceptable indication of interest, as this is a common way owners interact with their property.

 

Life insurance proof of death & Death Master File search requirement
UPPO recommends that a “match” of owner information with the Social Security Death Master File should not equate proof of death, and the only trigger of abandonment should be when the policy is due and payable as prescribed by law and the policy terms.

 

Election to Take Payment
If a holder is unsuccessful in notifying an owner of their property, the holder is allowed to report and remit the property to the administrator before it’s considered abandoned. Though UPPO supports this, direct language should be added to this section to relieve the holder of any liabilities for any claims to the property.

 

Examination of records & interstate cooperation
UPPO recommends that additional provisions be added to the RUUPA, which would restrict a state’s ability to join an unclaimed property audit that has already commenced, and in addition add specific restrictions related to record sharing between jurisdictions, in concern for the confidentiality of the holder.

 

Estimation and retention of records
UPPO commissioned a review, by two statistical sampling experts, of the AICPA (recommended by UPPO) and MTC (recommended by NAUPA) statistical sampling methods. The experts have advised UPPO that a modified version of the MTC standards could provide sufficient levels of disciplines. 

 

In addition to the model, UPPO still recommends clear procedures and standards be developed for the use of estimation and statistical sampling to ensure transparency and fairness. This is an issue that will likely see continued dialogue between stakeholders and the drafting committee, and UPPO recommends the drafting committee create a work group with representatives from NAUPA and UPPO to review these recommendations and develop specific guidance.

 

Foreign transactions/property
With support from the principles of comity and the Supremacy Clause, the Due Process Clause, and the Foreign Commerce Clause of the U.S. Constitution, UPPO advocates that all foreign transactions/property is exempt from unclaimed property reporting. UPPO recommends Section 26 to be amended as the following to exclude all foreign address property:
[Section 26. Foreign Transactions

 

(a) Except as provided in subsection (b), this [act] does not apply to property held, due, and owing to a person whose last known address is in a foreign country or to property arising out of a foreign transaction., if the foreign country, or a subordinate governmental unit of the foreign country, has laws

which entitle it to take and hold unclaimed property of its citizens and residents which are comparable to the laws of this state.

 

(b) Property defined in subsection (a) above may be voluntarily turned over to this state, but only under the following circumstances: (i) the holder is in the process of liquidating its business, or (ii) other circumstances render the holder’s continued maintenance of the property infeasible, in the view of the holder, such that escheatment would serve the interests of preserving the property for eventual owner claims. If the property has been voluntarily turned over to this state by the holder pursuant to Section 5(4), the administrator in whose custody the property has been placed may deliver the property to the foreign country or subordinate government unit of the foreign country on receipt of a record from the other country or unit requesting its payment or delivery.]

To learn more about how UPPO is representing the holder community on the national reform stage, visit the UPPO Advocacy page.

 

Tags:  reform  Revise Uniform Unclaimed Property Act  ULC  unclaimed property 

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Updated: 2015 unclaimed property legislative season in review

Posted By Administration, Thursday, October 1, 2015

Back in July we provided a 2015 legislative session round-up, and since then, there have been some additional bills to take notice of.

 

Listed below are the bills that have been signed into law since the July legislative season in review post.

 

Connecticut S.B. 1502
Date signed: June 30, 2015; date effective: July 1, 2015

 

Synopsis: Budget bill. Provides for electronic unclaimed property notice on Treasurer's website of all property having a value over $50.

 

Louisiana H.B. 692
Date signed: June 29, 2015; date effective: June 29, 2015

 

Synopsis: Includes as interest in property any one-time or recurring clearing house transaction, any owner-directed electronic transaction, and the accessing of a deposit account by the owner through the website or other restricted electronic access point of the federally insured financial institution.

 

North Carolina H.B. 184
Date signed: Aug. 18, 2015; date effective Aug. 18, 2015

 

Synopsis: Amends language pertaining to credit balances.

SECTION 4.5.(a) G.S. 116B-54 reads as rewritten:"§ 116B 54. Exclusion for forfeited reservation deposits, certain gift certificates or electronic gift cards, prepaid calling cards, certain manufactured home buyer deposits, certain credit balances, unclaimed lottery prizes, and certain merchandise credits.

 

...(g) A card or certificate, whether paper, electronic, or other format, issued for a merchandise credit that meets the requirements of subsection (b) of this section is not abandoned property under G.S. 116B-53(c)(7)."

 

North Carolina S.B. 665
Date signed: Sept. 1, 2015; date effective: Oct. 1, 2015

 

Synopsis: This bill relates to unclaimed life insurance, and it was signed by the governor on Sept. 1. It requires, subject to certain exceptions, that companies authorized to transact life insurance business in North Carolina conduct a semi-annual comparison of their policies, annuities, and account owners with the death master file from the U.S. Social Security Administration (or a similar database) to determine potential matches.  

 
§ 58-58-390. Requirements for insurers.

(a) To the extent that an insurer's records of its in-force policies, annuities, and account owners are available electronically, an insurer shall perform a comparison of such in-force policies, annuities, and account owners against a death master file, on a semiannual basis, to identify potential death master file matches. To the extent that an insurer's records of its in-force policies, annuities, and account owners are not available electronically, an insurer shall perform a comparison of such in-force policies, annuities, and account owners against a death master file, on a semiannual basis, to identify potential death master file matches, using the records most easily accessible by the insurer.

 

(b) The requirements of subsection (a) of this section shall not apply to any of the following:

 

(1) Policies or annuities for which the insurer has received an active premium payment within the 18 months immediately preceding the death master file comparison.

 

(2) Any policies, annuities, or retained asset accounts issued or delivered prior to October 1, 2015, for which the insurer attests, in a sworn statement signed by an officer or director of the insurer that is subject to perjury and delivered to the Commissioner, that the insurer has done all of the following:

a. Not engaged in asymmetric conduct.

 

b. Has historically practiced compliance with the requirements of G.S. 58-63-15(11) with respect to the investigation, handling, and payment of policy proceeds.

 

c. Monitored the limiting age of each person, as stated in the policy, and performed its obligations under Chapter 116B of the General Statutes when an insured reached the limiting age.

North Dakota regulation
ADC 70-02-01-04, 06, 15; ADC 70-02-02-10; ADC 70-02-03-03; ADC 70-02-04-02, 14
Date effective: Oct. 1, 2015

 

Synopsis: Relates to application deadline for renewal of a real estate license and to update and clarify certain provisions pertaining to non-resident licensure, trust accounts, continuing education, and out of state commission splits. This Code amendment provides reporting requirements for funds that remain unclaimed in a real estate broker’s trust account for three years and are deemed abandoned.

 

2. Brokers are responsible at all times for deposits and earnest money accepted by them or their salespersons.

 

…d. Abandoned deposits. Any deposits in a broker's trust account that remain unclaimed for three years and are deemed abandoned by North Dakota Century Code chapter 47-30.1 shall be reported and delivered by the broker to the administrator of the state abandoned property office as required by North Dakota Century Code chapter 47-30.1.

 

Agency contact: North Dakota Real Estate Commission, 1110 College Dr. Suite 207, PO Box 727, Bismarck, North Dakota 58502-0727

 

South Carolina H.B. 3701
Date signed: July 7, 2015; date effective: July 7, 2015

 

Synopsis: Retains audit provisions allowing the state to join other states in multistate contingent fee audits, but not to include companies whose parent companies headquartered or incorporated in South Carolina when there is a reason to believe that the companies are holding funds belonging to South Carolina.

 

Washington S.B. 6057
Date signed: July 1, 2015; date effective: July 1, 2015

 

Synopsis: This bill makes a number of changes in the Washington unclaimed property law including:

 

Beginning July 1, 2016, holders who are required to file a report electronically will be required to remit payments by electronic funds transfer or other form of electronic payment acceptable to the department.

 

Prohibits the WA UPD from commencing any action or proceeding with respect to any assessment more than 3 years after the later of the due date for payment of the assessment including any extension granted by the WA UPD or 30 days after the final decision on any petition for review.

 

Clarifies that gift cards with no expiration dates or dormancy fees are not reportable.

 

Adds provisions related to holder reimbursement for over-reporting or items reported in error.

 

Adds provisions for review of assessments or denial of an application for refund or return of property.

 

Adds provisions pertaining to audits including those that pertain to disclosure of audit information.

 

Revises the penalty provisions as follows:

  • If a holder fails to file any report or to pay or deliver any amounts or property when due under a report, there is assessed a penalty equal to ten percent of the amount unpaid and the value of any property not delivered.
  • If an examination results in an assessment for amounts unpaid or property not delivered, there is assessed a penalty equal to ten percent of the amount unpaid and the value of any property not delivered.
  • If a holder fails to pay or deliver to the department by the due date any amounts or property due under an assessment issued by the department to the person, there is assessed an additional penalty of five percent of the amount unpaid and the value any property not delivered.
  • If a person willfully fails to file a report or to provide written notice to apparent owners as required under this chapter, the department may assess a civil penalty of one hundred dollars for each day the report is withheld or the notice is not sent, but not more than five thousand dollars.
  • If a holder, having filed a report, failed to file the report electronically as required by RCW 63.29.170, or failed to pay electronically any amounts due under the report as required by RCW1963.29.190, the department must assess a penalty equal to five percent of the amount payable or deliverable under the report, unless the department grants the taxpayer relief from the electronic filing and payment requirements. Total penalties assessed under this subsection 23 may not exceed five percent of the amount payable and value of property deliverable under the report.
  • The penalties are cumulative.
Read the last legislative round up for a full compilation of all unclaimed property legislation passed in 2015.

 

More information
Visit the govWATCH website to read the full text of each bill

 

 

Tags:  2015  egislation  ill  nclaimed property  scheatment 

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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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Identify and eliminate common reporting errors

Posted By Administration, Thursday, September 24, 2015

State unclaimed property administrators depend on holder reports to help them find property owners and, more importantly, to ensure they are paying the correct people when receiving claims. Thus, report accuracy is critical. Several states have increased their educational efforts to help holders properly report, but reporting errors continue. Mistakes can result in filing delays, missed deadlines, penalties and—in the worst cases—costly audits. Following are several common reporting errors holders should avoid.

 

Incorrect report timing

Holders sometimes report and remit property before the end of the required dormancy period, according to Phillip Carlton, assistant chief of Florida’s Bureau of Unclaimed Property. Filing outside of the correct reporting cycle is also common, especially in states with less common reporting dates.

 

“We see that a lot because Florida is a spring filing state with the reports and remittance due by April 30,” says Carlton. “The majority of states have a Nov. 1 reporting date. We receive reports at that time from entities outside of Florida. These reports are outside of our reporting cycle and, thus, not in compliance with Florida’s unclaimed property law.”

 

Improper file format

Acceptable file formats vary from state to state. Some still accept paper reports, while others are now exclusively electronic. However, specific electronic report formats also differ. CDs may be OK in one state but rejected in another, for example.

 

“In Wisconsin, we’ve supplied multiple methods for online reporting,” says Erin Egan, director of Wisconsin’s Bureau of Tax Operations. “If you send in paper or CDs, we’ll send them back to you, and you could miss the deadline.”   

 

Invalid codes

Reports sometimes include property type codes that may be accurate in one state but that are not used in the state where the report is being filed. Relationship code errors are also common.

 

“If reporting property with multiple owners, usually the mistake made by the reporting entity involves leaving off the relationship code,” says Carlton. “That’s critically important, because it helps the state determine how we pay people when they come forward to claim an account. There’s a big difference between an ‘and’ account and an ‘or’ account.”

 

Incorrect date of last transaction

The correct date of last transaction is typically either the date the obligation occurred or the last time there was owner contact. However, holders sometimes report the date of the due diligence letter or simply use Dec. 31 of each year as the last transaction date, both which are improper practices.

 

Lack of Social Security number

States often receive reports without Social Security numbers, even for property types that require holders to have that data for tax purposes, such as payroll checks.

 

Bad data formatting

As more states streamline their processes, it’s essential for holders to ensure electronic report data is properly formatted. State efforts to cross-reference tax records and other databases are hindered by information submitted in the wrong fields and other data problems. Common data errors include:

  • Incomplete owner name and incorrect name data in first and last name fields
  • Failure to designate that the owner is a business
  • Last address field used for “do not mail” notes
  • Social Security number placed in the wrong field, compromising its confidentiality
  • One Social Security number duplicated for multiple owners

“It is incredibly helpful if the name and address information is in the correct fields on the report,” says Egan. “There’s a first name and last name field, so make sure you have the first name and last name filled in appropriately. Don’t try to string things together and don’t try to space things out. Don’t put your names in the address field and vice versa.”

 

Carlton advises exercising great caution when working with spreadsheet templates used in creating electronic reports. “You can really impact the accuracy of your report,” he explains. “We’ve seen issues where someone was sorting the template and sorted only one column rather than the whole document. There were well over 20,000 names on the report. The error was discovered by the reporting entity a year and a half after delivering the report to the state, and we had paid claims. Some people received less and others received more than they should have. The state worked with the holder to resolve the issue, with the holder having to make up the difference for those who were paid incorrectly. If they sort, they really need to make sure they’re sorting the entire document.”

 

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. A special State Administrator Forum is designed to facilitate communication between holders and state administrators. 

 

Egan and Carlton recommend reviewing state unclaimed property websites and reporting instruction manuals before filing, and encouraged communication between holders and the states.

 

“A lot of times holders are afraid to contact the states because they think it will lead to an audit,” says Carlton. “That’s far from true. We want the holders to know that if they’re not certain about the reporting requirements, they should contact us. We want them to do it right. We’d rather not have to call them to get a corrected report. Don’t hesitate to contact us.”

 

More information

UPPO Jurisdiction Resource Guide

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


Tags:  compliance  reporting  unclaimed property 

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