Unclaimed Property...2018/05/24 · —Unclaimed/Abandoned Property: Tangible or intangible...

Unclaimed Property

Denver Chapter - Payroll AssociationMay 24, 2018

2© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 2© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Disclaimer

The following information is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.


Agenda

—Unclaimed Property Basics

—Compliance Requirements

—Becoming Compliant: Voluntary Disclosure Opportunities

—The Audit Risk

—Significant Enacted and Pending Legislation

—Audit Trends & VDA Opportunities

—Q&A

Unclaimed Property Basics


The Concept of Unclaimed Property and Its Anomalies— Custodial laws

− If efforts by holders to reunite rightful owners with their property are unsuccessful, the property must be reported and remitted to the state after a specified period of time (“dormancy period”)

− Most states act as a custodian to safe guard owner’s property in perpetuity− Not a true “escheat”

— Derivative Right Doctrine- The state “stands in the shoes of the owner” and has no more or less rights than

the owner. (Example: S & H Green Stamps case - State v. Sperry & Hutchinson Co., 56 N.J.Super. 589, 153 A.2d 691 (App.Div. 1959), aff'd o.b., 31 N.J. 385, 157 A.2d 505 (1960))

— Not a tax, so traditional nexus standards do not apply— All 50 states, the District of Columbia, Puerto Rico, Guam, U.S. Virgin Islands and the

Northern Mariana Islands have requirements for unclaimed property reporting- Guam and the Northern Mariana Islands presently limit reporting to financial

institutions— Foreign countries may have similar unclaimed property laws

- Example: Canada (Quebec, British Columbia, and Alberta)


Common Unclaimed Property Terms and Definitions

— Unclaimed/Abandoned Property: Tangible or intangible property that is held, issued or owing in the ordinary course of business and which remains unclaimed or abandoned by the apparent owner for a designated period of time as determined by state (“jurisdictional”) statutes and regulations

— Holder: Possessor of abandoned property— Owner: Person or entity entitled to the property— Dormancy Period: Specified period of time in which the property owner does not take

action on his or her property (varies by state and by property type)— Last Activity Date - The most recent date that the owner and the holder of the

property made "active" contact with each other— End Date or “Cut-off” Date - The date through which a Holder must search its

records to determine if it is in possession of unclaimed property. — Due Diligence: The level of effort required to locate the owner prior to reporting and

remitting the property to the state— Negative Reports: A report to be submitted notifying the state that no property is

reportable


U.S. Reporting Jurisdictions

U.S. Reporting Jurisdictions = 55

The 50 U.S. States +District of Columbia, Puerto Rico, Guam,

U.S. Virgin Islands, and Northern Mariana Islands


The Priority Rules: Which State Law Applies?

Supreme Court established priority rules— Texas v. New Jersey 379 U.S. 674 (1965)— Reaffirmed by Pennsylvania v. New York (1972) and Delaware v. New York (1993)

Property should be remitted to the state of the owner’s last known address based on the holder’s books and records1

Property with no last known address is reportable to the state of the holder’s domicile2

If the state of last known address does not provide by law for the escheat of the property, the state of the holder’s domicile has the power to escheat.

It is important to note, the Supreme Court did not address the treatment of non-U.S. last-known address property. However, foreign property was addressed in the 1981 and 1995 Uniform Unclaimed Property Act.


Which Types of Transactions/Items are Unclaimed Property?

— Uncashed accounts payable checks— Unpaid wages, payroll, expense, bonus

or commission checks— Accounts receivable credit balances

and credit memos— Unidentified remittances— Customer deposits— Refunds— Rebates

— Gift Cards, gift certificates, or merchandise credits

— Checking accounts, savings accounts, CDs, money orders, escrow accounts

— Oil and gas royalty payments— Insurance claim payments— Health Insurance Premiums/Refunds— Equity related property, including stock

and dividends

Although not an all-inclusive list, common types of unclaimed property include:


Often overlooked:Stale dated checksTrade payablesWages/payroll/salaryEmployee expense reimbursementsCommissionsBonusesRoyaltiesSuspense accounts

Commonly reported:

Can be created by nearly every department within a companyUnclaimed Property…

Voided checksUn-refunded deposits

Unapplied cashRebates

Merchandise credits/vouchersStock and dividends

Worker’s comp benefitsFlexible spending accounts

Retirement accountsEmployee garnishmentsHealth savings accounts

Unclaimed Property Types (continued)


Common Payroll Concerns/Issues

— Uncashed and voided payroll checks (direct deposit and physical checks)− Third party administrator funding relationships

— Pay cards— Bonuses and commissions— Garnishments— Expense reimbursements— Hourly employees— Temporary employees— Terminated employees— Employees working temporarily overseas


When Is An Outstanding Item Reportable?The Formula: END DATE – LAST ACTIVITY DATE (Check Date for A/P & Payroll) = Dormancy Time If the Dormancy Time is greater than the State prescribed Dormancy Period = Reportable/Eligible

EXAMPLE: Employee John Bizi was paid wages from Yur Company, Inc. in a check dated Feb. 14, 2016. Bizi’s address in Yur’s records is in North Dakota (MS01 wages/salary = a 2-year dormancy period; North Dakota Code 47-30.1-15). Would the value of the check be reportable on the 11/1/18 North Dakota (ND) reporting deadline (North Dakota Code 47-30.1-17(4))? Answer: Yes – Do the Math! ND 2016 End Date = 6/30/2018 •LAD or Issue Date = 2/14/2016 —Dormancy Time = 2 yrs, 4 mos, 16 days —Dormancy Period (MS01) = 2 yrs

Compliance Requirements


What Types of Businesses Must Comply?Generally, all Holders (businesses) are required to submit annual unclaimed property reports to each respective reporting jurisdiction— Types of companies that would be required to report unclaimed property include:

- Corporations- Limited liability companies- Partnerships- Not for profit entities

— Holder/Company Obligations- To identify, track, and safeguard abandoned property- To perform due diligence- To file an annual report- To remit property to the state after the dormancy period is reached


Holder Responsibilities

Adjust financial records for unclaimed property remitted to states

Collect financial data to support future unclaimed

property compliance

Prepare and submit annual reports per state requirements

Analyze unclaimed property items held for

for dormancy and reportability

AnnualUnclaimed Property

ComplianceCycle

Prepare due diligence correspondenceto property owners per state

requirements


The Four Basic Holder Responsibilities1. Record Review / Internal Due Diligence − Issue date / LAD, cut off date, dormancy period

2. Due Diligence / Owner Contact –Variations in mail requirements, timing requirements, eligibility,

and language

3. Reporting and Remitting –Form and remit variations, deadlines

4. Record Retention –Audit considerations


Holder Responsibilities: Record ReviewImplement procedures for and review their records to identify accounting errors, resolve items with customers, and consider exemptions/exclusions. Common Items to Review: — Disbursements (i.e., claims, royalties) — Vendor Checks — Payroll or Expense Checks:

- Has the employee has been terminated or transferred & now has an new address?- Did the employee retire? (Access retirement info.)- Is the employee on foreign assignment?

— Credit Memos / Balances — Outstanding check / payment lists (including payments made by 3rd parties) — Industry specific items (checking and savings accounts, insurance claims payments,

etc.) Timing - Records should be reviewed at least once a year but preferably every 60 - 90 days to stay current Materiality Limit - Set a materiality limit for the review.


Holder Responsibilities: Due Diligence/Mailing Requirements

Due diligence is the level effort required by states for a holder to attempt to locate the rightful owner prior to the property being reported and remitted to the state. — Statutory language, fonts, and formatting

- CA requires specific language: “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”

— Due diligence minimums- Most common state minimums are $50 or $100- Some states have no minimums, or varying minimums of $10, $20, $75 or $250

— Timing of mailing- Typically, 60 days to 120 days prior to property being escheated

— Certified Mail- IA, NJ, NY, & OH require certified letters to be mailed based on certain criterion

— Publication- NY, & PR require publication in newspapers depending on the industry of the holder

reporting the property


Holder Responsibilities: ReportingAs annual reporting requirements differ by state and industry, it is the holder’s responsibility to determine when, where and how to submit a report. Except for certain industries, annual reporting deadlines and eligibility requirements are as follows:

— Report deadline dates− FALL: Report due on or before November 1st

− SPRING: Report due dates vary between March 1st and May 1st

— Examples: Delaware is due March 1st, Pennsylvania is due on April 15th

− SUMMER: Michigan and Texas are due on July 1st

— Cut-off dates for determining dormancy- FALL cut-off typically June 30th

- SPRING cut-off typically December 31st

- SUMMER: Texas cut-off is March 1st and Michigan cut-off is March 31st

— Method/Form of Reporting and Remittance- Report Delivery: CD, Email, or mandatory on-line upload?- Remittance Form: Check, ACH or Wire

— Exemptions / Deductions?- Business to Business: Usually only for credit memos or balances- De Minimis: A few states have special wages de minimis exemptions- Deduction: CO 2% / $25 (More)


Reporting Challenges, Tips, and Best Practice

— Key Reporting Challenges- Lack of uniformity among jurisdictional reporting requirements- Frequent legislative changes- Data difficult to obtain due to lack of organizational awareness and support

— Reporting Tips- Ensure data is complete and properly formatted

— Use state-assigned holder numbers— Add NAIC codes for states as required (i.e., Tennessee)

- Remember to include signature of corporate officer & notarization

— Best Practice- Well documented policies and procedures- Awareness, collaboration, and integration throughout the company - Internal “due diligence”, Remediation & statutory due diligence


Holder Responsibilities: Record Retention1. Retention Time Period

- 2016 Uniform Unclaimed Property Act §404: Holders must retain records for 10 years after the later of the date the report was filed or the last date a timely report was due to be filed.

- DE: Holders must maintain records for 10 years beginning from the date a report is filed. Del. Code tit. 12, §1145

- 10 year record retention requirement starting from the date a report is filed- CA: Holders must maintain records “pertaining to” property reported for 7 years

from the date it is or should have been reported. Cal. Admin. Code §1175 - TX: Holders must maintain records for 10 years after the property was reportable.

Tex. Property Code §74.103 2. Which Records?

- 2016 Uniform Unclaimed Property Act 404 (in pertinent part): Must maintain the information required to be included in the report; the date, place, and nature of the circumstances that gave rise to the property right; the amount or value of the property; and the last address of the apparent owner, if known to the holder;

- DE: Retain information about the “date, place, and nature of the circumstances that gave rise to the property right.” The regs list various documents to be retained including bank statements, bank reconciliations, detailed general ledgers, aged accounts receivable reports, and more 21 DE Reg. 123 (§2.9)

Audit Trends & VDA Opportunities


Audit TrendsOverview of typical unclaimed property audit—Most states either use their own audit staff or hire third party audit

firms to conduct unclaimed property audits—Audits can be challenging and time consuming—Audit look-back periods can be extensive, covering many years—Limited or no statute of limitations for unclaimed property not

reported—Assessments, including penalties and interest, can be substantial—Important to secure non-disclosure/confidentiality agreement

(NDA) at onset of audit and end-of-audit “Closing Agreement”


Audit Trends

Compensation dependent on outcome of auditOther states solicited to participateCan be contentious and lead to litigation

Contingent Fee Audit

State Audit

Self-Audit

State-employed auditors may not be as knowledgeableAudits often take more time

Self-determined assessment with state guidanceCan obtain end of audit closing agreement

Some states seek to collect unclaimed property as a source of “revenue”

Some states seek to return unclaimed property as a way to stimulate local economies


Audit TrendsCommon Audit Triggers— Holder’s state of incorporation— Company size/revenue (Larger = Riskier)— Late reporting— Failing to report all property types common for the company’s industry — Reporting errors and improper formatting— Merger and acquisition activity— Media coverage/company publicity (layoffs, bankruptcy, stock-splits, etc.)— Industry trends & issues:

Healthcare(Insurers & Providers)

Oil and Gas Retail

Internet & Technology

Broker/Dealers & Securities Life Insurers


Audit TrendsStates’ right to estimate—Most state statutes provide for estimations for years where

detailed records are not available or deemed incomplete- State interpretation of Supreme Court established priority rules

vary—Minimal guidance from states related to estimation techniques

- Base periods to be used for testing- Definition of complete and researchable records- Error rate calculation- Statistical sampling

—Some states require “Record Availability Attestation” letter to justify estimations


Voluntary Disclosure AgreementsState voluntary disclosure agreements (“VDA”)— As the term indicates, a VDA is a voluntary process through which a company may

report past due unclaimed property- Self review of certain books and records for defined, often reduced, scope period- Abatement of interest and penalty- State may or may not waive right to audit- Promised future compliance

— VDAs (formal or informal) are available in most states, although the process varies by state

— Statutory programs (formal)- Signed contractual agreement- Established guidelines and expectations- May require a presentation of analysis performed

— Administrative programs (informal)- Cover letter submitted with voluntary report and remittance- First time filing (FTF) with cover letter

— Estimations may be required, but typically limited to states of domicile


Voluntary Disclosure AgreementsVDAs can be a beneficial way to get into compliance, BUT do it right!—Keep state apprised during the self-review process—Avoid aggressive reporting positions —Disclose where records are limited—Negotiate and proactively reach agreement on assumptions,

positions, etc.—Retain records used to calculate liability

- Executed agreement, any demand for payment or other documentation and records demonstrating payment was made

—Report on time and stay in compliance—Develop ongoing compliance process and policies and

procedures


Voluntary Disclosure Agreements

Formal VDA Agreement

Managed Self-Audit

Informal Program – Case-By-Case

Interest is statutory

No ProgramProgram Type:

VDAs


21 DE Reg. 123 (08/01/17) Effective 10/11/2017

— On April 1, 2017, the Delaware Department of Finance issued proposed audit regulations as required in 12 Del. C. §1132, of DE SB 13. Due to comments to those proposed regulations, the regulations were re-issued on August 1, 2017 with some changes. Some of the provisions include:

— Indication of Owner Interest in the Property (§2.5.2): Actions which are NOT indications of interest automatic postings, automatic reinvestments, computer system conversion dates and non-return of mail (other than a non-returned IRS Form 1099 for ACH or DRP account)

— Linkage (§2.5.3): The pending regulations indicate that ownership interest in one investment or account can be cross-referenced with another investment or account if the records of the holder indicate the same name on the account, signature card or contract.

— Record Retention (§2.9): The statutory record-retention requirement is broadened to include “date, place, and nature of the circumstances that gave rise to the property right.” The new draft lists various documents (to be retained for 15 years), including bank statements, bank reconciliations, detailed general ledgers, aged accounts receivable reports, and more.

— Sufficient Address to Establish Priority / Last Known Address (§2.8): Clarifies 12 Del. C.§ 1139(a) by indicating that a description/code sufficient to determine “last known address” must include two of the following three, which must not conflict: city, state or foreign code, and zip code.

— Negative Reports: (§2.6.2): The requirement to submit negative reports is absent from the new Delaware law. The regulations provide that while negative reports are not required, negative reports submitted will be accepted.


DE Regulations (Cont’d)

Non-Disclosure Agreement (§2.14.3 Sample Form): A sample form NDA approved by the State is included in the regulations. In contrast to the prior draft regulation, the new draft no longer requires adherence to the security standards outlined by the International Organization for Standardization, but rather permits a security standard to be created by the auditor. The new draft regulation continues to allow auditors to retain the holder’s documents for as long as the auditor is contracting with the state.

Factors Considered in Identifying a Holder for Audit (§2.12.4): The regulations provide examples of factors considered including: — inconsistencies, omissions or a lack of detail in the holder’s past unclaimed

property filings,— a comparison of a Holder’s unclaimed property filings to the filings of similar

holders in the same industry and of the same approximate size, — the state’s records of a holder’s reporting and compliance history, and any

publicly available information about the holder, including annual company report and press materials.

Statutory Updates


DE SB 13 Enacted 2/2/2017 and DE SB 79 Enacted 6/29/2017

Senate Bills 13 and 79 (SB13), as enacted caused compliance related changes such as: — Jurisdiction and Last Known Address (§§ 1139(a) & 1141(a)(3))

- Indication of address- Foreign addressed property

— Indemnification (§1153) extends the indemnification provision to holders when they report to Delaware property with a foreign owner address

— Due Diligence (§§ 1148 & 1149)- New requirements and threshold ($50)- Window to perform due diligence is not less than 60 days nor more than 120 days prior to the

reporting deadline— Dormancy Periods (generally §1133 – with other more specific provisions for certain

property types) – payroll has a 5 year dormancy period and stored value cards have a 5 year dormancy period measured from owner last indication of interest (i.e., owner purchase, etc.) (§1133 (11) and (14))

— Electronic Contact (§§ 1130 (19) & 1136)- Electronic communication between owner and holder now establishes “owner contact”

— Record Retention (§ 1145) - 10 year record retention requirement starting from the date a report is filed


DE SB 13 and DE SB 79 (Cont’d)

Additional changes include:— Audit and VDA lookback periods reduced (§§ 1172(h) and 1173(c)(2))— Statute of limitations (§ 1156(b))

- Limited to 10 years after the duty to report to pay— VDA invitations (§§ 1172(a) & 1172(d)(1)-(2))

- Holder must be notified of their option to participate, subject to one carve-out— Estimation (§ 1176(a))

- Extrapolation and statistical sampling in audits is expressly authorized


2017 RUUPA – Related, Enacted LegislationOther than DE’s SB 13, 3 states (IL, TN and UT) in 2017 have enacted RUUPA-related Legislation. Some of the provisions in each bill are the same or similar to those in the RUUPA. For example, the provisions permitting electronic contact to constitute an “indication of interest”

Subject IL SB 9 TN HB 420 UT SB 175

Effective Date 1/1/2018 7/1/2017 5/9/2017

Electronic Contact Permitted?

Electronic contact by the owner to serve as an “indication of interest” which forestalls escheatment Sections15-210 (b)(1) and 15-102 (26)

Electronic contact by the owner to serve as an “indication of interest” which forestalls escheatment Section 66-29-113 (b)(1)

Electronic contact by the owner to serve as an “indication of interest” which forestalls escheatment Section 67-4a-208(2)(a)

http://ilga.gov/legislation/100/SB/10000SB0009enr.htm

http://publications.tnsosfiles.com/acts/110/pub/pc0457.pdf

https://le.utah.gov/%7E2017/bills/static/SB0175.html


Significant Provisions RUUPA-Related LegislationSubject Illinois SB 9 TN HB 420 UT SB 175

Due Diligence New notice header language required. (15-502(a))

New notice header language required. (66-29-129(a))

New notice header language required. (67-4a-502 (1))

Due Diligence Notice Window

Not more than 1 year nor less than 60 days prior to filing the report. (15-501(a))

Not more than 180 days nor less than 60 days before filing the report. (66-29-128 (b))

Not more than 180 days nor less than 60 days before filing the report. (67-4a-501(1))

Due Diligence Mailing Mode

First class mail except securities valued at or over $1000 must send letter notice via certified mail. (15-501 (a)(c))

First class mail (66-29-128 (b)(1)) First class mail (67-4a-501(1))

Foreign Addressed Property

May take custody of property presumed abandoned, whether located in this State, another state, or a foreign country, if the holder is domiciled in this State or is this State or a governmental subdivision, agency, or instrumentality of this State, and (1) another state or foreign country is not entitled to the property because there is no last-known address of the apparent owner or other person entitled to the property in the records of the holder; or(2) the state or foreign country of the last-known address of the apparent owner or other person entitled to the property does not provide for custodial taking of the property. (15-304)

Substantially similar to Illinois (66-29-119)

Substantially similar to Illinois (67-4a-304)


RUUPA-Related Legislation (Cont’d)Subject Illinois SB 9 TN HB 420 UT SB 175

Reporting Method

A holder shallreport via the internet in a format approved by theadministrator, unless the administrator gives a holder specific permission to file a paper report.(15-401(a))

The reportmust be filed through an electronic medium in a manner prescribed by the treasurer, (66-29-123)

Holders must report via the internet in a format approved by the administrator (67-4a-401(1)(b))

Business to Business Exemption in Tact?

Eliminated and propertyexempted under the business to business exemption in past 5 years reports must be reported on next report. (15-1503(a))

Maintained – “check, draft, credit balance, customer overpayment, or unidentified remittance”. Must have an ongoing business relationship: “commercial, business or professional transaction” within the dormancy period. (66-29-105(c))

No previous or current business to business exemption.


Subject Illinois SB 9 TN HB 420 UT SB 175

Dormancy Periods- Payroll

-Many reduced from 5 to 3 years (15-201) -Wages, including those paid by payroll card have a 1 year dormancy period (15-201 (13)) (statute specifically mentions payroll cards)

-Many reduced from 5 to 3 years (66-29-105) -Payroll cards have a 3 year dormancy period (66-29-105(a)(5)) -Wages, etc. have a 1 year dormancy period (66-29-105(a)(11))

-Most remain the same except special provisions for particular property types -Wages, commissions, etc., have a 1 year dormancy period 67-4a-201(11) (this provision doesn’t mention payroll cards)

Record Retention

10 years after the later of the date the report was filed or the last date a report was due to be filed (15-404)

10 years after the later of the date the report was filed or the last date a timely report was due to be filed, (66-29-126)

5 years after the later of the date the report was filed or the last date a timely report was due to be filed (67-4a-404 (1))

RUUPA-Related Legislation (Cont’d)


IL SB 9 - Anomalies

− Retroactive Transition Provision (§15-1503(A))− Conversion to 2 year dormancy period upon death (§15-201 last

paragraph)− Elimination of the business to business exemption


The 2016 Revised Uniform Unclaimed Property Act (“RUUPA”) – Payroll CardsRUUPA: “a payroll card or demand, savings, or time deposit, including a deposit that is automatically renewable, three years after the earlier of maturity or the date of the last indication of interest in the property by the apparent owner, except a deposit that is automatically renewable is deemed matured on its initial date of maturity unless the apparent owner consented in a record on file with the holder to a renewal at or about the time of the renewal;” RUUPA §201(5) The new KY & TN statutes adopt an approach that is similar to the RUUPA: Kentucky: “A payroll card or demand, savings, or time deposit account, including a deposit 7 that is automatically renewable, three (3) years after the maturity of the deposit, except a deposit that is automatically renewable is deemed matured on its initial date of maturity unless the apparent owner consented in a record on file with the holder to renewal at or about the time of the renewal, ….” Ky. Rev. Stat. Ann. §393A.4(5)

Tennessee: “A payroll card or demand, savings, or a time deposit, including a deposit that is automatically renewable, three (3) years after the earlier of maturity or the date of the last indication of interest in the property by the apparent owner; provided, that a deposit that is automatically renewable is deemed matured on its initial date of maturity unless the apparent owner consented in a record on file with the holder to a renewal at or about the time of the renewal;” Tenn. Code Ann. §66-29-105(a)(5)

Both States: “Wages, commissions, bonuses, or reimbursements as to which anemployee is entitled, or other compensation for personal services, other thanamounts held in a payroll card, one (1) year after the amount becomes payable;” Ky. Rev. Stat. Ann. §393A.4(12) and Tenn. Code Ann. §66-29-105(a)(11)


New Kentucky UP Statute: HB 394─ Wages Exclusion with Caveat: Maintains exclusion for unclaimed/uncashed wages or salaries

of fifty dollars ($50) or less that are not claimed by an employee within one (1) year of the date the wages or salaries are earned. However, the exclusion DOES NOT apply to amounts held on a payroll card. Ky. Rev. Stat. Ann. §393A.4(5)

─ Indication of Owner Location/Address: Adopts RUUPA with regard to “indication of location” for owners. Ky. Rev. Stat. Ann. §393A.15(1)

─ Due Diligence Acknowledgement with Report: Must acknowledge that due diligence was performed when filing the unclaimed property report. Ky. Rev. Stat. Ann. §393A.23 (1)(h)

─ Due Diligence Timing: Not more than 180 days nor less than 60 days before filing the report. Ky. Rev. Stat. Ann. §393A.27 (1)

─ Email Due Diligence in addition To USPS Mail: Must send due diligence via first class United States mail AND if an owner has consented to receive electronic-mail delivery from the holder, the holder must also send notice via electronic mail. Ky. Rev. Stat. Ann. §393A.27 (2)(b)

─ Due Diligence Letter Must Contain Special Header Language: "Notice. The Commonwealth of Kentucky requires us to notify you that your property may be transferred to the custody of the Kentucky State Treasurer if you do not contact us before (insert date that is thirty (30) days after the date of this notice)." Also must state that property which is not legal tender of the United States may be sold by the administrator. Ky. Rev. Stat. Ann. §393A.28 (1) and (2)(d)

─ Statute of Limitations: 5 years if non-fraudulent report filed; 10 years if no report filed Ky. Rev. Stat. Ann. §393A.29 (2) and (3)


Significant Enacted Legislation: ReportingTennessee HB 2278 (Effective 4/24/2018) - Changes the reporting date for unclaimed property as follows:— For the property held for the period of January 1, 2017,

through December 31, 2017, the report under Section 66-29-123 must be filed before May 1, 2018. (this year)

— For property held for the period of January 1, 2018, through June 30, 2019, the report under Section 66-29-123 must be filed before November 1, 2019. (an 18 month period)

— Thereafter, the report must be filed before November 1 of each year and must cover the twelve (12) months preceding July 1 of that year. (10/31 report date for all years beginning with 2019.)


Significant Pending Legislation: Dormancy PeriodsCalifornia - AB 2209 - Increases the dormancy period for property held by banking and financial institutions to 5 years from 3 years (including IRAs) and changes the time period within which due diligence notice must be sent to not less than 3 nor more than 3 1/2 years after the date of last activity by or communication with the owner (from 2 - 2 1/2 years). (Note that the alternate time period for due diligence notice of 6 - 12 months before the property becomes reportable is not changed.)

Illinois – SB 2901 - Increases many dormancy periods from 3 to 5 years including the catchall provision. Adds a Business to Business exemption. Modifies the statute of limitations and repose provisions to make them more like RUUPA and not to require property not to be specifically identified in a report for it to apply. Changes the states right to estimate liability when records are not retained to use estimation. Permits a holder to contest the use or validity of estimation. Prohibits the administrator contracting with third party auditors on a contingent fee basis. The retroactive application transitional provision is deleted.

Illinois – SB 3229 – In addition to several other changes to the unclaimed property law, this bill would change the dormancy period for demand, savings and time deposits to 5 years from 3 years after the later of maturity or the date of the last indication of interest and modifies the dormancy period wages, commissions, bonuses, to one year after it becomes payable unless held on a payroll card then 5 years after the last indication of interest by the owner.

Indiana – SB 376 ENACTED – Provides that a time deposit that is automatically renewable is considered matured upon the expiration of its initial period, unless: (1) the owner has consented to a renewal at the time of the account opening or at about the time of the renewal; and (2) the consent is in writing or is evidenced by the original account agreement or by any memorandum or other record on file with the holder. Effective 7/1/2018.


Significant Pending Legislation: CO SB 240 — Payroll Card Dormancy Period: Payroll cards are included in the definition of stored value cards and are

assigned dormancy period that is three years after: a. December 31st of the year the card is issued or additional funds are deposited into it; or b. the most recent indication of interest in the card by the owner; or c. a verification or review of the balance by or on behalf of the apparent owner. Colo. Rev. Stat. Ann. §38-13-102 (30)(b)(III) and 38-13-206 (1).

— Wages, Commissions, Bonuses or Employee Reimbursements: One year after the amount becomes payable. Colo. Rev. Stat. Ann. §38-13-201(k)

— Indication of Owner Location/Address: Adopts RUUPA with regard to “indication of location” for owners. Colo. Rev. Stat. Ann. §38-13-301(1)(a)

— Due Diligence Acknowledgement with Report: Must acknowledge that due diligence was performed when filing the unclaimed property report. Colo. Rev. Stat. Ann. §38-13-402(h)

— Email Due Diligence in addition To USPS Mail: Must send due diligence via first class United States mail AND if an owner has consented to receive electronic-mail delivery from the holder, the holder must also send notice via electronic mail. Colo. Rev. Stat. Ann. §38-13-501(2)

— Due Diligence Timing: Not more than 180 days nor less than 60 days before filing the report. Colo. Rev. Stat. Ann. §38-13-501(1)

— Due Diligence Letter Must Contain Special Header Language: "Notice. The State of Colorado requires us to notify you that your property may be transferred to the custody of the State Treasurer if you do not contact us before (insert date that is thirty (30) days after the date of this notice)." Also must state that property which is not legal tender of the United States may be sold by the administrator. Colo. Rev. Stat. Ann. §38-13-502 (1) and (2)(d)

— Statute of Limitations: 5 years if non-fraudulent report filed; 10 years if no report filed Colo. Rev. Stat. Ann. §38-13-609 (2) and (3)

Thank youKaren Anderson, Senior ManagerState and Local Tax – Denver, CO(303) [email protected]

Jamie Aquino, ManagerState and Local Tax – Denver, CO(303) [email protected]

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