As we've covered, Michigan is attempting to close part of its budget gap by radically changing the state unclaimed property act. Under the proposed legislation, most dormancy periods would shorten to 3 years, and the state would require reporting and remittance to take place for 3 different periods over the next 3 years.
Yesterday, the Unclaimed Property Professionals Organization issued letters to the Chairmen of the Appropriation Committee setting forth several well thought-out concerns regarding the legislation (aside from the shortening of the dormancy periods). For those who might be unfamiliar with UPPO, it is a not-for-profit advocacy association that provides education, networking, and advocacy for the holders of unclaimed property (disclosure: I am a member of UPPO).
While the UPPO's concerns are worth reviewing in full, the feature of the new law that sticks out the most is its use of several different reporting periods. Presumably because funds are needed on a rolling basis to balance the state budget, the Michigan legislation has three different reporting periods. First, the "usual" November 1, 2010 deadline will remain in place. Next, there will be a second report due July 1, 2011 for property deemed unclaimed for the 9 month period of July 1, 2010 to March 30, 2011. Thereafter, reports will be due July 1 for property deemed abandoned as of the preceding March 30. These reporting and cutoff dates are not used by any other state.
What is striking about these different dates is that there would seem to be no rational reason for them except, as noted, to keep unclaimed funds coming into state coffers on a regular basis. While it has always been understood that unclaimed funds in the possession of the state would be used for other purposes, this is perhaps the most explicit example of the unclaimed property laws being overtly used to generate state revenue.