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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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The Gift That Keeps on Giving: Understanding Gift Card Reporting and Compliance

Posted By Susan Han, principal, Abandoned and Unclaimed Property Practice – Ryan, Tuesday, September 3, 2013
Updated: Tuesday, September 3, 2013
Navigating the complex field of unclaimed property can be difficult for holders. The issue of reporting various forms of stored value – better known as gift cards or gift certificates, but also potentially encompassing other more cutting edge forms of stored value – can be particularly problematic due to the grey area surrounding these unique and highly popular instruments.

 

Unlike other forms of intangible personal property, such as uncashed checks or credit balances, which are more straight-forward from an unclaimed property compliance and reporting perspective, gift cards compliance often requires a more in depth analysis to determine reporting obligations under the jurisdictional (or "priority”) rules. In fact, more than 30 states have specific exemptions for gift cards under their unclaimed property statutes, but it’s important for holders to know the limitations of each exemption to ensure they are reporting gift card balances correctly.

In states without exemptions, gift cards and other forms of stored value are generally considered escheatable property and must be reported to the states under the priority rules established by the U.S. Supreme Court in Texas v. New Jersey – first priority being the state of the owner’s last known address as reflected on the holder’s books and records and the second priority being the state where the issuing company is incorporated or organized (assuming owner unknown property). With a large majority of gift card transactions (issued at the point of sale directly or through a third party), names and addresses are rarely collected as part of the transaction because they are purchased by cash or credit card. As a result, for such gift card transactions where names and addresses are not collected and retained, reporting generally reverts to the second priority, which is the state of incorporation of the gift card issuing entity.

Many gift card issuers are either already organized in one of the 30-plus states that have statutory gift card exemptions or choose to organize a wholly owned special purpose entity in one of the gift card friendly states. But in states without gift card exemptions, holders who may retain name/address information on a certain population of gift cards (i.e. potentially certain online gift cards) often incorrectly report gift cards or perhaps even over-report unredeemed gift cards to states that already have statutory exemptions. There are other complexities to reporting gift cards that should also be considered in conjunction with a consultant or legal counsel, such as states that allow holders to retain their "profit margin” and how this profit margin should be calculated or measured.

Many retailers are now working with third-party companies to handle all aspects of gift card issuances, redemptions, escheatment issues, and accounting processes. These companies are typically organized in states with broad statutory gift card exemptions.

Holders that do not already have gift card planning in place (i.e. gift card special purpose entities) and do actually retain name/address information need to consider the best course of action and have a plan in place to properly report gift cards to the appropriate state(s) and take advantage of statutory exemptions where they are applicable.

UPPO has multiple resources online for holders to learn more about unclaimed property compliance and reporting. Please view the member resources or unclaimed property links for additional information. UPPO also addresses this topic at its regional and annual events, and provides regular updates about state legislative changes related to gift cards and other property types in its weekly govWATCH briefing, available exclusively to UPPO members. Not a member of UPPO? Join and start receiving valuable resources today!

Susan Han is a principal with the Abandoned and Unclaimed Property practice group at Ryan, offering global tax services in North America. Ryan is a member of UPPO and Susan is also a member of UPPO’s Government Relations and Advocacy Committee.

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Tags:  Gift Cards  intangible personal property  retail  unclaimed property 

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Looking Back on the 2013 Holders Seminar

Posted By Catherine Del Re, Laura Lane & Robert Joseph, co-chairs of the professional development committee, Wednesday, August 21, 2013

With over 100 attendees and $260 raised for charity, the 2013 Holders Seminar was a success! On Aug. 14 and 15, the Unclaimed Property Professionals Organization (UPPO) headed to Chicago for two days of educational sessions and networking. Presentations were tailored for professionals new to the unclaimed property world, with topics covering the technical duties like crafting a due diligence letter, and utilizing technology to assist with compliance, to popular-interest topics such as unclaimed property reform. The sessions boasted practical information that will surely be useful in the day-to-day unclaimed property function. Each session was lively with exchanges of questions and helpful hands-on hints by presenters and attendees.

Here is what some Holders Seminar attendees had to say about the presentations

"Great examples to use in ‘real’ day-to-day world.”

"Fantastic material provided that has allowed me to gain a base of knowledge on unclaimed property.”

"Great presenters, unclaimed property can be exciting!”

In addition to attendees, UPPO had the pleasure of welcoming three state administrators and two representatives from the Uniform Law Commission (ULC), including the ULC Executive Director John Sebert. Their presence at the Seminar gave attendees a chance to mingle over lunch, at the Welcome Reception and during sessions. We thank you all for joining us at the Holders Seminar!  

During the Seminar, UPPO collected contributions for the UPPO Gives Back campaign which benefited the Greater Chicago Food Depository and the UPPO Scholarship fund. We are excited to announce that $172 and over 20 lbs. of food was collected for the Greater Chicago Food Depository and $91 for the UPPO Scholarship fund.

On behalf of the UPPO Professional Development Committee we would like to extend a thank you to all the sponsors, exhibitors, speakers and attendees of the 2013 Holders Seminar. We look forward to seeing you in March 2014 for the Annual Conference in Grapevine, Texas! To stay updated on UPPO news, subscribe to the UPPO Focus blog, follow the @UPPOfocus Twitter account or join the UPPO LinkedIn group.

 

More Resources

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Interested in volunteering with UPPO? Sign-up to volunteer on a UPPO committee

Tags:  Conference  Education  Holders Seminar  Unclaimed Property  UPPO 

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Shh…Unclaimed Property Secrets

Posted By Margo Strahlberg & Carla McGlynn, presenters at the Holders Seminar, Wednesday, August 7, 2013
Updated: Wednesday, August 7, 2013

We all know there is a lot of unknown information when it comes to unclaimed property. Each state has its own rules and at times the laws can be difficult to interpret. Carla McGlynn, partner at Unclaimed Property Consulting & Reporting LLC and Margo Strahlberg, associate at Bryan Cave LLP, understand this and will be filling in those gaps and sharing the "secrets” of unclaimed property at the Holders Seminar on Aug. 14 in Chicago!

Specifically, we will be giving our first-hand insights into how state abandoned property laws treat a variety of different property types, such as prepaid cards and rebates. We will also be diving into some of the nuances and legal quirks relating to business-to-business and de minimus exemptions, as well as exploring the impact from the Consumer Financial Protection Bureau’s preemption decision and New Jersey’s newly proposed rule.

In addition, we’ll be sharing the interviews we conducted with eight state administrators and asked them about everything from reciprocal reporting, to audits, to reporting extensions. This segment of the presentation will present an opportunity for attendees to ask questions and then we’ll present answers on behalf of the state administrators.

Here’s an example of a question we asked the state administrators

Q: What are the names of the third-party firms your state uses to conduct audits?

A: Florida responded that they use nine firms to conduct its audits. All other states provided the names of the firms their state utilizes.

Attend the session to find out the audit firms' names and much more!  This session is going to be great for anyone in attendance, from those just starting out to the unclaimed property veterans. Make sure to register for the Holders Seminar, to ensure you won’t miss out on the secrets.

More Resources

Join UPPO today and receive a special-member registration price at the Holders Seminar

Check out the State Administrator Forum for other Q&As with state administrators


Tags:  education  Holders Seminar  state administrators  unclaimed property  UPPO 

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Do You Know How to Communicate With the States?

Posted By Beth Stein & Robert Commodore, presenters at the Holders Seminar, Friday, August 2, 2013
Updated: Friday, August 2, 2013

Talking with state representatives can be a sticky situation for any unclaimed property holder – especially if you are new to the profession. The balance between sharing too-little and over-sharing information can sometimes be hard to find.

Beth Stein, managing director at SeaChange and Robert Commodore, senior director of Consumer Protection & Education (Licensing, Unclaimed Property) at the State of Minnesota are presenting a session, "How to Communicate with the States" at the Holders Seminar, Aug. 14-15. At this session, attendees will hear the invaluable advice of a third-party service provider and a state representative. We will be sharing with attendees the suggested practices when speaking with administrators, pros and cons of working with third-party resources, and general rules to keep in mind when speaking with states.

Helpful tips to keep in mind

  • Be cautious when sharing information with the state, but understand they need comprehensive information to give correct answers and provide assistance
  • Ask questions to the appropriate person within the state – typically start by contacting the state administrator.
  • Try to obtain answers and advice in writing to have proof of the conversation occurring, or, at a minimum, send the state contact an email summarizing the conversation
  • Keep in mind state administrators might be leery to give advice when holders are sharing too little about their specific case                                                                                                                                               
  • Depending on the issue, it may be advantageous to utilize a third party advocate to keep the company anonymous

Looking for more helpful tips? Register for the Holders Seminar today and plan on attending Robert and Beth’s presentation

Resources

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Tags:  communication  education  Holders Seminar  state administrators  unclaimed property  UPPO 

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Let’s Talk About Unclaimed Property Reform

Posted By Administration, Tuesday, July 30, 2013
Updated: Tuesday, July 30, 2013

UPPO is keeping a watchful eye on unclaimed property reform and inserting its voice as the leading unclaimed property organization. At the Holders Seminar, Aug. 14-15, Ethan Millar and Jennifer Borden, UPPO members, will be presenting on the topic of reform. Below is the interview with Jennifer and Ethan.

Q: Could you describe the initial processes involved with reforming federal unclaimed property laws?

A: Since unclaimed property is generally regulated by the states rather than by the federal government, there is no real effort that we are aware of to adopt federal unclaimed property reforms. At the state level, reform can take many forms, but the American Bar Association (ABA) and the Uniform Law Commission (ULC) are both focused on creating "model” or "uniform” acts that states can look to for guidance in revising its own unclaimed property laws.

Q: Generally speaking, how does the ABA’s Model Unclaimed Property Act differ from the current incarnation of the law?

A: The ABA Model Unclaimed Property Act (Model Act) is currently in the process of being drafted, so no provisions have been finalized. However, the Model Act is intended to be based on and further the core principles underlying states’ unclaimed property laws, and in particular the derivative rights doctrine, which is often not followed under current law. The Model Act is also intended to be consistent with federal law, and unfortunately many existing laws are not.

Q: Could you describe the reasons why reform is needed, and what advantages holders might gain from future reforms?

A: Reform may be needed for a variety of reasons, including to make state laws more fair or more uniform, to address changes in technology or business practices, and to correct errors or inconsistencies under current law. Holders may benefit from reform in many ways, including potentially reduced or simplified compliance obligations, greater certainty on specific issues, and stronger protection of their property rights. Some of the major areas of reform include:

  • making the state laws consistent with the federal priority rules
  • eliminating state inconsistencies with the derivative rights doctrine
  • exempting business-to-business transactions from state unclaimed property laws
  • changing the treatment of certain property types (e.g., prepaid cards, securities insurance, etc.)
  • updating the due diligence or reporting rules
  • restricting the use of statistical estimation
  • establishing formal and independent appeals processes

Q: How do the activities of the ABA and ULC differ and where are they similar? Do you feel they complement each other or provide conflicting views?

A: One difference is that the ABA is focused on creating a "model” unclaimed property law that is intended to best reflect the purposes and principles underlying unclaimed property laws, whereas the ULC appears to be more focused on creating an unclaimed property act that is generally acceptable to both states and holders, and thus is perhaps more likely to be widely adopted as a practical matter. The ULC is also generally focused on creating an act that will be adopted in its entirety by the states, whereas the ABA is drafting the Model Act with the intent that it may be adopted either in whole or in part.

The ABA and the ULC do have a long history of cooperating together. Both organizations worked together to draft the current Uniform Unclaimed Property Acts.

Q: What is UPPO’s role in advising the ULC Study Group and/or ABA activity? How can UPPO ensure that holders’ views are heard and their rights protected during this process?

A: The ABA is actively soliciting input from UPPO and its members regarding the Model Act (as well as other interested parties), and UPPO’s Government Relations and Advocacy Committee has appointed a subcommittee to specifically provide comments on the ABA Model Act. The ABA takes these comments very seriously. UPPO will have a similar role in the ULC effort, by providing commentary on issues and draft provisions being considered by the ULC.

Q: What additional information about your presentation would you like attendees to know before the Holders Seminar?

A: The presentation will discuss more details regarding the ABA and ULC reform efforts. This will include the procedures followed by both organizations in drafting these acts, who the decision-makers involved in the reform are, among other things.The presentation will also identify the draft provisions of the ABA Model Act that are currently in progress, and which substantive areas of reform both organizations will focus on in the future. We will also discuss why UPPO members should get involved in both of these efforts, and how to do so.

To hear more from Ethan and Jen on unclaimed property reform, register for the Holders Seminar!

 

More Resources

Join UPPO now and receive an exclusive member registration price at the Holders Seminar

Listen to UPPO’s webinar exclusively on the Uniform Law Commission

Modernizing the Uniform Disposition of Unclaimed Property Act

John Sebert, ULC Executive Director will be leading a session at the Holders Seminar


Tags:  ABA  Education  Holders Seminar  Reform  ULC  Unclaimed Property  UPPO 

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