Unclaimed Property and Corporate Compliance News

Local Governments, Agencies Subject to Unclaimed Property Laws

Most of the focus from state unclaimed property administrators usually falls on Fortune 500 corporations. However, state agencies and local governments are all required to submit unclaimed property to the appropriate state government.

Court Ruling on California's Policy concerning Claims Made by Trustees in Bankruptcy

On March 21, 2012, the 9th Circuit Bankruptcy Appellate Panel issued a memorandum opinion in In Re Death Row Records, Inc., Debtor. John Chiang, Controller for the State of California, Appellant, v. R. Todd Neilson, Chapter 7 Trustee, Appellee (PDF link). The Court said that the Bankruptcy Court properly certified bankruptcy trustees as a class for the purposes of challenging a California policy on returning unclaimed property held pursuant to the Unclaimed Property Law.

Ontario Announces Intent to Begin Unclaimed Program

On March 27, 2012, Ontario, Canada released their 2012 budget. Of interest to U.S. companies includes the following announcement:

"The government intends to move forward with the establishment of an Unclaimed Intangible Property Program to reunite owners with their unclaimed property and, until it is claimed, allow the money to be used for the benefit of Ontarians. Unclaimed intangible property generally includes but is not limited to insurance policies, returned stocks and bonds, bank deposits, unpaid wages, and pension benefits."

Idaho Bill to Prevent Disclosure of Unclaimed Property Information

Idaho Senate Bill 1365 would provide an exemption for certain information relating to unclaimed property from state disclosure laws for:

Hawaii Bill to Remit Property with Report

Update on SB 2748: The Consumer Protection Committee recommended that the bill be passed, unamended, on February 7, 2012. The Judicial Committee acted similarly on February 10, 2012. On February 24, 2012, the Ways and Means Committee recommended the bill for passage, with amendments. It was then sent to the House, where it was referred to the House Judicial and Finance Committees. It has passed the Judicial committee and is scheduled for a hearing in the Finance Committee on Wednesday.

Originally Posted: February 2, 2012

Audit Nightmares: Young America Corp.

Who is the holder? Unclaimed property audits always begin with an analysis of who is responsible for reporting unclaimed property. In 2003, 45 states initiated an audit of Young America, the Minnesota rebate fulfillment company. The audit and subsequent litigation went on until 2010, when retailers settled with the various states. Seven years later, Sprint settled for $22 million and 36 states.

Retail companies such as Sprint, T-Mobile and Walgreens, entered into rebate fulfillment contracts with Young America. Young America was to accept and process rebate applications, paying out valid submissions. The retailers would pay to Young America the full value of all valid submissions, but Young America would retain any uncsahed rebate checks. The "slippage" was later taken into income by Young America, to the tune of about $43 million from 1995 - 2002. States wanted the slippage as unclaimed property and authorized Affiliated Computer Services (ACS) to begin an audit.

Tip: California Electronic Payment Remittances

California has a unique two step reporting program, born out of the reforms from litigation. While companies are required to report properties during the fall filing season, payment is not due until June. If the final remittance is over $20,000, California requires electronic payment and will impose 2% penalties for payment submitted via check. (See: § 1532 - Delivery of Property to Controller)

South Dakota Bill Shortens Dormancy Periods

South Dakota's governor signed H.B. 1270 on Friday, March 2.

Full Text: HB 1270, Enrolled Version

Update Posted: February 28, 2012

South Dakota H.B. 1270 has now passed both the House and the Senate and has been presented to the Governor for signature. H.B. 1270 was introduced at the request of Governor Dennis Daugaard, and he is expected to sign the bill. H.B. 1270

Originally Posted: February 15, 2012

Banking Crisis Leading to More State Unclaimed Property

The Great Recession and general economic turmoil in the past four years has led to 425 banks closing (and counting!) their doors since January 2008. The FDIC acts as the receiver of the assets of the failed banks, attempting to return funds to the account owners. But as with other holders, the FDIC is not always able to return funds with their rightful owners, leading to unclaimed property.

Reporting Late Property in Arkansas

Arkansas, a fall reporting state, has not been one of the states that regularly charges interest on late reported property. However, they have been sending notices out to holders remitting late property that they may begin charging interest and penalties beginning with the 2012 reports.

The text of the notices includes:

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