Tuesday, November 30, 2010

Massaschusetts Authorities Probe Attempted Unclaimed Property Theft

According to an article in the Worcester Telegram & Gazette, a Massachusetts man has been indicted for attempted to wrongfully claim approximately $1.5 million in unclaimed property, by posing as the heir of a deceased doctor.  Specifically, the defendant is alleged to have presented false will, trust and unclaimed property claim forms to the Massachusetts Treasurer's Abandoned Property Division.  Division employees were apparently tipped off to the potential fraud because of a number of discrepancies in the signatures and notarization of the documents.

One question this raises is how the defendant knew that this particular deceased individual had a significant amount of unclaimed property to begin with.  The Massachusetts Abandoned Property Database, like most states' registries, does not list the amounts held for a potential claimant, precisely to prevent this type of fraud.

Monday, November 29, 2010

Utah Proposed Regulation Relating to Real Estate Deposit Funds

Utah is considering a substantial reorganization to its existing real estate licensing rules.  As part of that reorganization, the new regulations would include a provision providing that unclaimed trust deposits held by a real estate broker as a result of a cancelled or failed real estate transaction would be subject to the provisions of the Utah Unclaimed Property Act.

Anyone wishing to comment on the proposed rule has until December 15th to do so.  Comments should be provided to the Utah Department of Commerce, Division of Real Estate.

Wednesday, November 24, 2010

Happy Thanksgiving!

Escheatable is taking the rest of the week off in celebration of the Thanksgiving holiday.  Best wishes to all of you and your families.

Tuesday, November 23, 2010

IRS Announces $164.6 Million in Unclaimed Tax Refunds

Last week, the Internal Revenue Service issued a press release disclosing that it currently has in excess of $160 million in tax refunds that could not be delivered to taxpayers (primarily because of mailing errors). 

Interestingly (or perhaps not) unclaimed federal tax refunds are not reported and remitted as unclaimed property, because under federal law:

No overpayment of any tax imposed by [the Internal Revenue Code] shall be refunded (and no interest with respect to such overpayment shall be paid) if the amount of such refund (or interest) would escheat to a State or would otherwise become the property of a State under any law relating to the disposition of unclaimed or abandoned property.

Source:  26 U.S.C. 6408.

Accordingly, taxpayers who believe that they are missing refunds should contact the IRS via the "Where's My Refund" tool on the IRS website.

Monday, November 22, 2010

Michigan Issues Notice Regarding Unclaimed Property Law Changes

The Michigan Department of Treasury recently issued a notice reminding holders of the new dormancy periods and reporting dates for 2011. 

Earlier this fall, as part of its attempts to balance the state budget, Michigan enacted sweeping changes to the state unclaimed property law.  Pursuant to the new law, the dormancy period for most property types was reduced from 5 years to 3 years, and significant changes were made to the holder reporting process.  The prior version of the law required an unclaimed property report to be filed and property delivered by November 1 for the year ending June 30.  The new law leaves that deadline in place, but adds the following reporting dates:

  • In 2011, a report shall be filed on or before July 1, 2011 for the 9-month period ending on March 31, 2011. 
  • For years ending after 12/31/2011, the report shall be filed on or before July 1 of each year for the 12 month period ending on the immediately preceding March 31.
Accordingly, even though most holders filed reports with the state a few weeks ago, for property deemed unclaimed as of June 30, 2010, another report is due July 1 of this year for property deemed abandoned during the period July 1, 2010 through March 31, 2011.  Michigan reporting will thereafter switch to the July 1 date (and will be the only state to have such a deadline).


 More information is available at the Unclaimed Property Division's website.

Thursday, November 18, 2010

Spike TV's Auction Hunters: Unclaimed Property Comes to Realty TV

We have reality TV shows relating to (the New York) residents of the Jersey ShoreLeonardo Da Vinci, and famous (if underachieving) wide receivers, so why not one relating to unclaimed property?  Spike TV's new show Auction Hunters follows two "prospectors" who bid on abandoned storage units in an attempt to sell the contents for more than was bid.  Escheatable was unfamiliar with the process for auctioning storage units, but according to Spike's website:

 You and the other bidders will then line up in front of the first of what is likely several units up for auction.  Next, the auctioneer will throw open the unit's door.  Each bidder will briefly file past the open unit, leaving you only a matter of seconds to look and only look into the unit.  No touching allowed!  Once those precious seconds are over, you're done and that's why these short moments are so important.  You need to make a lightning fast assessment as to what the contents might be, and how much are you willing to bid.  Once everyone has had their look, bidding begins.  It can start as low as $1 or go as high as several thousand.  After being declared the winner, you will typically have up to 24 hours to clean out the unit or be forced to pay a financial penalty.

The obvious question (at least to us) is, isn't this unclaimed property?  Generally, yes and no, depending upon the storage unit contract.  In most instances, the storage unit contract or some states' laws specifically provide that the storage company can auction off the contents in order to be reimbursed for unpaid fees.  If the amount received, however, is greater than the amount due, the excess may be unclaimed property subject to reporting and delivery (at least according to some states and state laws).

Tuesday, November 16, 2010

Breaking News: Federal Court Enjoins Parts of NJ Gift Card Law

A few weeks ago, we reported on the NJ Retail Merchants Association's lawsuit against New Jersey in response to that state's new unclaimed property laws relating to gift cards.  As we covered earlier, the NJRMA challenged various provisions of the NJ legislation (the "Bill," discussed here) including the provisions presuming NJ reportability for cards sold in NJ locations or in NJ zip codes (the "Location Presumption") and the requirement that issuers turn over the full face value of cards inactive for 2 years (the "Face Value Requirement").  The NJRMA also challenged the retroactivity of the bill (i.e., the law's application to cards that were issued years before the bill was enacted). 

Similar lawsuits were filed against the state by the New Jersey Food Council and American Express Prepaid Management as to the gift card provisions.  Lawsuits have also been filed by American Express (challenging new laws relating to travelers' checks) and Memo Money Order Company (challenging the shortened dormancy period for money orders).  These plaintiffs all sought a preliminary injunction -- that is, an order preventing NJ from enforcing the Bill -- until the court can issue a final ruling.  The State opposed these requests, and asked the court to dismiss the case.

On November 12, the federal district court issued an opinion and order in connection with the plaintiffs' request for a preliminary injunction.  The court has enjoined the state from enforcing the Location Presumption, and from applying the Face Value Requirement to cards issued prior to the effective date of the Bill.  The court declined, however, to stop the state from enforcing the new 2 year dormancy period for stored value cards, or from shortening the dormancy period for travelers' checks.  This does not represent a final ruling on any of these issues.  Instead, it is a preliminary determination that prevents NJ from enforcing the Location Presumption or the Face Value Requirement (retroactively) until a final decision is made.

We will continue to follow the case.

Monday, November 15, 2010

Unclaimed Property in the Eastern Carribean (No, Not Pirate Treasure)

Though we spend most of our time here discussing unclaimed property laws and procedures at it involves the United States, it should be noted that escheat agencies and procedures exist - or are being established - all over the world.  Recently, we spent some time discussing the new Cayman Islands' Dormant Accounts Law, but other Caribbean institutions have similar rules.

For example, the ,Eastern Caribbean Central Bank the monetary authority for Anguilla, Antigua and Barbuda, the Commonwealth of Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines, maintains a list of Abandoned Property Holders listing dormant accounts being held by those islands' regulated financial institutions.  We here at Escheatable are looking forward to going down to the ECCB to personally inspect the process. 

Friday, November 12, 2010

Did You Know?

It's time again for Did You Know?  On Fridays here at Escheatable, we provide you with interesting information regarding the unclaimed property laws to amaze your friends and frighten your enemies.  Today's entry is from Oregon:

I'll have a beer.  And may I see your book of consigned baggage?

According to Oregon law, "When personal property is consigned to or deposited with . . . [a] tavern keeper . . . [he or she] shall immediately cause to be entered in a book kept by the consignee or bailee a description of such property, with the date of its reception."

Or. Rev. Stat. 98.110

Thursday, November 11, 2010

Meet Your (New) Escheator - Elections Have Impact on Unclaimed Property Administrators (Part 2 - Nebraska to Wyoming)

We continue our two part series on the election results and new (or newly-reelected) state unclaimed property executives.  We are going alphabetically; part one covering Alabama through Massachusetts, can be found here

We begin part two with Nebraska.  As we mentioned earlier, Cornhuskers at the polls actually had two Treasury-related decisions to make.  First, who to elect as State Treasurer, and second, whether or not to keep the office of State Treasurer altogether.  By an overwhelming margin, Nebraskans decided to keep the position.  Congratulations to Don Stenberg, who gets (and gets to keep) the job.

Your other winning state escheators are as follows (Individuals listed are newly-elected, or reelected, State Treasurers unless another position is specified):

Nevada - Kate Marshall
New Mexico - James B. Lewis
New York - Thomas DiNapoli (State Comptroller)
Ohio - Josh Mandel
Oklahoma - Ken Miller
Rhode Island - Gina Raimondo
South Carolina - Curtis Loftis
South Dakota - Rich Stattgast
Texas - Susan Combs (Comptroller of Public Accounts)
Vermont - Jeb Spaulding
Wisconsin - Kurt Schuller
Wyoming - Joe Meyer

Congratulations to all those elected or re-elected.  If we missed a state, contact us at admin at escheatable dot com.

Wednesday, November 10, 2010

Meet Your (New) Escheator - Elections Have Impact on Unclaimed Property Administrators (Part 1 - Alabama to Massachusetts)

As you may have heard, there were elections last week all over the country.  While most of the press was following the top-ticket federal and state races, we at Escheatable are more interested on how the elections may affect unclaimed property administration.  From coast-to-coast, dozens of states held down-ticket elections for the constitutional or statutory officers responsible for administering state unclaimed property programs.  As we mentioned earlier, state unclaimed property efforts even became an issue upon which incumbents (or their opponents) campaigned.  The dust has now settled, and we're ready to meet your escheators.  Today, we cover Alabama through Massachusetts.

(States with 2010 general elections only.  Individuals listed are newly-elected, or reelected, State Treasurers unless another position is specified).

Alabama - Young Boozer III
Arizona - Doug Ducey
Arkansas - Charlie Daniels (this one not this one, Auditor of State)
California - John Chiang (State Controller)
Colorado - Walker Stapleton
Connecticut - Denise Nappier
Florida - Jeff Atwater (Chief Financial Officer)
Idaho - Ron Crane
Illinois - Dan Rutherford
Iowa - Michael Fitzgerald
Kansas - Ron Estes
Maryland - Peter Franchot (Comptroller)
Massachusetts -Steve Grossman

Tomorrow, we will cover Nebraska through Wyoming.

Tuesday, November 9, 2010

New Hampshire Court Dismisses Lawsuit Challenging State Reuinification Efforts

A New Hampshire court has dismissed a lawsuit challenging the methods for giving notice.  Pursuant to the New Hampshire unclaimed property act, the state attempts to contact owners of unclaimed property via mailings, an online database, and by publishing owner names in the New Hampshire Union Leader

Two plaintiffs, Kimberly Blain and Joe King's Shoe Shop, claimed that the state's efforts to notify owners was insufficient and argued that the state had an interest in not locating owners: namely, the approximately $4.4 million that winds up as state revenue as a result of the abandoned property program. 

The court ruled that while the state's efforts might not be optimal, they did not rise to the level of a deprivation of the owners' constitutional rights. 

Monday, November 8, 2010

New York Case Underscores Need for Internal Controls

A recent article in the Albany Times-Union about the appeal of a federal bank fraud conviction also contains an important reminder for the unclaimed property community.  The underlying fraud conviction was based upon 3 individuals' allegedly wrongful transfer of more than $2.4 million in bank-held unclaimed property to accounts controlled by the defendants.  One of the defendants was a bank employee who apparently had access to the unclaimed accounts, and made fraudulent payouts to the other defendants.

While most unclaimed property professionals are primarily concerned with the "ends" of the unclaimed property pipeline (that is, making sure all dormant items get flagged for inclusion in the unclaimed property systems, and making sure all unclaimed property gets properly reported) this article is a good reminder that property must be safeguarded while it is the the process as well.   

Friday, November 5, 2010

Did You Know?

It's time again for Did You Know?  On Fridays here at Escheatable, we provide you with interesting information regarding the unclaimed property laws to amaze your friends and frighten your enemies.

Here We Go Again - It's the Thirty-First State.  The State Flower is the Poppy.  The State Grass is the Purple Needlegrass.  The State Fossil is Smilodon Fatalis.

Yesterday, we noted that Delaware published its annual list of unclaimed property, and that many of the listed owners are not Delaware residents.  A search of the Delaware database shows that Delaware is holding money owed to the State of California.  Delaware shouldn't feel bad.  After all, it's not the only state having trouble finding California.

Thursday, November 4, 2010

Delaware Publishes Unclaimed Property Owners' List - Why The World Should Be Watching

On October 29, Delaware published its annual list of unclaimed property holders.  Sure, residents of "The First State" should care, but companies all over the world too?  Sure.  Here's why:

Many items of unclaimed property arise from interstate or international commerce.  For example, a Delaware incorporated entity, headquartered in New York, may issue a check to a New Jersey resident for work performed in Connecticut. 

Obviously, since there are many states involved in this transaction, there needs to be some set of rules to determine which state has first priority to take custody of any unclaimed property.  Those rules were set down by the U.S. Supreme Court in 1965 in a case called Texas v. New Jersey.  In that case, the Supreme Court held, as a matter of federal common law, that first priority to take custody of unclaimed property belongs to the state of the rightful owner's last known address (in our example above, that would be New Jersey).  The court further ruled that in situations where the holder does not know the owner's last known address, the next priority to claim the property belongs to the holder's state of domicile (i.e., its state of incorporation).  Those rules have been repeatedly reaffirmed by the Supreme Court, most recently in the 1993 decision of Delaware v. New York.

Why is this important?  Most states (including Delaware) have self-expanded these priority rules to cover foreign unclaimed property.  Though neither Texas v. New Jersey nor Delaware v. New York set forth any rules to cover the situation where property is owed to a non-U.S. resident, many states take the position that unclaimed property belonging to a non-U.S. owner is escheatable to the holder's state of incorporation.  Because Delaware is a state of incorporation for thousands of U.S. companies (including much of the Fortune 500) a tremendous amount of unclaimed property belonging to non-U.S. individuals and residents gets reported to Delaware on an annual basis. 

Accordingly, a review of Delaware's annual unclaimed property list has information relating to hundreds of non-U.S. residents and entities that are owed unclaimed property being held by the State of Delaware.  Indeed, many (perhaps even a majority) of the entries listed are for non-U.S., not Delaware, owners.  Thus, Companies with significant overseas operations or businesses should review the list, even if they have no Delaware operations.

Wednesday, November 3, 2010

More on the New Jersey Litigation - Money Order Issuers Join The Act

Regular readers of Escheatable have already heard plenty (perhaps too much) about New Jersey's new unclaimed property legislation this summer and the resulting lawsuits.  As you may recall, New Jersey shortened the dormancy period for both travelers' checks and money orders to 3 years (down from 15 years, and 7 years, respectively) and created a 2 year dormancy period for stored-value cards.  Thereafter, New Jersey was promptly sued by travlers' check and gift card issuers to prevent the new law from going into effect.

Not to be outdone, at least one money order issuer is joining the fray.  On October 21, Memo Money Order Company, Inc. ("Memo") -- a Pennsylvania issuer of money orders -- sued New Jersey in federal court seeking an injunction to prevent application of the new law (Case No. 3:10-cv-05460).  As have others, Memo alleges that the New Jersey law, and its retroactive application, violates Memo's 14th Amendment due process rights, constitutes an unlawful taking of property, violates the federal and state Contract Clauses, and is invalid under the New Jersey Constitution.

The Memo lawsuit is on a slightly different track than the travelers' check and gift card cases.  A decision on the latters' request for a preliminary injunction is expected by mid-November and will likely go a long way toward deciding this case as well.

Tuesday, November 2, 2010

Unclaimed Property Makes An Appearance on the Campaign Trail

First of all, congratulations to all on finishing another fall reporting period.  We take a break from the detail-oriented process of annual reporting to look at the big picture.  In particular, the role of unclaimed property in state politics and its affect on various races throughout the country.  As one might imagine, those responsible for administering state unclaimed property programs are quick to tout the successes of the program.
In California, Nevada, and Wisconsin, for example, the incumbents are campaigning on how successful they have been at reuniting citizens with unclaimed property. 

In Massachusetts, the candidates for the position of State Auditor sparred over the hiring of "inexperienced" unclaimed property auditing firms, which allegedly cost the state $16 million dollars, and whether a CPA license should be a requirement of that office. 

In Nebraska, however, voters will decide whether to get rid of the State Treasurer completely.  Specifically, legislation passed by the state senate in Nebraska proposes eliminating the position state treasurer -- who, among other things, administers the state unclaimed property department -- as of January, 2015.  The legislation does not specify what state entity would administer the unclaimed property office upon abolishing the office of State Treasurer.  Notwithstanding the office's potential demise, there are at least 2 Nebraskans still interested in the job.

Don't forget to vote today!

Monday, November 1, 2010

It's Reporting Day

It's early November; the phone calls have been made; the mailings have gone out, the pollsters have had their say.  Now, its time for the moment of truth.  That's right, unclaimed property reports are due today (or 10/31) in 43 jurisdictions*. 

A "best of luck" and a sigh of relief to unclaimed property managers and reporters everywhere.  Take a break; you deserve it.  Just don't break too long -- Delaware reports are due in March.

*  Alabama, Alaska, Arizona, Arkansas, California, Colorado, D.C., Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.