Join now!   |   Subscribe   |   Pay an Invoice   |   Contact Us   |   Sign In
Unclaimed Property Focus
Blog Home All Blogs
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.

 

Search all posts for:   

 

Top tags: unclaimed property  Compliance  education  UPPO  due diligence  audits  Delaware  reform  Advocacy  Members  ULC  litigation  UP101  UP Laws  reporting  RUUPA  Uniform Law Commission  Holders Seminar  legislation  Canada  Gift Cards  service providers  uniform unclaimed property act  UPPO Asks  Annual Conference  Policy  VDA  fall reporting  FAQs  Pennsylvania 

New Pennsylvania and Texas due diligence requirements raise questions

Posted By Administration, Tuesday, February 21, 2017

In recent years, Pennsylvania and Texas enacted new unclaimed property due diligence requirements that affect holders this year. In both cases, the statutes raise several questions for holders required to comply with the new requirements.

 

Pennsylvania

Last year, Pennsylvania amended its unclaimed property law, effective Sept. 12, 2016. Among the changes was the addition of a due diligence requirement. According to draft guidance from the state, the new due diligence requirement applies to all property to be reported on April 15, 2017.  

 

The due diligence requirement specifies that property holders must send a notice to owners between 60 and 120 days before reporting the property to the state treasurer. The requirement applies to any property valued at $50 or more for which the holder has an owner address it believes is valid.

 

Holders are also permitted to provide optional, additional notice any time between the date of last activity by, or communication with, the owner and the escheatment date, under the new requirement.

 

Unless the holder has valid consent from the owner for electronic contact the owner, written notice must be sent by first-class mail. The holder is required to include descriptions of the property and property ownership, value of the property (if known) and information for contacting the holder to avoid escheatment of the property.

 

The due diligence requirement’s language raises several questions for holders. It is unclear whether having valid consent to communicate electronically triggers a requirement that the holder must provide the notice electronically, or if the holder has the option to provide notice either electronically or by first class mail.

 

It is also unclear what constitutes owner consent to receive the due diligence notice electronically. Does the consent have to specifically mention due diligence notices? Does consent apply if the owner agreed to receive only specific types of documents, such as tax forms, electronically?

 

UPPO has raised these questions via comments to Pennsylvania’s treasurer in hopes of receiving clarification for the holder community.

 

Texas

In June 2015, Texas passed H.B. 1454, which includes new due diligence requirements, effective on Sept. 1, 2017. Under the new requirements, if a property owner has designated a “representative for notice,” the holder must mail or email the written notice required upon presumption of abandonment to the representative in addition to mailing the notice to the owner.

 

The requirements specify that, although the designated representative does not have any rights to claim or access the property, the dormancy period will cease if the representative communicates to the holder knowledge of the owner’s location and confirms that the owner has not abandoned the property.

 

Holders are also required, under the new requirements, to include the name and last-known mailing or email address of the representative for notice designated by the holder.

 

As with Pennsylvania’s new requirements, the Texas requirements raise several questions for holders:

  • What types of property are covered? The law specifies mutual funds, deposit accounts and safe deposit boxes, but doesn’t specify whether both open-end and closed-end mutual funds, and IRAs are included?
  • What are the acceptable methods for obtaining representative information? The requirement specifies that the comptroller provides a form that a holder may make available to an owner to designate a representative. However, it does not specify whether this is the only acceptable method for collecting this information.
  • Is there any criteria for being designated as a representative for notice, and does the designated representative have to provide any sort of consent to serving this role?
  • How long does a designation of being a representative for notice last, and are there any requirements for an owner to revoke this designation and/or for a holder to notify Texas of the revocation?
  • If the owner holds multiple accounts with the same holder, is designation of a representative for notice on one account considered applicable to all accounts? Likewise, does a representative response regarding one account automatically reflect interest in all of the owner’s accounts maintained by the holder?

UPPO has raised these questions with Texas officials and will continue to monitor implementation of the new requirements.

 

 

Tags:  due diligence  Pennsylvania  Texas  unclaimed property 

Share |
PermalinkComments (0)
 

S.B. 13 makes sweeping changes to Delaware’s unclaimed property statutes

Posted By Administration, Thursday, February 16, 2017

On Feb. 2, 2017, Gov. John Carney signed Delaware S.B. 13 into law, significantly updating the state’s unclaimed property statutes. Many of the changes mirror the 2016 Revised Uniform Unclaimed Property Act (RUUPA), and others appear to respond to issues raised by the Temple-Inland case. The new law is intended to “bring greater predictability, efficiency and fairness to the state’s unclaimed property reporting process and compliance initiatives.” Following is a summary of several of the law’s most noteworthy provisions.

 

Lookback, Record Retention and Statute of Limitations

S.B. 13 reduces the lookback period for both audits and voluntary disclosure agreements (VDAs) to 10 years plus dormancy. It also defines an express record retention period of 10 years from the date a holder submits a report. The statute of limitations is now 10 years from the date the duty arose, whether or not the holder reported the property. The previous statute of limitations, although shorter, began to run from the time the holder reported the property.

 

Estimation Methodology

The new law mandates that the secretaries of finance and state develop estimation regulations by July 1, 2017. They must include permissible base periods; items to be excluded from estimation calculation; aging criteria for outstanding and voided checks; and a definition of what constitutes “complete and researchable records.”

 

Audit Conversion

Under the new law, all holders currently under audit may convert to a two-year accelerated audit. Holders under audit as of July 22, 2015, may convert to a VDA program. Holders have until 60 days after the promulgation of the new estimation regulations to decide whether to convert to an accelerated audit or VDA program. Interest and penalties will be waived if conversion is made. Holders remaining in the audit will be subject to mandatory interest that is waivable only up to 50 percent.

 

Subpoena Authority

Provisions of the new law give the state escheator the power to issue an administrative subpoena and the ability to seek enforcement of an administrative subpoena in the Court of Chancery. These provisions appear to address issues raised by Delaware Department of Finance v. Blackhawk Engagement Solutions.

 

Judicial Review

Among the new provisions adopted in Delaware is a process for appeal by holders to the Delaware Court of Chancery, replacing the previous multi-step administrative review process. Under the new appeal process, holders have the ability to challenge the state escheator’s determination of liability. The court’s standard of review is deferential to the state escheator regarding factual determinations, but errors of law will be reviewed de novo. The judicial review provision also expressly gives the Court of Chancery the authority to review questions of state or constitutional law related to the examination. This provision appears to be a response to the Temple-Inland case.

 

Indications of Owner Interest

S.B. 13 adds a specific list of owner activities that prevent running of the dormancy period. Indications of the owner’s interest in property includes:

  • A written or oral communication by the owner to the holder or agent of the holder concerning the property or the account in which the property is held.
  • Presentment of a check or other instrument of payment of a dividend, interest payment or other distribution.
  • Accessing the account or information concerning the account, or a direction by the owner to increase, decrease or otherwise change the amount or type of property held in the account.
  • Payment of an insurance policy premium with some exceptions.

The new law also specifies that if an owner has more than one investment or account with a holder, an indication of interest in one investment or account is an indication of interest in all of those accounts.

 

Knowledge of Death

The new law adopts the “knowledge of death” concept as a dormancy trigger for life insurance proceeds. “Knowledge of death” may be identified through any source, such as declaration of death, a death certificate or the comparison of the holder’s records against the Social Security Administration’s Death Master File.

 

Priority Rules

For the first time, the Delaware unclaimed property law includes a codification of the U.S. Supreme Court’s priority rules. It expressly prohibits Delaware as the state of domicile under the second priority rule from taking property into custody that is exempted in the first priority rule state. It also allows the state of domicile to claim foreign-address property but excludes property claimed under foreign law.

 

Owner Address

S.B. 13 adopts portions of RUUPA’s definition of an owner’s “last-known address.” The last-known address of an owner is defined as “a description, code or other indication of the location of the owner on the holder’s books and records that identifies the state of the last known address of the owner.”

 

Disposal of Securities

The new law specifies that the state escheator shall sell or dispose of securities on any established stock exchange or by such other means as soon as the escheator deems it feasible after the delivery. The escheator may not sell a security listed on an established stock exchange for less than the price prevailing on the exchange at the time of sale. The escheator may sell a security not listed on an established exchange by any commercially reasonable method.

 

S.B. 13 provides for indemnification of security owners for 18 months. The escheator will provide either a replacement security or the market value of the security at the time the claim is filed if the owner comes forward with that 18-month period.

 

Gift Cards

For the first time, Delaware’s statute defines “gift cards,” “stored value cards” and “loyalty cards.” Gift cards and stored value cards remain escheatable after five years of inactivity. The state retained its unique profit retention provision defining the amount unclaimed as “the amount representing the maximum cost to the issuer of the merchandise, goods, or services represented by the card.” S.B. 13 adds “Goods” and “Services” into the mix, as old statute only provided exemption for “maximum cost to issuer of merchandise represented by the card.” Loyalty cards are expressly exempt.

 

Holders are prohibited from transferring their unclaimed property liability or obligation, except to a parent, subsidiary or affiliate. This provision affects third-party, unrelated companies that issue gift cards on behalf of a business and appears to address some of the uncertainty resulting from the Card Compliant qui tam litigation.

 

Compliance Review

Another new provision in the law permits the state escheator to conduct a “compliance review” if the escheator believes a filed report was inaccurate, incomplete or false. The compliance review is limited to contents of report and all supporting documentation. The escheator is required to adopt rules governing the procedures and standards for compliance reviews, but no timeline was included in the statute.

 

Application of the New Law

S.B. 13 represents a major change in Delaware’s unclaimed property practices with many positive developments for holders. They include reduced lookback, clear record retention period, estimation regulations, statute of limitations regardless of prior reporting compliance, direct appeal to Court of Chancery, new definitions and new exemptions.

 

As with any new law, it remains to be seen how provisions will be interpreted and applied. Holders await the regulations still in development regarding audit conversions to fast-track audits and VDAs, and the new compliance review provision. Clarification from Delaware will help holders make informative judgments about whether to convert current audits into VDA or fast track audits, and whether other changes to their unclaimed property practices are warranted.

 

Tags:  audits  Delaware  estimation  gift cards  RUUPA  unclaimed property 

Share |
PermalinkComments (0)
 

New York reduces voluntary compliance program reach-back period

Posted By Administration, Thursday, February 9, 2017

Effective on Jan. 1, 2017, the state of New York implemented a reduced reach-back period for holders participating in the voluntary compliance program. The reach-back period is now 10 years plus dormancy on general ledger items, reduced from 20 years plus dormancy before the change.

 

“We’ve been talking to holders quite a bit about what works and doesn’t work,” says Kelly Kuracina, assistant bureau director for New York’s Office of Unclaimed Funds. “We heard over and over that the reach-back period was intimidating. It’s uncommon for companies to have records going back more than 20 years. We thought it would be a good-faith olive branch to set a more reasonable timeframe for when companies are likely to have records.”

 

The reduced reach-back period applies only to the voluntary compliance program—not to audits. Companies participating in the voluntary compliance program before Jan. 1, 2017, also fall under the previous reach-back period. However, if a holder joined the program near the end of 2016 and identifies issues related to the reach-back period, New York’s Voluntary Compliance Unit will review the circumstances and work with them on a case-by-case basis, according to Kuracina.

 

Holders are eligible to apply for the program if they have not been contacted about an audit in New York and would be first-time reporters or recently identified a property type that hasn’t been reported.

 

As part of its outreach efforts, New York’s Voluntary Compliance Unit has been sending letters to likely property holders, inviting participation. Whether they receive an invitation or initiate the process on their own, potential program participants can complete a self-audit checklist to help determine whether the company is holding unclaimed funds. Or, if the holder already knows it has past-due unclaimed property to report, it can complete a voluntary compliance agreement (VCA). Upon review of the survey or VCA and acceptance into the program, the holder has six months from the date of acceptance to conduct its review, complete its due diligence and file a report.

 

“We know there’s a population of companies that are either not aware or not in compliance,” Kuracina says. “We take responsibility for raising awareness and making sure they know there’s a requirement under the law to report unclaimed funds they hold. If it’s simply a case where they aren’t aware, we want them to become aware. If they weren’t in compliance because the reach-back period seemed too onerous, now they have the opportunity to come forward.”

 

Learn more about New York’s voluntary compliance program on the state’s unclaimed property website, or contact the Voluntary Compliance Unit at nysvcu@osc.state.ny.us with any questions about the program or unclaimed property compliance in the state.

 

 

Tags:  New York  unclaimed property  VDA  voluntary disclosure agreements 

Share |
PermalinkComments (0)
 

Gobeille case backs ERISA preemption argument

Posted By Contribution from Sam Schaunaman, J.D. and GRAC member, Thursday, February 2, 2017

Many employee benefit plans were established under the federal Employee Retirement Income Security Act of 1974, as amended (ERISA). Unclaimed property holders generally take the position that because federal law dictates how benefit plans should be administered under ERISA, states are preempted from claiming the money associated with those plans. A 2016 U.S. Supreme Court decision appears to add support to this position.

 

Considering the case of Gobeille, Chair of the Vermont Mountain Care Board v. Liberty Mutual Insurance Company, the Supreme Court examined whether Liberty Mutual and its third-party administrator, Blue Cross Blue Shield of Massachusetts, Inc. were required to provide information to Vermont under the state’s disclosure statute.  Liberty Mutual sponsored a self-insured and self-funded health plan that provided health benefits in all 50 states to its employees, their families, and former employees. Vermont issued a subpoena to Blue Cross to provide eligibility, medical claim and pharmacy claim files for the plan’s Vermont members. Liberty Mutual instructed Blue Cross not to comply, and then filed suit, seeking a declaration from the court that ERISA preempts state law and, thus, because the plan is an “employee welfare benefit plan” under ERISA, the company was not compelled to submit the requested information.

 

The Supreme Court ruled in favor of Liberty Mutual. This decision is significant for unclaimed property holders. If a state regulator cannot compel a benefit plan subject to ERISA to obey a healthcare reporting subpoena, it logically follows that it also cannot compel it to file an unclaimed property report or obey an unclaimed property subpoena.

 

This decision adds support to existing authorities favoring ERISA preemption:

  1. Literal reading of the statute and legislative history: It is generally accepted that Congress enacted ERISA so plan sponsors would have to comply with only one federal law, rather than a variety of potentially conflicting state laws.  Sen. Jacob Javits (R-N.Y.), a key sponsor of the bill that became ERISA, stated as part of the legislative history to ERISA that, “The emergence of a comprehensive and pervasive federal interest and the interests of uniformity with respect to interstate plans required—but for certain exceptions—the displacement of state action in the field of private employee benefit programs.”
  2. Previous case law: In the 1999 Commonwealth Edison Company v. Vega case, the U.S. Court of Appeals for the Seventh Circuit denied the state of Illinois’s efforts to escheat uncashed benefits checks issued by an ERISA-covered defined benefit plan.
  3. U.S. Department of Labor (DOL) support: The DOL, which administers some ERISA provisions, is on record supporting the law’s preemption of state laws. It has publicly stated this position via advisory opinions and a formal letter to the Uniform Law Commission committee that was drafting the 1995 edition of the Uniform Unclaimed Property Act.

 

ERISA has been in effect for more than 40 years, but conflicts regarding its preemption of state law related to unclaimed property still arise from time to time. 

 

This Gobeille case appears to support the proposition that states cannot make any plan covered by ERISA respond to a health care reporting subpoena. If they can’t make such a plan sponsor supply information pursuant to litigation, it would seem they shouldn’t be able to require the filing of escheat reports either. Doing so would require an ERISA plan administrator to become familiar with and adhere to 50 different laws, thus defeating the intent of Congress when passing ERISA.

 

 

About the contributor

Sam Schaunaman, senior manager at Ryan AUP and member of the UPPO Government Relations and Advocacy Committee, contributes to UPPO’s monthly litigation update blog posts. Schaunaman has over 26 years of unclaimed property experience in all aspects of unclaimed property and is a frequent author of unclaimed property articles and whitepapers. Schaunaman is a member of the Oklahoma Bar Association.    

 

Disclaimer: This case summary contains a general description of the case, and neither UPPO nor Ryan, or any of their affiliated or related entities, by means of this summary, is rendering business, financial, legal, tax, reporting or compliance or other professional advice or services.  This summary blog is not a substitute for such professional advice.

 

 

Tags:  ERISA  federal preemption  litigation  unclaimed property 

Share |
PermalinkComments (0)
 

State Legislatures Reconvene, Immediately Take up Unclaimed Property Issues

Posted By Administration, Monday, January 30, 2017

Reconvening earlier this month, state legislatures are wasting no time considering new unclaimed property legislation, including language from the Revised Uniform Unclaimed Property Act. Following are summaries of several of the most noteworthy bills UPPO is tracking.

 

Arkansas

H.B. 1142 extends the presumed date of abandonment for securities from five to seven years from any of the following:

  • The date of most the recent dividend, stock split or other distribution unclaimed by the apparent owner;
  • The date of second mailing of a statement of account or other notification or communication that was returned as undeliverable, or after the holder discontinued mailings, notifications or communications to the apparent owner;
  • The date that the security holder or payee is presumed lost or unresponsive as it existed on Jan. 23, 2013.

The bill also includes new provisions requiring the security holder to liquidate the security before remitting it to the administrator. The bill was referred to a Senate Committee on Jan. 23.  

 

Delaware

Highly anticipated legislation since last summer’s Temple-Inland summary judgment and settlement, S.B. 13 adopts provisions from the 2016 Revised Uniform Unclaimed Property Act. It also adopts certain recommendations from the Delaware Unclaimed Property Task Force and makes significant changes to the state's unclaimed property reporting process and compliance initiatives.

 

These changes include reducing the look-back period for all voluntary disclosure agreements and audits to 10 report years, and creating a 10-year statute of limitations for the state to seek payment of unclaimed property due to the state. In addition, this legislation aligns the state’s record retention requirement for companies with the statute of limitations and look-back period, which mirrors laws in a majority of other states.

 

S.B. 13 also offers any company currently under audit the opportunity to convert their audit into a voluntary disclosure agreement. Since July 22, 2015, Delaware law has allowed companies to enter into a VDA before going through an audit. This change provides the VDA option for companies whose audits began before July 22, 2015, and are still in process. It also gives all companies that received a notice of examination who are currently under audit on the bill’s effective date the opportunity to engage in an expedited audit review process.

 

The bill addresses the state’s estimation practices for audits and VDAs, requiring the secretaries of finance and state to develop by July 1, 2017, regulations for estimation base periods, excluded items, aging criteria for outstanding and voided checks, and the definition of “complete and researchable records.”

 

Finally, the bill mandates that interest be assessed on any late-filed unclaimed property, as a means to incentivize voluntary compliance. The bill quickly made its way through the legislature, and was sent to the governor on Thursday, Jan. 26 for signing.

 

Nebraska

The unicameral legislature in Nebraska is considering a pair of unclaimed property bills. L.B. 137 adopts the Unclaimed Life Insurance Benefits Act. It requires an insurer to compare its policies and retained asset accounts against a death master file to identify possible matches of its insured at least a semi-annually. The bill outlines requirements in the case of a match or potential match, as well as procedures for group life insurance. A hearing is scheduled for Jan. 30.  

 

L.B. 141 adopts the Revised Uniform Unclaimed Property Act. Among relevant provisions, the bill establishes various dormancy periods and due diligence requirements. It exempts gift cards without expiration dates and fees and establishes a three-year dormancy period for returned merchandise credits and gift cards with fees. The bill also outlines the state treasurer’s responsibilities regarding unclaimed property and provides for holder reimbursement where appropriate. It provides in certain circumstances for the right of another state to take custody of unclaimed property. The bill is still awaiting to be scheduled for a committee hearing.

 

New York

S.B. 1689 prohibits gift card expiration dates and dormancy service fees unless it meets four conditions:

1.       The remaining value of the gift card is $5 or less each time the fee is assessed;

2.       The fee does not exceed $1 per month;

3.       There has been no activity on the gift card for 24 consecutive months; and

4.       The holder has the ability to reload or add value to the gift card.

 

The bill also requires retailers to redeem gift certificates of $10 or less for cash at the consumer's request. The bill was referred to the consumer protection committee.

 

Oregon

S.B. 113 requires the provider of goods and services identified on a gift card to transfer to the Department of State Lands the remaining balance of any gift card after five years of inactivity from the date of the last purchase using that gift card. The bill is currently in committee.

 

South Dakota

S.B. 34 revises provisions related to securities held as unclaimed property. The bill requires the state treasurer to sell all stocks, bonds and other negotiable instruments within 90 days of confirmed receipt, unless the property is on an open claim. The bill was referred to a House Committee on Jan. 20.

 

Utah

H.B. 42 makes comprehensive revisions to the state’s insurance law. Among other changes, the bill amends definitions under the Unclaimed Life Insurance and Annuity Benefits Act by removing the definition of “knowledge of death.” The bill saw its third hearing in the House on Jan. 25.

 

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  death master file  insurance  RUUPA  securities  unclaimed property 

Share |
PermalinkComments (0)
 
Page 8 of 48
 |<   <<   <  3  |  4  |  5  |  6  |  7  |  8  |  9  |  10  |  11  |  12  |  13  >   >>   >| 
Membership Software Powered by YourMembership  ::  Legal