Missouri Introduces Payroll Legislation

Pursuant to both the 1981 and 1995 Unclaimed Property Acts, payroll (e.g., uncashed paychecks and similar items) has a dormancy period of one year (as opposed to 3 or 5 years for many property types).  The one-year dormancy period is the norm in most states, but there are outliers.  Missouri, which currently has a five year dormancy period for payroll, has introduced legislation to join the majority of states using a one-year dormancy period. 

The new legislation, House Bill 64, would shorten the dormancy period for payroll related items to one year, effective January 1, 2012.  The bill has not yet been scheduled for a hearing before the full legislature.

Unclaimed Property As State Revenue: A Warning from North Carolina

We've spent more than a few posts here talking about the states' use of unclaimed property as general revenue until such time as it is claimed by its rightful owner.  More recently, we've seen Connecticut erase its deficits through increased unclaimed property collection, and Michigan change its unclaimed property laws in an attempt to balance the state budget.  Of course, as any state administrator of unclaimed property will tell you (with varying degrees of honesty) unclaimed property does not belong to the state, it is simply held in trust for the rightful owner.  That fact - that the property is subject to reclaim at any time - is one of the biggest drawbacks of the states' increasing reliance on unclaimed property as state revenue.

A recent story from North Carolina underscores the problems that occur when the unclaimed property well starts to run dry.  Pursuant to North Carolina law, the monies derived from investment of escheated property is used for need-based education grants for North Carolina students.  This use of funds has a long pedigree, dating back to a 1789 constitutional provision providing for the transfer of escheated lands to the University of North Carolina.  Now, however, according to a recent article from The Charlotte Observer, however, an increase the need for such grants is emptying the escheats fund.  If more money is not found (through cost cutting or an increase in escheat-related revenue) cuts to the grant program could be forthcoming.

As states increasingly rely upon unclaimed property (as well as other non-certain sources of revenue) as part of the state budget, such cuts and shortfalls will continue to happen.

Virginia Guidance Regarding "Promotional Incentives"

Now that we're back from the holidays, it's time for most people to deal with the unintended consequences of the gift giving season:  rebates and returns.  While the latter is generally straightforward (to the extent that waiting upon an endless customer service line is straightforward) rebates can be trickier, for both consumer and unclaimed property professional.  For the consumer, there are several different considerations, depending upon the type of rebate:  mail-in or online; cash back or future purchase; etc.  To say nothing of special forms, expiration dates, and proofs of purchase.

For unclaimed property professionals, things are similarly complicated.  In some states, such as Virginia, there are unclaimed property exemptions for rebates and other "promotional incentives."  See Virginia Code Section 55-210.8.  However, there is generally some confusion among holders as to what these exemptions cover.  To provide some clarity, the Commonwealth of Virginia issued a memo to provide holders with guidance as to the scope of this "promotional incentives" exemption.

In sum, the memo emphasizes that no matter whether an item is labeled a "rebate" or not, holders seeking to invoke the promotional incentives exemption must meet a two part test:

1.  The incentive must be designed to influence the consumer to purchase goods and services; AND
2.  The consumer must provide no consideration, or less consideration than the value of the incentive.

The memo goes on to give a few examples of rebates that are, and are not, covered by the exemption.  Holders with Virginia rebates should read the memo in full.  For others, it is a timely reminder that labels are not determinative when it comes to unclaimed property.

Did You Know? Holiday Edition

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.

You had to see this coming, right?

We've spent a fair amount of time here at Escheatable marveling over all the people and entities that are owed unclaimed property, and by whom.  The Yankees are owed money from New York.  The State of California is owed money by the State of Delaware (as well as by *ahem* California).  In light of all that, it should perhaps be no surprise that the State of Wisconsin is holding unclaimed property for this gentleman.

Merry Christmas everyone!

Breaking News: New Jersey Gift Card Rules Further Postponed Until 1/18

A quick update on the continuing New Jersey gift card law litigation.  As you probably know, a variety of New Jersey gift card issuers filed a lawsuit in federal court, seeking to have parts of New Jersey's new gift card law overturned.  Last month, the a federal court in New Jersey issued a preliminary injunction prohibiting the state from enforcing at least two provisions of the new law: (1) the law's presumption that all cards sold in New Jersey are escheatable to New Jersey; and (2) the law's requirement that merchandise-only gift cards issued prior to the act be escheatable in cash.

We say "at least" two provisions of the law have been enjoined because the parties to the lawsuit are currently disputing the scope of the federal court's injunction.  In particular, the parties disagree as to whether the new law's requirement that gift card issuers obtain purchaser or owner zip code information is enforceable.  New Jersey takes the position that the zip code requirement is unaffected, the issuers take the position that the provision can't be enforced.  An application has been made to the court to settle the dispute, but no decision has been made.

As you may have noticed, this happens to be a busy time for gift card issuers.  In light of the uncertainty, the New Jersey Attorney General's Office filed a letter with the federal court yesterday, which informs the court that "the Treasurer has extended the date for issuers to implement a system or process capable of recording and maintaining the purchaser's zip code until no earlier than January 18, 2011."

A formal announcement should be forthcoming from the Treasury Department

Connecticut Digs Out of Deficit Using Unclaimed Property (at least, for now)

In a December 1, 2010 budget forecast to the governor, Connecticut comptroller Nancy Wyman projected that the state would run an $18 million deficit for the current year.  Now, however, according to the Connecticut Mirror, a substantial increase in the amount of unclaimed property collected by the state may result in a budget surplus.  Specifically, according to the State Treasurer's office, Connecticut has brought taken custody of more than $92 million in unclaimed property (compared with a projection of $50 million).

The article also notes, however, that claims for the first 5 months of the fiscal year are more than double that of this time last year, suggesting that any budget relief may be temporary.  This, we suppose, is to be expected.  As states continue to shorten dormancy periods and become more and more aggressive in requiring holders to report and remit unclaimed property, they will take custody of more and more property that is not "really" abandoned.  Accordingly, attempts to leverage more restrictive unclaimed property laws into additional state revenue are inherently limited by the owners' largely unconditional right to reclaim the funds.

Programming Note: Off Until 12/21

Quick programming note:  Escheatable will be off until December 21.  If there are any tips or breaking news that can't possibly wait until then, drop us a line at admin at escheatable dot com.

South Carolina Holds Online Unclaimed Property Auction

Add another entry to the list of recent articles here (and here, here, and here) about unclaimed property auctions.  The Unclaimed Property Division of South Carolina began an online unclaimed property auction yesterday.  Pursuant to the South Carolina Unclaimed Property Act, unclaimed property that has been held by the state for at least 3 years may be sold to the highest bidder at a public sale.  (S.C. Code Section 27-18-230).

Granted, most readers of Escheatable are sending out unclaimed property, not bringing it in.  But, if you are in the market for a set of sterling Christmas ornaments or a Morgan Dollar belt buckle this holiday season, be sure to check it out.

How We Got Here - In 30 Lines or Less

This past weekend the Abilene Reporter-News published an article providing an overview of Texas unclaimed property law, and encouraging readers to check with the Texas Comptroller of Public Accounts to see if they are owed some of the $2.2 billion of unclaimed property being held by the state.

Far more interesting to Escheatable, however, was the accompanying timeline of the history of unclaimed property laws.  In just 27 lines, you can learn how the escheat laws developed from the time of Ancient Rome to today (with stopovers in England, the U.S. Supreme Court, and Texas).  It is worth reading.

Did You Know? Fred Clarke's Secretary Edition

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 Nevada:

And how much am I bid for the postcard signed by Fred Clarke's Secretary?

Tomorrow, the Nevada Unclaimed Property Division is holding an unclaimed property auction.  According to the Auction Catalog, one of the items up for auction is a "Fred Clark[e] baseball post card, non-malicious secretarial signed version." Fred Clarke, who was inducted into the Baseball Hall of Fame in 1945, was an outfielder for the Louisville Colonels and Pittsburgh Pirates, and was one of the original "boy managers" (or player-managers).  According to James Spence Authentication, the "non-malicious secretarial signed version" of his postcard means that this item was not signed by Mr. Clarke himself (who, as you may know, is 7th all time in career triples), but was signed by Mr. Clarke's secretary, or someone acting on his behalf.

You never know what you might find.  Happy bidding!

Industry Spoke, Goverment Listened - Changes to the Cayman Dormant Accounts Law

A few months ago, we reported some unclaimed property developments in the Cayman Islands.   The Cayman government enacted the "Dormant Accounts Law," which established a 6 year dormancy period for most items, and provided that all dormant funds would be held for the "general revenue of the Islands."  As noted in the original Cayman News Service article, a number of holders were particularly concerned about the length of the dormancy period as well as DAL's notice provision, which provided that in situations where "the financial institution has been instructed by the dormant account holder not to correspond with or contact the dormant account holder" the financial institution is required to publish notice of the "nature and type of such dormant accounts" in "one or more daily newspapers circulating in the Islands . . . [and] any other media as the financial institution deems necessary."  (Dormant Accounts Law, Section 6(1)).

Recently, the Cayman government responded to these concerns and amended various provisions of the DAL.  In particular, the dormancy period under the Law was lengthened from 6 years to 7 years, and makes clear that once property is turned over to the government, it will be held in trust for an additional six years.  The amendments also change the notice requirements.  Notice of unclaimed property held for a Cayman resident is still subject to newspaper publication, but property held by a financial institution for a non-resident need only be published on the "account provider's website or in a register held at the principal office of the account provider in the Cayman Islands."  (Dormant Account (Amendments) Bill 2010, Section 5(a)).

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