Unclaimed Property and Corporate Compliance News

SEC Amendments on "Unresponsive Payees" Effective March 25

Wall StreetThe SEC has amended Rule 17Ad-17 to extend missing shareholder (or unresponsive payee, as unotification requirements to broker and dealers. The amendment comes as a result of Section 929W of the Dodd-Frank Act. The rule is effective March 25, 2013, with required compliance by January 23, 2014. The SEC specifically adopts the rule prospectively, meaning that notifications are not required for checks already outstanding.

Wisconsin Says it is Launching Unclaimed Property Audits

The Mousehouse in Wisconsin. Photo by Kimberly DeCarreraWisconsin is giving strong hints and outright telling holders that audits are on the way. In this morning's Facebook update, the Unclaimed Property office said, in part, "Word is getting out, Wisconsin is launching audits of businesses not complying with Holder Reporting Laws and pushing legislation allowing amnesty[.]"

The administrator, at reasonable times and upon reasonable notice, may examine the records of any person to determine whether the person has complied with this chapter.
Section 177.30(2) of the Wisconsin Uniform Unclaimed Property Act

North Carolina Bill to Make Improvements to Unclaimed Property Program

A new bill introduced this month in North Carolina would make some minor changes to the escheat statutes in the state. HB 257 contains two provisions of interest to holders: first, the fee to file an extension would be removed, and second, the holder affidavit would be replaced by a certificate and verification. Currently, North Carolina requires a $10 fee to file a request for an extension, during which time interest continues to accrue on overdue property.

Massachusetts Next State to Prohibit Stores from Asking for Zip Codes

Spring Training is under way. Baseball will be played at Fenway Park before you know it.The Supreme Judicial Court of Massachusetts ruled that zip codes are "personal identifying information" and that retailers cannot request such information as a requirement to completing a retail transaction. The case, Tyler v. Michael Stores, Inc., came before the Court as a certification of a question of law from the U.S. District Court for Massachusetts. The retailer's practice of requesting zip codes, even when not required by credit card companies, to complete a credit card transaction and then using that information to build marketing lists has been determined to be a violation of the state's Consumer Protection Act statutes.

Massachusetts joins California as the states that prohibit the collection of zip codes under these circumstances. California's judicial decision involved a case with the retailer Williams-Sonoma as the defendant in 2011.

Effects on Unclaimed Property

Barganier Looking to Hire New Associate

Barganier and Associates is a holder advocate firm, assisting clients with their unclaimed property compliance and audit defense work. Due to our continued growth and customer retention, we are looking to add to our team of professionals.

We are seeking a full-time employee to work in the Atlanta office. You will work directly on compliance and audit matters with a team of experience unclaimed property professionals. The work involves constant contact with clients, which you will be expected to provide the same excellent platinum customer service that Barganier is known for. You will be responsible for meeting deadlines, managing projects and uncovering new opportunities. You will also be required to keep up-to-date with changes in both laws and regulations relating specifically to unclaimed property as well as client industries.

Health Care Beware! Patient Credit Balances Major Risk Factor for Unclaimed Property Audits

Hospital Beds = Unclaimed Property. Be prepared with a compliance solutionThe first question is always “what is unclaimed property?” For all companies, unclaimed property can be abandoned stocks and dividend checks, uncashed payroll and vendor checks and accounts receivable credits. If money moves in or out of a company, there is the potential for unclaimed property. In health care practices, accounts receivable credits often take the form of credit balances on patient accounts.

In an industry that has difficulty collecting balances in full, credit balances are just as common. Credit balances are often a problem when there are multiple payers, such as the patient, insurance companies, and government programs. A patient receives services, and the practice submits an invoice to both the patient and the insurance company. The insurance company adjusts down the invoice, based on negotiated rates, and pays a portion of the remaining balance. Your practice then submits additional invoices to the patient or back resubmits to the insurance company. This cycle results in a stream of partial payments that may eventually lead to more than the full balance being paid, leaving a credit balance on the account. This credit balance represents money owed to another party, not the practice, and if left unresolved, the state may claim as unclaimed property.

Texas Upping the Contingent Fee Audit Ante With New Bill

The Eyes of Texas are Upon YouTexas House Bill 2593 would amend the current unclaimed property law by adding a Section 74.3062, which would allow for the recovery of property held by other states or by residents of other states, and permitting the payment of a finders fee of 15% of the property recovered.

Why Contingent Fee Auditing is Bad for Holders

Historically, Barganier and Associates has seen such contingent fee contracts valued at 12% of the property recovered. At any rate, third party audit firms, such as Kelmar Associates, are encouraged by their compensation agreements to issue as high of an audit assessment as possible. In this process, outside audit firms may ignore valid holder arguments or positions that would lower such assessments.

Georgia Bill on Gift Cards Must Wait till 2014

Georgia CapitalGeorgia Senate Bill 190 cannot pass until the 2014 after it failed to pass the Senate before Crossover Day. In Georgia, legislation must pass one house and move to the other before the end of Day 30 or Crossover Day for it to be able to pass both houses and become law in the same year. If a bill does not pass, then it is no longer considered live, requiring the legislature to wait until the next session to reconsider the bill.

More Emphasis on Delaware Incorporated Entities to File Unclaimed Property

The Delaware Secretary of State has been sending letters to companies to make them aware of the voluntary compliance program Department of State is administering. According to the letter the VDA program offers companies "a unique, but narrow opportunity to "catch up" on past due unclaimed property obligations, and more importantly, receive a broad release of all historic unclaimed property liability in order to avoid an unclaimed property audit." The letter goes on to discuss the company's reporting obligations in all 50 states, comparing Delaware's statutes to the other states.

Two Conflicting California Bills on Owner Claims Introduced

California is tallying up the money in their unclaimed property fundCalifornia is responding to two recent judicial decisions that allow judgment creditors and bankruptcy trustees to collect unclaimed property by introducing Assembly Bill 1275, which would amend the law pertaining to claims on reported unclaimed property.

The bill would amend Section 1540(a) to state "Any person, excluding another state, who claims to have been the owner" where the italicized portion replaces " an interest in."

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