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Showing posts from August, 2010

New Jersey Grants Temporary Gift Card Repreive

As we noted earlier , New Jersey enacted legislation earlier this summer that explicitly applies the state unclaimed property laws to stored value cards (i.e., gift cards).  Under the new law, gift card issuers are required to report and remit balances for cards belonging to New Jersey residents that have been inactive for more than 2 years.  Of course, most gift card issuers do not obtain or retain address information for a gift card purchaser.  Consequently, most items were escheated, if at all, to the owner's state of incorporation.  New Jersey sought to address this issue by requiring issuers to obtain name and address information for the gift card owner or purchaser.  The legislation was effective as of July 1, 2010, but explicitly made retroactive.  This provision was notable not only for its affect on unclaimed property administration, but because it also represented a change in the way most issuers do business.  Many (if not most) gift card issuers do not collect purchas

Due Diligence Cutoff for Fall Reporting States

Most state unclaimed property laws require the holder to go through a "due diligence" process before remitting property to the state.  This obligation generally requires the holder to send a letter to the apparent owner's last known address stating that property of the owner is about to be reported and remitted to the state as unclaimed property.  Most states have a cutoff under which letters need not be sent, and some have special requirements for large-dollar accounts (e.g., certified mail). States that follow one of the uniform unclaimed property acts generally require that the notice be sent no more than 120 days and no less than 60 days before filing the report.  In states with October 31 reporting and a 60 day letter requirement, that deadline for sending out due diligence notices is tomorrow, November 1.  Fall states with a 60 day requirement include Alabama, Arkansas, DC, Georgia, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Montana, N

Unclaimed Property as State Revenue

According to an article in today's Chicago Sun Times , Illinois is holding over $1.4 billion in unclaimed property.  (That's right.  Billion.  With a B.)  Of course, with today's state budget deficits, that doesn't mean that Illinois has $1.4B sitting in the bank.  Usually, a specific amount is held aside to honor claims, while the rest is used as revenue.  Thus, as state budgets get more and more lean, there is a greater reliance on unclaimed property collection to make up the difference.  In Delaware, for example, unclaimed funds represents the third biggest contributor state revenue , after franchise and personal income taxes.  Similarly, in Michigan, the governor announced a proposed budget that seeks to close a $1.5 billion gap by, among other things, changing unclaimed property laws . What this means for holders is that stringent enforcement of state unclaimed property laws is not going away.  If anything, enforcement will likely become more strict, as states se

New Jersey goes after gift cards

Stored value cards (commonly referred to as "gift cards") have gone from a gift of last resort to a juggernaut of the retail industry.  These descendants of the paper gift certificates are now the number one holiday gift item, and sales of gift cards continue to increase this year.  Of course, as gift card sales have increased, governments have become more interested in regulating their use.  As has been widely reported, the Federal Credit CARD Act of 2009 imposed new requirements on gift card issuers relating to the assessment of dormancy fees (e.g., fees assessed for inactivity) and expiration dates.  Less reported has been the gradual expansion of state unclaimed property laws to inactive or unused gift card balances. Earlier this summer, New Jersey joined the list of states whose unclaimed property laws expressly apply to gift cards.  New Jersey Assembly Bill 3002 (effectively July 1, 2010, but expressly retroactive) imposes a dormancy period of 2 years for gift cards. 

Welcome

Welcome to Escheatable - The Unclaimed Property Blog. What is unclaimed property?  Unclaimed property is - as the name suggests - intangible property (e.g., money, a financial account, or a right to payment) that has not been claimed, or has been abandoned, by its rightful owner.  Every state has unclaimed property (sometimes referred to as “abandoned property” or “escheat”) laws.  Pursuant to these laws, corporations, financial institutions, insurance companies, and other business entities are required to turnover unclaimed property to the state after a period of time defined by the law (anywhere from one to 15 years).  Examples of unclaimed property include uncashed checks, unclaimed dividends, stale accounts receivable credits, unused gift cards, unreturned security deposits and many others. Given the varied nature of items that can give rise to unclaimed property, any business that has employees, customers, vendors, or clients probably has unclaimed property to be reported and r