Tuesday, February 2, 2016

Florida Senate Bill 970 -- Will Florida Expand the Use of Estimation?


One of the most controversial issues surrounding unclaimed property audits is estimation -- the use by auditors of statistical sampling and extrapolation to calculate a holder's historical unclaimed property liability in years that there are no researchable records available.  Holders and states dispute, among other things, when such estimation is appropriate, how it should be performed, and whether estimation can be used at all when not specifically authorized by statute.  Estimation has been a commonly contested issue arising in litigation between holders and states, and is one of the issues hotly contested in connection with the proposed revision of the Uniform Unclaimed Property Act.

While states, auditors, holders, and holder advocates dispute a number of issues with regard to estimation, until now they all agreed on at least one thing:  that unclaimed property liabilities for "estimated" years (where actual records were not reviewed) were all payable to the holder's state of incorporation.  As you may recall from our post about unclaimed property jurisdictional rules, unclaimed property generally gets turned over to the state where the owner's last-known address is located.  Where the holder has no owner-address information, unclaimed property gets reported to the holder's state of incorporation.  Using that same logic, estimated liabilities (which, being a simple calculated liability are by definition not associated with owner names) have historically been escheatable only to the holder's state of incorporation.  

Recently introduced legislation in Florida seeks to change all that.  Florida House Bill 783 / Senate Bill 970 proposes to amend the audit provisions of the Florida Unclaimed Property Act to provide:

If the records of the holder that are available for the periods subject to this chapter are insufficient to permit the preparation of a report of the unclaimed property due and owing by a holder, or if the holder fails to provide records after being requested to do so, the amount due to the department may be reasonably estimated, regardless of whether the holder is incorporated, formed, or organized in this state.
 In other words, the proposed legislation not only expressly authorizes Florida's auditors to estimate the liabilities of holders incorporated in states other than Florida, but it also provides the auditors with the authority to estimate "the amount due to the department" (i.e., Florida).  That runs contrary to most auditors' current practices, and is likely to cause significant disputes among the states, as most states clearly instruct that all estimated property gets reported and delivered to the holder's state of incorporation.  While holders may be concerned by this development, it is really the private auditing firms that run the risk of being forced to try to reconcile multiple state demands for the same property. 

The legislation is currently in committee in both the Florida House and Senate.  

Friday, January 22, 2016

Friday Lost + Found: Just How Much Are States Holding in Unclaimed Property?


As the East Coast prepares for its first major snowstorm of 2016, we take a quick look at some recent stories concerning the dollar value of unclaimed property held by state governments. 

California --  Over $8 billion

Connecticut -- $710 million

Illinois -- Over $2 billion

Maryland  -- Over $1 billion

New York --  Over $14 billion

According to the National Association of Unclaimed Property Administrators, the states collectively are holding in excess of $40 Billion in unclaimed property for the rightful owners of those sums. 

Like so many snowflakes, those misplaced pennies add up.

Monday, January 4, 2016

Happy New Year - A Look Ahead

Welcome to 2016.  What unclaimed property issues will come up over the next 365 (actually, 366) days?  While you can never be sure, here are some stories that we will be keeping an eye on.

Lawsuits, Lawsuits, Everwhere -- More and more holders are challenging state audit procedures, practices, and results.  The Unclaimed Property Professionals Organization has a great roundup that we needn't repeat here, but cases are pending challenging Delaware's estimation techniques (Temple Inland v. Cook), the legality and use of gift card subsidiaries (French v. Card Compliant), federal preemption (National Freight v. Sidamon-Eristoff), and a variety of other issues.  A decision in any one of these cases could have a significant effect on unclaimed property practices.

Revision to the Uniform Unclaimed Property Act -- The Uniform Law Commission of the National Conference of Commissioners on Uniform State Laws is continuing its efforts to revise the Uniform Unclaimed Property Act.  For a primer about the who, what, where, when, and why of the revision effort, see our previous post here.  The next meeting of the committee is scheduled for late February in Dallas.

Owner Challenges to State Unclaimed Property Laws -- While the historical justification for the state taking custody of unclaimed property for the rightful owner is the theory that the state "steps into the shoes" of the missing owner, some citizens are beginning to challenge the eagerness with which the state jumps into those shoes (sometimes while they are still being worn).  Lawsuits in Minnesota and Oklahoma are challenging the methods by which the state takes custody of unclaimed property or the actions that the state takes (or doesn't take) to direct those funds to the rightful owner.

Wednesday, October 14, 2015

New York Finds $1.67M in Unclaimed Funds Belonging to . . . New York? A Lesson in Claiming

According to an article in Monday's Daily News by Erin Durkin, New York City Public Advocate Letitia James and her staff found over $1.67M in over 2,000 accounts held by the New York Office of Unclaimed Funds on behalf of New York City agencies, departments, and organizations.  As the article notes, many of the accounts may have been missed in earlier reviews by the City because of owner names in the state database that might have been abbreviated or misspelled.

The article raises an important lesson for owners searching the state's database for unclaimed property -- the information in the state's database is only as good as what gets reported.  If an owner's name is abbreviated or misspelled on the holder's report, it will probably be that way on the state's database.  So, in searching for your property, don't forget to try common or likely misspellings or abbreviations of your (or your company's) name.  For example, if you were searching for property held for the Alphabet Boat & Cargo Corporation, you might be well advised to run searches for all of the following:
  • Alphabet Boat & Cargo
  • Alphabet Boat and Cargo
  • Alphabet Boat + Cargo
  • Alphabett Boat Cargo (or other misspellings)
  • Cargo, Alphabet Boat (in case reported in Last Name, First Name format) 
  • ABC Corp
  • ABC Company
The article also serves as a reminder to holders to try to report owner names accurately and consistently.  Doing so will make it more likely that the owner can locate his or her property in the future.



Friday, September 11, 2015

Friday Lost + Found: Australia Amendments, NY Numbers, Escheat Events

Australia to Revise Bank Account Rules -- According to an article om News.com.au, the Australian government is considering legislation to (re)revise its laws relating to unclaimed bank accounts.  Under the current rules, certain bank accounts are deemed unclaimed if there has been no activity for 3 years.  The proposed revisions would change the period of inactivity required to 7 years.

New York Holding $14B in Unclaimed Property -- Every once in a while, we like to keep tabs on the current amount of money being held by the states' as unclaimed property.  According to one recent article, the amount currently held by the New York Office of Unclaimed Funds for New Yorkers is $14 billion as of fiscal year end March 31.

Upcoming UPPO Webinar on Recovering Property -- Though we spend the vast majority of time on this site writing about the process of reporting and remitting unclaimed property, it is worth remembering that most holders of unclaimed property are also owners of unclaimed property held by others.  On October 14, the Unclaimed Property Professionals' Organizations is sponsoring a webinar on "How to Recover Property for Your Company".  Webinar details and registration information can be found at the UPPO website.