The Unclaimed Property Ledger

Transcription

1 Spring 2010 The Unclaimed Property Ledger IN THIS ISSUE ABOUT VENIO HOT TOPIC Due Diligence, It Pays to Be Diligent By Christa DeOliveira, CIA, CCEP This article explores the background, new developments, and options surrounding due diligence and owner outreach. CONTRIBUTOR S CORNER Unmatched Receivers: Escheatable? By J.Brooke Spotswood, Escheat Counsel In this article, mismatches in inventory receipts and invoices are considered, as well as whether these differences should be considered as unclaimed property. LEGISLATIVE UPDATES These are avaiable only in our online edition. ABOUT VENIO Venio finds owners of unclaimed property for banks, brokerage firms, mutual funds, insurance companies, transfer agents, and publically held companies. Its search and location, reporting, and risk management services ensure compliance with SEC regulations and state laws, reduce expenses and improve customer and asset retention. With over 45 years of experience, Venio has recovered and restored hundreds of millions of dollars in unclaimed property for clients and their customers Venio LLC, all rights reserved. HOT TOPIC Due Diligence, It Pays to Be Diligent By Christa DeOliveira, CIA, CCEP Due diligence has long been required by the majority of jurisdictions prior to escheating of unclaimed property. However, in recent years we are seeing a growing trend where there are exacting requirements for due diligence, either statutorily or through administrative procedures. Some of the specific requirements include phrasing, font size and bolding, adding due diligence as a new requirement, as well as states requiring information about due diligence that was conducted prior to turning property over to a state. Due diligence is the process of holders applying state requirements and attempting to contact the apparent owner, before turning property over to the appropriate state. Most states require due diligence to be conducted and it is recommended for all states 1

2 Background Both the 1981 and 1995 Unclaimed Property Acts, set forth by the Uniform Law Commission, provide for holders to conduct due diligence. The 1981 Act specifically provides for holders sending a written notice to the apparent owners of property presumed to be abandoned. These written notices should be sent not more than 120 days before a report s due date. The requirement is waived if a holder s records disclose an inaccurate address for the owner, the claim would be barred by the statue of limitations, and the property has a value of less than $50. The 1995 Act has similar provisions. The timeframe for sending a written notice remains not more than 120 days but is amended to include not less than 60 days before a report is due. The original 1954 Uniform Disposition of Unclaimed Property Act 1954 and subsequent 1966 Act are silent to due diligence. The only owner notification they outline is for states to publish information of property turned over to them. Due diligence letters should be sent to the last known address on the holder s records. Holders may and in a few instances are directed to conduct searches to locate current addresses for their missing owners. Additionally, holders may also choose to outsource this to search firms to assist them in finding their lost owners. Recent Developments California, Ohio, Pennsylvania, and Texas all have noteworthy new requirements. Last year, the California Supreme Court heard the case of Azure Limited v. I-Flow Corporation and made a ruling that challenges the conventional thinking that escheating property to a state results in blanket indemnification. This ruling resolved a split between two other Southern California courts of appeal. The case establishes that holders are not necessarily indemnified if property is turned over to California without appropriate notice of transfer or due diligence. In this particular case I-Flow Corporation escheated a large holding of shares in I-Flow stock belonging to Azure Limited. As part of the complaint, Azure asserted that Azure s location was known at all relevant times by I-Flow. Azure is based in Mumbai, India. Azure learned that its shares had been turned over to the state of California, and when Azure attempted recovery of the shares directly from the state it learned that California had previously liquidated the shares for the amount of $4.62 per share. At the time of recovery, the shares were currently trading at the higher rate of $17.72 per share. Subsequently, Azure sued I-Flow, asserting that I-Flow did not carry out its fiduciary duty of attempting owner notification of warning of impending escheat and sought damages for the difference between the proceeds from California s liquidation of the shares and the share price of $ Azure prevailed. Recently, California passed HB 1291 with an effective date of January 1, Notification requirements have been revised and holders are required to send due diligence notices to owners of property valued at $50 or greater before reporting it. This requirement is designed to give owners notification that their property is in danger of being turned over to the state and to reunite more owners with their property. The notice needs to have a heading centered at the top of the letter that is either in bold or two font sizes larger than the font in the rest of the letter. The notice should state, THE STATE OF CALIFORNIA REQUIRES US TO NOTIFY YOU THAT YOUR UNCLAIMED PROPERTY MAY BE TRANSFERRED TO THE STATE IF YOU DO NOT CONTACT US or other substantially similar language. This new phrasing requirement cleans up previous legislation which had awkward phrasing requirements. The timing requirement that all due diligence letters should be sent not more 365 days or less than 180 days before the property is reportable on the notice report (not transferred or remitted) has remained intact. However, it was clarified in the legislation that this timing requirement is based on the notice report, so it ensures due diligence from the holder is conducted before property is ever reported to California. Another provision allows for sending due diligence letters electronically, where the owner s consent has previously been obtained. Owners can respond to due diligence letters by a phone call or electronic communication to rebuff the presumption of abandonment. Holders can deduct up to a $2 service charge for administrative costs associated with sending due diligence letters. Echoing the findings in Azure Limited v. I-Flow Corporation, the legislation directs that for holders to be relieved of liability or indemnified for the property escheated to California, the holder must have complied with the requirements of sending due diligence letters to the owners. Holders can be relieved of all liability when they have substantially complied with the due diligence notification provisions of California s unclaimed property law. For more details on this legislation, the California State Controller s Office publication of the Spring 2010 Holder Outreach Newsletter for California Unclaimed Property can be reviewed at spring.pdf. In Ohio, the five percent administrative fee on claims was eliminated effective October 16, 2009 as the result of passage of Am. Sub. H. B. No. 1. In Sec (D) the following phrasing regarding the five percent fee has been struck: [The director] shall retain in the trust fund, as a fee for administering the funds, five per cent of the total amount of unclaimed funds payable to the claimant. This also removes the requirement to disclose the five percent fee under O.R.C (D) and the disclosure on the OUF-8 Notice of Unclaimed Funds, or a similar notice. Am. Sub. H. B. No. 1 can be viewed in its entirety at While Pennsylvania continues to not require sending due diligence, last year they instituted new forms and are collecting information on due diligence efforts that have been conducted. 2

3 Due Diligence Verification Form A is for non-security property. On this form holders are asked to describe the due diligence that has been conducted and also account for due diligence that has not been conducted. The signature requirements do not direct for an employee at the holder with a specific position to sign the verification form. The form can be viewed on Pennsylvania s unclaimed property website at DueDiligenceFormA.pdf. In contrast to the signature requirements for Form A, for Due Diligence Verification Form B, the positions listed with authority to sign include: CEO, Chairman, President, Vice President, and Commissioner. The verification for Form B should be completed by holders reporting security property. It states, The undersigned senior officer hereby verifies that searches have been conducted to locate all lost security holders identified in this holder report, in accordance with Securities and Exchange Commission (SEC) regulations at 17 C.F.R Ad-17. Form B can be viewed at assets/pdf/unclaimedpropertyforms/duediligenceformb.pdf. ibility to use their discretion to determine the best approach to find apparent owners. This could include writing a standardized, general letter or using a highly customized search letter, targeted to a particular group of owners or for a specific property type. Additionally, most due diligence requirements fall at the end of dormancy periods. In some instances, this can be only a year, yet for other property types it could be five years or more. Searching for owners early in the dormancy aging process can elicit a greater success rate in reuniting owners with their property. Undoubtedly, there will continue to be changes in due diligence requirements and it will be interesting to track their evolution. As requirements become more state specific, holders can mitigate these differences by expanding their early outreach programs, keeping in mind effective and thorough owner outreach and due diligence are tools to reunify property with its owner. Based on the increasing state requirements, state scrutiny, and liability, holders cannot afford to simply go through the motions, but rather they need to conduct thorough due diligence. Through passage of SB 1589, last year, Texas has joined the ranks of states requiring due diligence to be conducted. The new legislation requires holders of unclaimed property holding property on June 30 valued at more than $250 to mail a notice to the owner on or before the following August 1. The notice is to be sent to the last known address of the known owner. The notice must state the holder is holding property and it may be required to deliver the property to the Texas Comptroller on or before November 1, if it remains unclaimed. However, this new notice requirement does not apply if the holder has already provided notice through compliance with an existing federal law, rule, or regulation or state law, within the timeframe specified in the legislation. Also, notification is not required when the holder does not have an address for the owner. The legislation also allows the holder to charge the cost of postage as a service charge against the property. This change is effective as of September 1, More information about this legislation can be found at tx.us/up/senate_bill1589.html. Options It is important to remember that owner outreach efforts are not all regulated. Search letters and other forms of owner outreach are outside the scope of due diligence; therefore, there are no phrasing, font, content, timing, or certified mailing requirements governing them. This gives holders the flex- To automatically receive notification of posting for of our online newsletters, you may subscribe by sending an to newsletter@venio.com. CONTRIBUTOR S CORNER Unmatched Receivers : Escheatable? By J. Brooke Spotswood, Escheat Counsel Unmatched receivers go by names such as: Goods Received/ Invoice Received (GR/IR), excess or mismatched inventory, open receivers, free goods, or uninvoiced payables. Regardless of which label or acronym your company uses, we can probably agree that these mismatches will occur in the ordinary course of business. These mismatches occur in a variety of ways. Sometimes, the supplier will ship additional product for a myriad of reasons: to compensate for prior shipments which were not completely filled or defective or to provide samples of a new product. A difference in the amount shipped to the amount received can even result from the product having gained weight during transit, particularly in the case of minerals or fluid! Other possibilities are custom of the trade or simply a gesture of goodwill, such as the thirteenth doughnut in the old-fashioned baker s dozen which is an example of both! 3

4 Additionally, there are valid reasons why the shipper s invoice and distributor s payment do not always match: rebates, discounts, price changes between shipment and delivery, etc. Regardless of the reason, the receiving company s records will reflect that it received thirteen doughnuts but paid for a dozen. The legal issue is whether that last doughnut is escheatable. Delaware says, Yes!, but is its interpretation correct? The answer seems easy enough, especially with the last doughnut category of overage. Overall the company s problem is more complex. The problem is created by two of the basic premises underlying escheat: a) the law includes all categories of property, unless specifically excluded and b) a legal presumption of abandonment arises upon nothing more than a period of owner (here, the supplier) inactivity. True, there is always the argument that the state s law never contemplated this or that category of property. Additionally, the presumption of abandonment is a rebuttable. However, the onus is on the company to shoulder the burden of persuading the state (or the court) that the property isn t covered and/or abandonment did not, in fact, occur. Given the public policies supporting escheat, namely consumer protection and public revenue, together with the probability of some incomplete or missing records, the company s task is difficult. The recent Delaware litigation, McKesson v. Cook (Del. Ct. Chancery C.A. No CC) provides a close look at one state s approach and suggests some possible arguments for a company facing an audit of its inventory. Delaware Audits Mckesson McKesson, a distributor of medical devices and pharmaceuticals, incorporated in Delaware in Delaware retained a private auditor, Kelmar Associates, LLC (Kelmar), to conduct what appeared to be a typical general ledger audit, that is, a review of uncashed payroll checks, unclaimed accounts payable, accounts receivable, credit balances, etc. In addition to the usual document requests, Kelmar also sought documentation of unmatched receivers. This was the first known audit of such property. Despite several years of discussion, Delaware continued to insist that this property was escheatable. The assessment, prior to interest and penalties, exceeded $4.5M. McKesson then filed suit. A detailed recitation of the legal proceeding and arguments is beyond the scope of this article; however, a short summary will provide companies with the basic background of a battle they may too be fighting. Counsel for McKesson raised basic legal arguments, as well as more technical ones. The basic arguments cut to the heart of the company s concerns: the inventory was not an escheatable category and was not owed to the suppliers and thus, not owed to Delaware as a custodian. McKesson also alleged that the Uniform Commercial Code (UCC) provided the appropriate framework for transactions between merchants and that the UCC s four year statute of limitations had expired. This would have precluded claims by any supplier and therefore by Delaware as well. McKesson also argued that the Federal Food and Drug Act preempted Delaware s Code of Escheat. Finally, the company reminded Delaware of its statute that declared unsolicited merchandise to be a gift to the addressee here, McKesson. Aside from those legal points, McKesson asserted that its records contained address information for most suppliers, which would negate some of Delaware s claim and further that Kelmar had used improper estimations when it extrapolated amounts for the years when records were unavailable. Indeed, McKesson alleged that Kelmar used the invoices from fiscal year 2003 as basis for its extrapolation, despite the fact that 98.06% of the addresses were in states other than Delaware. Delaware denied all these arguments. This litigation is still ongoing. McKesson s pleadings contained a very interesting comment in paragraph 45: it stated that Delaware s assessments were draconian. Delaware s response denied that statement. Although, companies who have survived an escheat audit similar to the one MeKesson faced are likely to agree that the assessments can in fact be draconian. Observations While the law of unmatched receivers remains unsettled, we are certainly on notice that Delaware and the other states are aware of the potential windfall. Yes, windfall if the suppliers never sought payment from McKesson, they are extremely unlikely to contact a state escheator, assuming the supplier knew which state escheator to contact! Until one or more court issues a definitive ruling that this property category is not escheatable, what can a company do to protect itself in the meantime? The first step would be to settle up with your suppliers on at least an annual basis. Typically, this would include an agreement that listed the allegedly unpaid invoices and contained the supplier s acknowledgement that no monies were due for each of the listed invoices. While this may seem to be a cumbersome task, it is far better than defending an audit. One of my East Coast clients followed these recommendations at least with the large mismatches. Another client, a West Coast manufacturer, had a novel approach: it dispatched its sales force with the invoices and a check in hand. The first question was: Do we owe you? The follow up to the surprised and grateful customer was: Can we do some more business? While it is easier to resolve these mismatches when the parties recollections are fresh and records are available, this reconciliation can also be done after the audit has commenced. Delaware allowed McKesson to follow this path and McKesson was able to remove some invoices from the state s demand. Please understand that a simple request: Do you hold any unpaid invoices?, and a negative response or non-response is not acceptable to the states. Instead the states insist upon a detailed recitation of the invoice, date, and 4

5 amount and the supplier s acknowledgement that the particular invoice is not due. The states are likely to view unmatched receivers as the best target since uncashed rebate checks, which were the best target since gift card balances and so on. What company will be the next McKesson? J. Brooke Spotswood has been practicing escheat law since He has written and presented on various escheat matters for over twentyfive years. Mr. Spotswood was admitted to practice in Virginia in The author gratefully acknowledges the insight provided by his late colleague Dr. Will Yancey for their article What s in Your Warehouse published in September 2007 issue of Accounts Payable Now & Tomorrow. 2010, J. Brooke Spotswood, Spotswood Law. To subscribe, ask questions, or submit suggestions, please send an to newsletter@venio.com. LEGISLATIVE UPDATES This web edition includes highlights of recently passed legislation impacting unclaimed property; it does not convey legal advice. (Budgetary legislation is only cited when there are peripheral provisions that might be of interest.) ALABAMA HB 222 effective 1/1/11: Assets of dissolved corporations that should be transferred to a creditor, claimant, or shareholder who cannot be found or who is not competent to receive them shall be reduced to cash and deposited with the State Treasurer for safekeeping. If the assets are not claimed after 3 years, they are presumed abandoned and are subject to the Uniform Disposition of Unclaimed Property Act. ARIZONA SB 1003 effective 11/23/09: Many dormancy periods have been reduced: A traveler s check is presumed abandoned 3 years after issuance instead of 15. A money order or similar written instrument, other than a third party bank check, is presumed abandoned 3 years after issuance instead of 7. Any stock or other equity interest in a business association or financial organization, including a security entitlement under title 47, chapter 8, is presumed abandoned 2 years, instead of 3, after any of the following, whichever occurs first: (a) The date of the most recent dividend, stock split, or other distribution that is unclaimed by the apparent owner. (b) The date of the second mailing of a statement of account, or other notification or communication that was returned as undeliverable. (c) The date the holder discontinued mailings, notifications, or communications to the apparent owner. Any dividend, profit, distribution, interest, redemption, payment on principal, or other sum held or owing by a business association for or to its shareholder, certificate holder, member, bondholder, or other security holder who has not claimed it, or corresponded in writing with the business association concerning it, is presumed abandoned 2 years, instead of 3, after the date prescribed for payment or delivery. Property in any individual retirement account, defined benefit plan, or other account or plan that qualifies for tax deferral under the income tax laws of the United States is presumed abandoned 2 years, instead of 3, after any of the following, whichever occurs first: (a) The date of the distribution or attempted distribution of the property. (b) The date of the required distribution as stated in the plan or trust agreement that governs the plan. (c) If determinable by the holder, the date specified in the income tax laws of the United States by which distribution of the property must begin in order to avoid a tax penalty. The principal on debt, other than a bearer bond or an original issue discount bond, of a business association or financial organization is presumed abandoned 2 years, instead of 3, after the maturity date and the interest on the debt is presumed abandoned 2 years, instead of 3, after the payment date. A demand, savings, or time deposit, including a deposit that is automatically renewable, and any interest or dividends are presumed abandoned 3 years, instead of 5, after maturity or the date of the last indication by the owner of interest in the property, whichever occurs first. Credits owed to a customer as a result of a retail business transaction are presumed abandoned 3 years, instead of 5, after the obligation accrued. An amount owed by an insurance company on a life or endowment insurance policy or an annuity that has matured or terminated is presumed abandoned 3 years, instead of 5, after the obligation to pay arose or, in the case of a policy or annuity that is payable on proof of death, the amount is presumed abandoned 1 year, instead of 2, after the insured has attained, or would have attained if the insured were living, the 5

6 limiting age under the mortality table on which the reserve is based. A life or endowment insurance policy or annuity contract not matured by actual proof of the death of the insured or annuitant according to the company s records is deemed matured and the proceeds are deemed due and payable and are presumed abandoned after 1 year, instead of 2, if all of the following conditions apply: (a) The insured has attained, or would have attained if the insured were living, the limiting age under the mortality table on which the reserve is based. (b) The policy was in force at the time the insured attained or would have attained the limiting age specified in subdivision (a) of this paragraph. (c) Neither the insured nor any other person who appears to have an interest in the policy within the last year, instead of 2 years, according to the company s records has assigned, readjusted or paid premiums on the policy or subjected the policy to a loan, corresponded in writing with the company concerning the policy, or otherwise indicated an interest as evidenced by a memorandum or any other record on file with and prepared by an employee of the company. Property that is held by a court, government or governmental subdivision, agency, or instrumentality, except for support as defined in section or for spousal maintenance, is presumed abandoned 2 years, instead of 3, after the property becomes distributable. Any amount that is payable on a check, draft, or similar instrument on which a financial organization or business association is directly liable, including a cashier s check and a certified check, and that has been outstanding for more than 3 years, instead of 5, after the check, draft or similar instrument was payable or after issuance if payable on demand is presumed abandoned unless within 3 years, instead of 5, the owner has communicated in writing with the financial organization or business association concerning the check, draft, or similar instrument or otherwise indicated an interest as evidenced by a memorandum or any other record on file and prepared by an employee of the financial organization or business association. All other property is presumed abandoned 3 years, instead of 5, after the owner s rights to demand the property or after the obligation to pay or distribute the property arises, whichever occurs first. Excess proceeds deposited with the county Treasurer pursuant to section are presumed abandoned if the monies remain with the Treasurer for at least 2 years, instead of 3, from the date of deposit and there is no pending application for distribution. With this new legislation a one time 2009 supplemental report will be need to be filed that includes all of the reportable property as of 6/30/09 using the new dormancy periods. This supplemental report is due on or before 6/1/10. For life insurance companies supplemental reports are not necessary; instead they should report as usual on 6/1/10, also using the new dormancy periods. All other reporting dates have not changed. Due diligence is required for all supplemental reports 90 days before the report is filed. For the 6/1/10 supplemental report the department may not grant any extensions. More information on this bill is available on Arizona s unclaimed property website, NewsAndUpdates.html. HB 2111 signed 4/23/10: The dormancy period for traveler s checks has been returned to 15 years. HB 2453 effective 7/19/10: This bill extends the dormancy period back to 3 years on security related property. (Unfortunately, the need to file a supplemental report for security related property as of June 1, 2010 remains intact.) ARKANSAS HB 1483 adopted 4/7/09: Arkansas Code (13), concerning the definition of property, is amended so that the definition does not include a patronage dividend, capital credit, customer deposit, or non-negotiated payment check that does not exceed $100 held or owing by an agricultural farm supply cooperative association organized under the laws of Arkansas. SB 809 adopted 4/1/09: When a cooperative formed under , has issued stock and thereafter declares, by providing notice to all shareholders of record at their last known address, that the stock is being redeemed by repurchase, the stock shall not be deemed unclaimed or abandoned property under CALIFORNIA HB 1291 effective 1/1/10: Notification requirements have been revised, holders are required to send due diligence notices to owners of property valued at $50 or greater before reporting it. This requirement is designed to give owners notification that their property is in danger of being turned over to the state and to ultimately reunite more owners with their property. The notice needs to have a heading centered at the top of the letter that is either in bold or 2 font sizes larger that states, THE STATE OF CALIFORNIA REQUIRES US TO NOTIFY YOU THAT YOUR UNCLAIMED PROPERTY MAY BE TRANSFERRED TO THE STATE IF YOU DO NOT CONTACT US or other substantially similar language. All due diligence letters should be sent 6 to 12 months before the property is reportable (not transferred or remitted); this way due diligence will be conducted before property is reported to California. Also, due diligence letters can now be sent electronically, where the owner s consent has been obtained. Owners can respond to due diligence letters by a phone call or electronic communication to rebuff the presumption of abandonment. Holders can deduct up to a $2 service charge for administrative costs associated with sending due diligence letters. 6

7 For holders to be relieved of liability or indemnified for the property escheated to California, the holder must have complied with the requirements of sending due diligence letters to the owners. For a holder to be relieved of all liability or indemnified, they must have substantially complied with the due diligence notification provisions of California s unclaimed property law. When a new account or safe deposit box is opened with a bank or financial organization, the bank needs to provide a notice informing the owner that his/her property can be escheated to the appropriate state if no activity occurs in the account within the state specified dormancy period. This specific provision is effective 1/1/11. Contents of safe deposit boxes or other safekeeping repositories shall not escheat if the owner has a savings or checking account with the holder which is active and not subject to escheat. Holders are required to send a due diligence notice to owners of safe deposit boxes before escheating the property. Similarly, various deposits and accounts held with business associations should not escheat if the owner has an active IRA or similar account established under Internal Revenue laws with that institution. The Controller may postpone the date for payment or delivery of escheatable property, and the date for any report required, upon his or her own motion or upon written request by any person required to pay or deliver the property or file a report. Before this legislation, the authority to grant an extension was only possible for the notice report, now if the notice report is extended, then the remit report is correspondingly also extended as it is due 7 to 7.5 months after the initial notice report. Additionally, this legislation also allows for the extension of the remit report and the corresponding delivery of property even when there has not been an extension on the notice report. Interest payable to the Controller is limited if a holder has failed to file a report in a required manner, but has timely paid or delivered the property to the Controller. If a holder is non-responsive to requests to correct any problems with the report, the holder is now subject to interest with a limit of up to $10,000. This limit applies only if the holder pays or delivers the property in a timely manner. More information is available on the California State Controller s Office website at HAWAII HB 2559 effective 7/1/09: This legislation establishes a new Uniform Unclaimed Property Act based on the Uniform Unclaimed Property Act of The entire legislation can be reviewed at HB2559_SD1_.htm. IDAHO HB 680 effective 07/01/10: This legislation transfers the administration of the Unclaimed Property Division from the State Tax Commission to the Office of State Treasurer. The powers and duties held by the Idaho State Tax Commission will be deemed the powers of the State Treasurer on and after 07/01/10 concerning state unclaimed property. ILLINOIS SB 2636 effective 7/1/09: Limits fees that can be charged to assist in recovery of pre-escheat property to 25% for living owners and 33% for deceased owners. The legislation requires written disclosure discussing eventual delivery to state administrated unclaimed property program and the ability to recover from the program without a fee and other required disclosures. INDIANA HB 1083 effective 07/01/10: The following property is considered abandoned for purposes of the state s unclaimed property act after a period of 3 years, previously it was 5 years: 1) a demand, savings, or matured time deposit; 2) property payable as a result of a demutualization, rehabilitation, or related reorganization of a mutual insurance company; 3) all other property not otherwise specified under the act. Also, this legislation provides for a technical amendment to one provision of the state s unclaimed property act to specify that the act does not apply to: 1) a business to business credit memorandum and 2) gift certificates. SB 328 effective 07/01/10: With respect to financial institutions, in case depositors or other creditors or the shareholders of any such corporation are unknown or shall fail or refuse to accept their distributive shares in the property and assets of such corporation, or are under any disability, or cannot be found after diligent inquiry upon the final settlement of the liquidation, the liquidating agent shall treat the property as unclaimed property. LOUISIANA HB 65 adopted 6/18/09: R.S. 156(7) is amended to include, as a form of property subject to state s custody, cashier s 7

8 checks, teller s checks, or other official bank issued checks purchased in the state or when the issuer has its principal place of business in the state and the issuer s records do not show the state where the instrument was purchased or when the instrument was purchased in a state that does not provide for the escheat or custodial taking of the property. OHIO HB 1 effective 10/16/09: This legislation eliminates the 5% administrative fee on claims, as well as the requirement to disclose it through the OUF-8 Notice of Unclaimed Funds, or another similar notice. NEBRASKA LB 432 adopted 5/26/09: Records, kept in regards to the Uniform Disposition of Unclaimed Property Act, of social security numbers, dates of birth, amounts due, and lastknown addresses of owners shall be subject to the same confidentiality as tax returns information held by the Department of Revenue, except the Auditor of Public Accounts shall have unrestricted access. Professional finder s fees are limited to 10% of the dollar amount of the property presumed abandoned. Claiming such a fee requires disclosing to the owner the details of the property and the fact that it may be claimed individually from the state free of charge. NEVADA SB 313 adopted 5/29/09: The following property will not be considered abandoned because of inactivity or failure to make a demand: 1) an account or asset managed through a guardianship; 2) an account blocked at the direction of a court; 3) a trust account established to address a special need; 4) a qualified income trust account; 5) a trust account established for tuition purposes; 6) a trust account established on behalf of a client; or 7) an account of fund established to meet the costs of burial. SB 418 adopted 6/4/09: The period for the Administrator of Unclaimed Property to bring an action to enforce provisions relating to unclaimed property is reduced from 10 to 7 years. NORTH CAROLINA HB 723 adopted 6/26/09: Holders of property presumed abandoned reporting 50 or more properties shall file the report in an electronic format. Holders reporting less than 50 properties may also file electronically. All electronic reporters may file an electronically signed affidavit to comply with this section. SB 1021 adopted 7/17/09: Fee agreements to locate property must clearly state the fees and costs for services. The total fees and costs are limited to the lesser of $1,000 or 20% of the value of the property recovered. The agreement must disclose that the property is being held by the North Carolina Department of State Treasurer s Unclaimed Property Program. The finder may receive cash property, but not tangible property or securities on behalf of the owner and shall not be authorized to negotiate a check made payable to the owner. Failure to comply with the provisions of this section renders agreements void and unenforceable and constitutes an unfair or deceptive trade practice. OKLAHOMA HB 1780 effective 11/1/09: Reports due to the State Treasurer for unclaimed property must be filed before November 1 of each year for property reportable as of the proceeding July 1, instead of September 1. The State Treasurer is authorized to purchase services, including legal services, in order to locate and effect the delivery of property and related owner information to assist the state Treasurer in the Treasurer s duties related to the administration of Oklahoma s unclaimed property act. The purchase of such services shall be chosen by solicitation of proposals on a competitive basis, but shall be exempt from the provisions of the Oklahoma Central Purchasing Act. The State Treasurer shall not pay monies to rightful owners, of their heirs, devisees, and assigns, exceeding the reimbursement amount the Treasurer shall receive from the Mineral Owner s Fund attributable to such payments to rightful owners, or their heirs, devisees, and assigns. Any agreements between state agencies and financial institutions shall be subject to prior approval by the State Treasurer. TEXAS SB 1589 adopted 5/27/09: Reports of unclaimed property must now include, if known by the holder, the driver s license or state identification number and address of each apparent owner. Holders of unclaimed property holding property on June 30 valued at more than $250 shall, on or before the following August 1, mail to the last known address of the known owner a notice stating the holder holds the property and the holder may be required to deliver the property to the comptroller on or before November 1 if it is not claimed. This does not apply if the holder has already provided notice within the specified time range to comply with another law or does not have an address for the owner. The holder may charge the cost of postage as a service charge against the property. UTAH SB 270 effective 7/1/11: Gift certificates, gift cards, and credit memos are exempted from the unclaimed property act. VERMONT HB 588 effective 7/1/09: Property held by a museum that is not subject to a loan agreement and has been held for 10 8

9 or more years and has remained unclaimed during that time shall be deemed to be abandoned. The property shall become the property of the museum, provided the museum has given notice as required. Property in the possession of a museum subject to a loan agreement shall be deemed to be donated to the museum, provided no claim is made after the termination of the loan, the museum adheres to notification requirements, and no assertion of title is filed within the required timeframe responding to the notices. SB 26 adopted 5/9/09: If the Treasurer holds unclaimed property in the name of a deceased owner valued at less than $5,000, changed from $2,500, the Treasurer may deliver the property in accordance with the probate court decree of distribution. If the Treasurer holds unclaimed property valued at $250 or less which more than one person owns, the Treasurer may deliver it proportionately to each of the persons who own the property and file a claim when it has been listed for less than one year. When it has been listed for a year or more, the Treasurer may deliver it to the first person who files a claim and who owns at least a share of the property. SB 96 effective 5/7/09: The Treasurer may withhold information concerning uncashed checks and other similar payment information prior to the property being presumed abandoned. Property held by the Treasurer valued at $250 or less, which more than one person owns may be delivered proportionately to each owner or if the property has been listed for a year or more, to the first person who files a claim and owns at least a share of the property. 27 V.S.A. 1259(c), limitation on actions for unclaimed property valued at $100 or less is repealed. WASHINGTON HB 2016 effective 03/25/10: Section 405(4)- Concerning campaign contributions and disclosure laws any accumulated unidentified campaign contributions in excess of one percent of the total accumulated contributions received in the current calendar year or $300, whichever is more, may not be deposited, used, or expended, but shall be returned to the donor if his or her identity can be ascertained. If the donor cannot be ascertained, the contribution shall escheat to the state and shall be paid to the State Treasurer for deposit in the state general fund. Section 1004(4)(b)- If a citizen brings a civil action against the state and prevails, the judgment ordered shall escheat to the state. SB 6239 effective 06/10/10: Section If any person takes possession of escheat property, without authorization, and has the use of the property for more than 60 days, he or she is liable to the state for the reasonable value of the use and is required to pay the value to the state. Section Any claimant to escheated funds or real property has 7 years from the date of issuance of testamentary or administration letters to file a claim for the property. The claim must be filed with the court having original jurisdiction of the estate and a copy must be served upon the department of revenue, along with 20 days notice of the hearing. To subscribe, ask questions, or submit suggestions, please send an to newsletter@venio.com. 9

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