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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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Contemplations of Consolidated Unclaimed Property Reporting

Posted By Christopher Jensen, director, Sam Schaunaman, senior manager & Christa DeOliveira, manager at Ryan, Tuesday, August 11, 2015

Introduction

The lack of uniformity with abandoned and unclaimed property laws and requirements is frustrating for holders.  A primary goal most holders pursue is to maximize resource efficiency and streamline processes, while complying with unclaimed property’s myriad of filing obligations.  One noteworthy way to achieve this goal is for holders of unclaimed property to prepare and file consolidated reports.

 

A consolidated unclaimed property report is one compliance report sent to a specific state or jurisdiction by a parent on behalf of multiple legal operating entities and contains properties reportable to that jurisdiction.  Sometimes, this is also referred to as reporting under one Federal Employee Identification Number (FEIN). It has been an increasingly frequent practice for holders to consolidate their compliance reporting to each applicable jurisdiction and a welcome practice by many states in environments where they have been asked to do more with less.  As this article indicates, the use of consolidated unclaimed property reporting generally is a “win-win” for both the holder community, as well as for the jurisdictions that receive such reports.*       

 

Use of Consolidated Reporting in Other Areas

Consolidated unclaimed property reporting is not an isolated practice.  Rather, consolidated reporting is also typical for other key areas holders use to report information to other governmental entities.  Specifically, it is common for any companies preparing financial statements to do so in a consolidated manner, rolling up financial reporting under a parent company.  For instance, according to the Financial Accounting Standards Codification Topic 810, a parent company is required to consolidate “…the results of operations and the financial position of a parent and all its subsidiaries as if the consolidated group were a single economic entity.” This is due to the premise that “…consolidated financial statements are more meaningful than separate financial statements….”

 

By way of further example, the Internal Revenue Service (IRS) allows for consolidated reporting among its legions of filers.  In addition to consolidating balance sheets and income statements, IRS Form 851 - Affiliations Schedule is submitted to disclose affiliated entities that have been included with the submitted federal income tax return.  The instructions for completing Form 851 specify to identify “the common parent corporation and each member of the affiliated group.”

 

An Important Caveat

A notable difference for unclaimed property reporting for consolidated financial statements and consolidated corporate income tax filings, when compared with unclaimed property consolidated reporting, is related to the fact that the state of corporate domicile, also sometimes referred to as the state of incorporation, is the most important report for many unclaimed property holders. This key difference is tied to the priority scheme determined by the Supreme Court in Texas v. New Jersey.  Under the federal priority rules determined in that case, first priority is given to the jurisdiction identified as the owner’s last known address, according to a holder’s books and records, and second priority is given to the state of incorporation, if either the owner is unknown or the owner’s address is unknown.  Therefore, it may be undesirable in some situations to co-mingle entities with different states of incorporation. Similarly, companies in the practice of acquiring companies, retaining them for a limited period, and then selling them for financial benefit (e.g., private equity holder) may not be interested in consolidated unclaimed property reporting.  However, for many holders, the consolidated unclaimed property report assists in making best use of scarce resources.  

                                                       

General State Practices

Allowing consolidated reporting is a benefit to the state or jurisdiction as well.  From an administrative perspective, it significantly reduces the number of reports to accept and process each year, all while maintaining the same volume of properties reported and remittances accepted.  In an era where state personnel have been asked to do more with less, it will exponentially reduce the burden with processing (possibly) unnecessary reports.  From a practical perspective, allowing consolidated reports may encourage compliance with state unclaimed property laws, as the once laborious requirements that dictated a separate report per entity have now been made more efficient and holder-friendly.  

 

Some states expressly acknowledge acceptance of consolidated reports.  Michigan notes in its Manual for Reporting Unclaimed Property, “Michigan does accept consolidated reports. A consolidated report is one that is filed on behalf of more than one legal holder (e.g., a parent company that files one report for itself and a number of subsidiaries).” Additionally, the directions on Arkansas’s Unclaimed Property Transmittal form AOS/UP1 instruct for “[h]olders reporting for multiple entities under a single entity name (consolidated report) must attach a detail of the entities included in the report…”

 

Additionally, when polled informally, the following states confirmed they indeed accept consolidated reporting: Idaho, Illinois, Iowa, New York, Ohio, Oklahoma, Pennsylvania, Texas, Utah, Virginia, and West Virginia.  Most of these states, like Arkansas, did indicate they prefer or even require an attachment listing all of the FEINs of the entities included within the report to be submitted with the report packet.*The understanding and experience of Ryan’s Abandoned and Unclaimed Property (AUP) practice is that most all jurisdictions will accept consolidated unclaimed property reports.

 

In contrast, Nevada’s Unclaimed Property Division has taken the lonely stance that “consolidated reporting is not permitted.” Further, Nevada’s stated position is that any “reports submitted in this manner will be returned unprocessed and subject to penalty.” Nevada specifies that, unlike other jurisdictions, “[c]onsolidated lists attached to holder reports stating the entities listed are included as part of the actual holder report submitted are not permitted.” With respect to Nevada’s approach to individual FEIN level reporting and disallowing consolidated reporting, it is expressly neither required nor denied by statute nor regulation.  It is worth noting, based on informal conversations with Nevada officials, the state may be considering alternatives to this current policy, but no immediate changes are anticipated.*** Undoubtedly, the status of this will be closely monitored by the unclaimed property holder community.

 

Unfortunately, requiring holders to file individual unclaimed property reports for each legal operating entity causes reporting problems for the holder community.  For example, significantly more individual reports need to be processed, signed, and in some cases, also have the report signer’s signature notarized.  In addition, it also requires for holders needing to report to Nevada to have a singularly different process for reports.  Presumably, filing individual reports also requires states to load thousands more reports than they would otherwise have needed to do.  Incidentally, many larger companies may only have a limited number of entities with actual disbursements or other activity leading to possible unclaimed property.  Without consolidated reporting, a much larger number of “zero” or “negative” reports would have to be filed by the various subsidiaries, thus creating a larger volume of tracking activity for the states.  

 

Future of Consolidated Reporting

Solutions can perhaps be found in a new National Association of Unclaimed Property Administrators (NAUPA) Standard Electronic File Format (“NAUPA Format” or “Format”).  Unfortunately, a new NAUPA Format is unlikely to be a quick solution, but it could be a mid-term or long-term solution.  As listed on NAUPA’s website, the current Format was originally developed in 2002 and has been used since 2003, with some revisions made over time, most recently in 2010 adding property type codes and in 2013 revising relationship codes. Additionally, the NAUPA Format calls for the output file to be text with fixed width file fields. 

 

NAUPA most assuredly recognizes there are limitations to the current Format. As such, NAUPA included updating the Format as part of its Strategic Plan dated 2013 – 2017. The Strategic Plan was promulgated by NAUPA, indicating a goal to begin writing a new NAUPA Format by 2017; however, this date was based on the completion of the Uniform Law Commission’s Drafting Committee to Revise the Uniform Unclaimed Property Act.  Specifically, the goal stated: “Update NAUPA’s file format by end of 2017 following resolution of revised Uniform Unclaimed Property Act in 2015.” Based on updates provided at the NAUPA track, during the recent National Association of State Treasurers 2015 Treasury Management Training Symposium held in Kansas City, Missouri, May 12–15, 2015, it appears the timing on a rewrite of the Format could be extended. 

 

Although certain provisions of a new Format could be altered by the outcome of the Uniform Law Commission’s (ULC’s) Revised Uniform Unclaimed Property Act (RUUPA) Committee, some of the necessary work could be accomplished in advance of the completion of this process.  Happily, NAUPA officials have expressed interest in working with the holder community to develop the new Format.

 

Undoubtedly, any revisions to the NAUPA Format will result in an output file that is in a more current language, significantly changing flexibility and allowing for more information to be reported.  Ideally, the new Format will be designed to allow holders to correspondingly report specific holder information at a property level—whether this is to be accomplished by a new method of submitting consolidated reports, the pertinent information captured directly in the property record, or another unforeseen alternative yet to be determined.  Regardless of the method, this could allow for holders to both streamline reporting operations and responsibly use internal resources, with the added benefit of consolidated reports providing states with property-level holder information and likely more information to enable states to appropriately return properties to claimants. 

 

Conclusion

Filing consolidated unclaimed property reports allows for holders to follow one efficient and effective reporting process.  The numerous advantages associated with creating efficiencies in the reporting process should not be undervalued. Given the importance in this area, we should see a continued focus by holders, service providers, and states to ensure the consolidated reporting option continues to be available to the unclaimed property reporters.  Additionally, a revised NAUPA Format will be forthcoming, hopefully providing a method for all states to accept consolidated reporting and, at the same time, provide owner information to aid states in the process of returning funds to the correct claimants. 

 

Contacts

Christopher S. Jensen, CPA

Director

Abandoned and Unclaimed Property

972.934.0022

christopher.jensen@ryan.com

 

Sam Schaunaman, J.D.

Senior Manager

918.518.5179

sam.schaunaman@ryan.com

 

Christa DeOliveira, CIA, CCEP

Manager

Abandoned and Unclaimed Property

319.378.5707

christa.deoliveira@ryan.com

 

Ryan, LLC is neither a CPA firm nor a law firm.



*FASB ASC 810-10-10-1

PURPOSE OF CONSOLIDATED STATEMENTS

1. The purpose of consolidated financial statements is to present, primarily for the benefit of the owners and creditors of the parent, the results of operations and the financial position of a parent and all its subsidiaries as if the consolidated group were a single economic entity. There is a presumption that consolidated financial statements are more meaningful than separate financial statements and that they are usually necessary for a fair presentation when one of the entities in the consolidated group directly or indirectly has a controlling financial interest in the other entities.

**Ryan internally conducted informal polling inquiries to confirm that states accepted consolidated reporting, and to ascertain if there were any related restrictions.  The question was posed to Idaho, Illinois, Iowa, New York, Ohio, Oklahoma, Pennsylvania, Texas, Utah, Virginia, and West Virginia.

***Until the NAUPA Format is updated and expanded to allow for greater detail in reporting details at the property level, there is the possibility of including ancillary information in field 45 of the property record.  The NAUPA Format identifies this field to be used to provide “[a]ny additional information that will assist in identifying the owner of the property should be listed in the property description field…” NAUPA Standard Electronic File Format, http://www.unclaimed.org/reporting/naupa-standard-electronic-file-format/


Tags:  abandoned property  consolidated reporting  Ryan  unclaimd proprety compliance 

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UPPO finalizes agenda and speakers of new lunch ‘n learn events

Posted By Administration, Thursday, August 6, 2015

Earlier this month, we announced that we’re bringing education and networking local by launching our new education program – the UPPO Lunch ‘n Learn Program! The program will bring introductory and topical unclaimed property compliance education to business communities located all across the U.S. We are kicking off the lunch ‘n learns in Minneapolis-Saint Paul and Denver on Sept. 15 and Sept. 17, respectively, and hope if you are in the area you’ll be able to join us for this new event. Register today! 

If you need to build your company’s unclaimed property compliance program or educate internal stakeholders of the importance of unclaimed property compliance, this event is a great fit for you. The event registration includes two hours of high-quality education and networking, lunch, and one CPE credit.

Below are the agenda and speaker details of the first two lunch ‘n learn events:


Lunch ‘n Learn agenda

  • 11:30 a.m. - noon: Kick-off your networking and meet with local, unclaimed property professionals.
  • Noon - 1 p.m.: Listen to the unclaimed property experts explain the general reporting requirements, history and importance of compliance, and answer any questions from attendees.
  • 1 - 1:30 p.m.: Hand out business cards to your new contacts, and discuss the topics of today with fellow attendees.

Minneapolis-Saint Paul Lunch ‘n Learn speker -- Sept. 15

Nancy Kovala, administrator, Abandoned Property Program, Ameriprise Financial

 

Denver Lunch ‘n Learn speakers -- Sept. 17

Jamshid Ebadi, director, abandoned and unclaimed property practice, Ryan

Samantha Petersen, west region unclaimed property practice leader, state and local tax, KPMG

With assistance from our sponsors, UPPO is able to bring the Minneapolis-Saint Paul and Denver business communities unclaimed property education.

Minneapolis-Saint Paul venue and lunch sponsor – KPMG

Denver lunch sponsor - Ryan

Denver venue sponsor – Greenberg Traurig

Questions? Contact us at 763-253-4340 or uppo@uppo.org.

Tags:  business  compliance  CPE  Denver  education  Minneapolis  unclaimed property 

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We’re halfway through the ULC’s effort to revise the UUPA!

Posted By Administration, Thursday, July 30, 2015
Updated: Wednesday, July 29, 2015

We’re halfway through the Uniform Law Commission’s (ULC) effort to revise the Uniform Unclaimed Property Act! As we move into the next phase of the process, we want to share how the Revised Uniform Unclaimed Property Act (RUUPA) draft addresses UPPO’s top 5 advocacy issues, as determined by members through the advocacy survey conducted in summer 2013. UPPO work groups were formed around those priorities, to research and draft position statements on each issue.  Now, we want your input to identify the issues on which UPPO should continue to focus its advocacy efforts, before the RUUPA draft becomes final. Take the survey to share your thoughts.

Though we are only half-way, UPPO believes the current RUUPA draft reflects the ULC’s desire to produce a final product that infuses fairness, modernization, and clarity that is recognizable by all stakeholders. We understand there is still work to be done, and therefore will remain engaged through continued verbal and written commentary, attendance at relevant ULC meetings, and collaboration with other stakeholders.

Status of UPPO’s Top 5 advocacy issues


Priority 1: Due diligence timelines

To minimize the complexity facing holders, the RUUPA currently says* owner notification needs to be completed not less than 60 days before filing the report. This lends flexibility to holders to complete due diligence on their own timeline rather than be locked into a specific time period.  This timing was suggested by UPPO in its position statement which was initially drafted by one of UPPO’s work groups.


*To ensure Section 8(f) and (h)(2)(B) are consistent with Section 10 and what the ULC drafting committee agreed upon during the February 2015 meeting, the language regarding the due diligence timeframe needs to be altered to read “…not less than 60 days before filing a report”. UPPO believes this is a drafting oversight that will be corrected once it’s brought to the attention of the reporter. 

Priority 2: Record retention requirements

Section 21 of the RUUPA provides for a standard record retention period of 10 years, and lists the information required to be kept on file by the holder. The information holders must keep for 10 years is:

  • The date, place, and nature of the circumstances which give rise to the property right;
  • The amount or value of the property; and,
  • The last known address of the owner, if known to the holder. 

UPPO recommended the record retention requirement be seven years, and that holder records must be retrievable in case of an audit.

 


Priority 3: Electronic owner contact

One of UPPO’s primary messages and goals in its comments to the ULC was that the RUUPA needs to be modernized to include the technology that drives modern commercial transactions – including electronic owner contact and recurring ACH transactions. The RUUPA draft includes the following types of electronic owner contact:

  • Electronic communication by the owner to the holder or agent of the holder,
  • Electronic payment of a dividend, interest, or other distribution,

  • Owner-directed activity in the account (including accessing the account, increasing, decreasing, or change the amount in of property in the account) as acceptable forms of an owner’s interest in the property. 

Priority 4: Definition of owner contact

The current version of the RUUPA includes an expanded list of activities that are acceptable forms of owner contact, most of which were proposed by UPPO, but UPPO continues to advocate that the ULC drafting committee include automatic deposits and withdrawals as well.  Below is the list of activities that are included in the RUUPA as acceptable forms of contact:

  • Written communication (this includes electronic communication);

  • Oral communication (if the holder makes and preserves a record of the conversation);

  • Presentment of payment (check, electronic, or other instrument of payment) of a dividend, interest payment or other distribution;

  • Owner-directed activity in the account in which the property is held;

  • Making a deposit or withdrawal from an account in which the property is held*;

  • Payment of a premium with respect to an interest in an insurance policy;

  • Any action by an agent or other representative of an owner is presumed to have been done on behalf of the owner, and is considered an action by the owner.

*In addition, UPPO believes removing the brackets** placed around automatic withdrawals and deposits* in the current RUUPA draft (which means that this type of action may be excluded from the list of owner contact in the state adoption process) will better protect owners’ interests and align itself with how owners remain in touch with many of their property accounts.

 

**Brackets indicate that it’s an optional provision, and the adopting state can decide to include the provision in the adopted act.

 


Priority 5: Jurisdictional reporting deadlines

The RUUPA creates a standard reporting deadline for all non-life insurance holders of Nov. 1, and May 1 for insurance companies. 

 

As UPPO advocated, the RUUPA includes a provision which allows for elective early reporting by holders. The RUUPA specifically provides, if the holder has not succeeded in notifying the apparent owner of the property, the provision allows holders to voluntarily report and remit property that hasn’t yet been presumed abandoned. When the property is delivered to the state, the property will then be considered abandoned.

 

Questions about UPPO's advocacy strategy or how we are staying involved? Contact UPPO President Dana Terry.

 

More information

Register for this free, members-only webinar ULC Update Webinar, Aug. 18; 2 - 3 p.m. EST!

Tags:  advocacy  reform  RUUPA  unclaimed property  Uniform law commission  uniform unclaimed property act  UUPA 

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Wanted: Individual to Lead UPPO On-Demand Webinar Subcommittee

Posted By Emily Lee, UPPO, Thursday, July 16, 2015

The UPPO On-Demand Webinar Subcommittee is seeking a leader.

The subcommittee is tasked with creating the digital education for UPPO’s new certificate program, which will be offered both digitally and at in-person events. The certificate program will shape the profession by developing knowledge standards and requirements of practicing unclaimed property professionals. 

You’d be an ideal candidate if you can check off each of these (if you don’t have all these it’s not a deal breaker):

  • Have a passion for the advancement of the profession, and interest in seeing the certificate program come to life
  • Served on a board of directors or advisory group
  • Project-management experience 

Chair responsibilities:

  • Meeting deadlines and ensuring the digital curriculum of the certificate program is shaping into a quality, robust offering.     
  • Leading the on-demand webinar subcommittee’s monthly meeting
  • Attending the Education Council’s quarterly meeting

Why consider the position?

  • You’d be leading a dedicated and enthusiastic group of individuals that are excited to get to work
  • An ability to shape the profession and UPPO in a positive way
  • Greater involvement within UPPO
  • Grow your leadership and management skills

If you’re interested, apply by July 31. To apply fill out this quick survey.

 

Questions? Contact Ashley Hennig, 763.253.4342 or ashley@uppo.org.

Tags:  education  leader  UPPO  volunteer 

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Louisiana expands acceptable indications of interest with H.B. 692

Posted By Emily Lee, UPPO, Wednesday, July 15, 2015
Updated: Wednesday, July 15, 2015

Effective immediately, the following types of activity will be considered acceptable in the eyes of the Louisiana unclaimed property program:

1) The making of a deposit to or withdrawal from a bank account, including any one-time or recurring automatic clearing house transaction, or any other electronic transaction that is owner-directed or otherwise authorized by the account owner.

 

2) The accessing of a deposit account by the owner through the website or other restricted electronic access point of the banking or financial organization.

 

This legislation gives owners greater protection of their assets by expanding the list of contact to reflect the modern way many financial institutions interact with their customers. “UPPO is pleased to see Louisiana modernize its unclaimed property statute to better protect consumers, and is hopeful that other states will also consider doing the same,” says, Dana Terry, UPPO president.


For more information about the bill or other legislative activity important to you, visit the UPPO
govWATCH website.

 

Want more information?

Members receive weekly, emails updating them of legislative changes like this. If you’re not a member, join today!

 

Delaware S.B. 141 intends to reduce look-back period and permanently establish Delaware VDA program

 

2015 unclaimed property legislative season in review

Tags:  indication of owner interest  Louisiana legislation H.B. 692  unclaimed property 

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