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Delaware State Court Enforces Unclaimed Property Subpoena - Case Headed Back to Federal Court

The unclaimed property saga arising out of the State of Delaware’s unclaimed property audit of Univar, Inc. took another turn recently when the Delaware Court of Chancery issued a ruling enforcing a subpoena issued by the state. The case is now (probably) headed back to federal court for a consideration of Univar’s constitutional claims. The story started nearly five years ago, in December 2015, when Univar received notice that it was to be the subject of an unclaimed property audit conducted by Kelmar Associates. After some procedural wrangling back and forth among the state, the holder, and Kelmar, an initial document request was issued in September 2016 seeking four categories of documents: (1) tax returns and related information; (2) apportionment schedules; (3) information relating to certain shared-service and disbursement activity; and (4) information concerning prior unclaimed property audits and voluntary disclosure proceedings. In October 2018, after th

Unclaimed Property on the Ballot in Louisiana

Constitutional Amendment Would Create Unclaimed Property Trust Fund to Pay Claims You may not have heard, but this year is an election year. In addition to contests at the federal, state, and local level there is a constitutional amendment on the ballot in Louisiana relating specifically to unclaimed property. Louisiana Amendment 7 would create a permanent trust fund expressly earmarked to pay unclaimed property claims. The proposed amendment would require the State Treasurer to annually deposit, into a dedicated fund, net unclaimed property receipts (after deductions for certain expenses and statutory allocations) until such time all of the state’s potential unclaimed property liabilities are funded. The specific language on the ballot is as follows: Do you support an amendment to create the Louisiana Unclaimed Property Permanent Trust Fund to preserve the money that remains unclaimed by its owner or owners? 2020 Louisiana Act 38, Section 4. This amendme

Holders: Don't Forget That You're Owners Too

Unclaimed Property Holders Should Take Another Look at Potential Claims   Before getting to unclaimed property news, just a quick word to our readers (both of you!):  we hope that you and your families are safe and well during these turbulent times. The COVID-19 crisis is, first and foremost, a human tragedy.  But even if and when the virus is tamed, and the immediate economic crisis ends, there is expected to be a significant long-term economic disruption as well.  One place where that disruption will be particularly felt is with regard  to cash flow and liquidity. For companies operating on a thin margin, every dollar in the door counts. Accordingly, this is a good time for holders of unclaimed property to remember that they very well may be owners of unclaimed property too. Often, companies do not bother searching for or claiming unclaimed property reported to the states on their behalf, thinking that the process is too cumbersome or not worth the effor

Certain Spring Reporting Deadlines Automatically Extended Due to COVID-19

Like other business operations, many holders have found that the COVID-19 crisis has caused a disruption to the process of reporting and remitting of unclaimed property, particularly in those states with a Spring reporting deadline.  While holders should check the relevant state unclaimed property administration website for specific information (and to request an extension if necessary), many states have proactively responded to this disruption by either unilaterally extending the unclaimed property reporting deadline or granting a prospective wavier of late-reporting interest and penalties for a defined period.  Some of the highlights are as follows: Arkansas – The May 1 annual reporting deadline for life insurance companies had been extended to June 1, 2020. Illinois – According to the website of the Illinois State Treasurer, interest and penalties will be waived for up to 60 days after the end of the Illinois declaration of emergency. Maryland – The Apr

An Offer You Might Not Want to Refuse

Delaware Secretary of State Issues VDA “Invitation” Notices   The Delaware Secretary of State’s Office recently sent letters to over 100 companies identified as “likely” out of compliance with Delaware’s unclaimed property laws. The letters “invite” those companies to enroll in Delaware’s Voluntary Disclosure Agreement (VDA) program. Delaware’s VDA is an amnesty-type program pursuant to which a company performs a thorough self-review of its unclaimed property reporting history and remits any overdue unclaimed property to the state. That self-review is, in turn, double-checked by state staffers on behalf of the Secretary of State’s office who may identify additional property, if any, to be reported and remitted. In exchange for performing this self-review, the VDA program provides companies with a waiver of all penalties and interest that the state might otherwise assess on late-reported unclaimed property. In addition, the company and the state will generally agre

Maine Amends Unclaimed Property Act to Exempt Gift Obligations Beginning in 2022

Amounts deemed abandoned to reduce from 60% to zero over four year period. On January 30, the Governor of Maine signed Public Law 553 , “An Act Regarding the Presumption of Abandonment of Gift Obligations.” Over a four year period, the new law will reduce — from sixty percent to zero — the dollar percentage of “gift obligations” that a holder must report and remit to Maine as unclaimed property. Pursuant to the Maine Unclaimed Property Act, “gift obligations” (which include most gift certificates and gift cards that are not redeemable in cash) are deemed unclaimed property two years after December 31st of the year in which the obligation is sold or the most recent transaction occurs. Currently, holders of such items are required to report and remit 60% of the outstanding balance of these items as unclaimed property, keeping the remainder as income. Pursuant to the new law, the percentage to be reported will remain 60% for those items with last activity in 2019,

2020 Vision: A Look at the Year Ahead in Unclaimed Property

Happy New Year! Last year saw a variety of developments in the world of unclaimed property. Today, we take a look ahead at five topics that might be at the forefront of unclaimed property news in 2020. Audit Disputes & Litigation — 2019 saw a number of challenges to the State of Delaware’s audit practices; most notably, the battle between Univar, Inc. and Delaware in parallel federal and state litigations arising out of a proposed unclaimed property audit. While there were a number of procedural and narrowing decisions in that case, the real substance remains to be litigated. That battle will continue, and it appears that new ones will get underway shortly. In December, AT&T filed a lawsuit against Delaware, challenging the state’s audit practices as a violation of the company’s constitutional rights. Similar challenges were recently filed by Fruit of the Loom and Eton Corporation, both of which are challenging the state’s estimation and extrapolatio