Thursday, July 26, 2012

Private Corporations Are Not The Only Ones With Unclaimed Property: St. Louis Court Sitting on $7.6 Million

The fact that corporations, financial institutions, and the like often have unclaimed property that ultimately gets reported and remitted to state governments is (relatively) well known.  But it is not only private entities that have this issue.  If an entity has a significant amount of payment streams coming in and going out, it stands to reason that at least some percentage of those payments will be misplaced, uncashed, or otherwise not disposed of.

By way of example, the St, Louis Post-Dispatch is reporting that the St. Louis Circuit Court has more than $7.6 million in refunds, credits and other unreconciled payments.  According to the article, these funds have built up over more than 10 years, and consist of, among other things, bail deposits, court fees, and other payments that were supposed to be returned to citizens.  The article explains that the court is looking to retain a private contractor to sort through the applicable records, and determine what payments are to be made. 

Of course, one wonders why these amounts were allowed to accumulate over more than a decade.  According to the Missouri Unclaimed Property Act, property "held by any court" appears to be subject to the unclaimed property act if the property has not been claimed by the rightful owner after three years. Just like unclaimed property accumulates for private and public entities alike, most state unclaimed property laws do not distinguish (or equally apply) to both types of entities

Thursday, July 19, 2012

Breaking News: Delaware Secretary of State VDA Process Signed Into Law

Last week, we mentioned that Delaware was considering a second voluntary disclosure process, separate from the one run by the Department of Finance.  That legislation was approved, and was signed by the Governor yesterday.  A copy of the legislation can be found here, but the highlights are as follows:  holders who come forward by June 2013 (and pay outstanding amounts by June 2014) will only have to review records back to 1996.  Holders who come forward by June 2014 (and pay by June 2015) will only have to review records back to 1993. 

Tuesday, July 10, 2012

Illinois State Treasury Announces Launch of "I-Cash" Program

Illinois State Treasurer Dan Rutherford recently announced a relaunch of Illinois' unclaimed property outreach program, and the addition of more than 780,000 names to the state's unclaimed property database.  The new program, called I-Cash, aims to connect Illinois residents to the more than $1.5 billion (yes, with a "b") that the state is currently holding for its residents.

According to the program's marketing piece, 1 and 8 Illinois residents have property being held for them by the Treasurer's office.  In other reunification news, the unclaimed property administrations of MissouriArkansasIowa, and Pennsylvania all recently touted their successes in reuniting unclaimed funds with their rightful owners.


Monday, July 9, 2012

Mid-Atlantic Minute: Updates from New York, New Jersey & Delaware

There have been a variety of unclaimed property updates up and down the New Jersey Turnpike in the past week, from New York to Delaware.  From North to South:

New York Passes "Finder" Regulation:  Recently, we mentioned that Ohio sent a cease and desist order to an unclaimed property "finder" firm that was allegedly charging people for unclaimed property claim forms (that are available free from the Ohio Department of Commerce website).  As we mentioned, there is no fee to claim property from the state, but most individuals (and even some businesses) that are contacted by property "finder" firms are unaware of that fact.  New York, for its part, is trying to make sure that consumers are educated before entering into agreements with finder firms.  New York Senate Bill 7690 would require all contracts between consumers and finder firms to include contact information for the State Comptroller's office, as well as the following language in at least 12 point font:
ABANDONED FUNDS HELD BY THE STATE CAN BE OBTAINED DIRECTLY FROM THE OFFICE OF THE STATE COMPTROLLER BY THE OWNER OF SUCH FUNDS WITHOUT PAYING A FEE.  THESE FUNDS ARE HELD INDEFINITELY BY THE OFFICE OF THE STATE COMPTROLLER. 
The bill also reiterates that the maximum amount that can be charged by a finder firm is 15% of the value of the property.  The bill passed the Senate on 6/19 and is now pending in the State Assembly.

More Thoughts on the New Jersey Gift Card Law:  Last week, Governor Christie signed Senate Bill 1928 into law, which revised New Jersey's 2010 gift card legislation.  Briefly, the bill extended the dormancy period for gift cards from 2 years to 5 years, and delayed implementation of a requirement that retailers obtain zip code information at the point of sale for 4 years.  While many gift card issuers applauded the amendments, not everyone is happy.  According to an article by Andrew Kitchenman in NJBiz the New Jersey Retail Merchants Association (among, presumably, several others) is not happy with the amendments (or, more specifically, the amendments that were made to the amendments right before the bill was put up for a vote).  As we covered here previously (sadly, at great length) the original amendments considered by the State Assembly would have undone the 2010 legislation altogether, removing gift cards from the scope of the unclaimed property act and eliminating the zip code collection requirement.  As Mr. Kitchenman's article recounts, however, the repealing legislation got watered down to merely delaying legislation during negotiations on the State House floor. 

Opponents of the legislation are not giving up.  According to an article in NJBiz last week, the NJRMA is committed to having at least the zip code collection provisions repealed before they come into effect in 4 years.  Indeed, Assembly Bill 3189 has already been proposed in Trenton, which would (consistent with earlier proposals) completely remove gift cards from the scope of the NJ Unclaimed Property Act.

Delaware Considering Parallel VDA Process:  Delaware is one of many states that has a voluntary disclosure agreement (VDA) process for unclaimed property.  Under a VDA, a holder that is out of compliance with the unclaimed property law comes forward to the state, and agrees to perform an internal review of its own records (often on a relatively expedited basis) to turn over past due amounts.  In exchange for that self-identification and remediation, the state generally offers amnesty in the form of a waiver of interest and penalties that may otherwise be assessed on late reported amounts.  As many in the unclaimed property industry can attest, and as has been widely reported, VDA arrangements with the State of Delaware have historically been fraught with peril.  For starters, in order to perform a VDA with Delaware, the holder has to agree to review its own records for possible noncompliance back more than 20 years to 1991.  As if the prospect of reviewing a fifth of a century worth of records wasn't enough, the state was unique in its willingness to nonetheless audit a holder who came forward under a VDA.

Perhaps to remedy its reputation, Delaware is considering a one-time amnesty program run outside of normal audit staff in the Division of Revenue.  Specifically, the Delaware legislature unanimously passed Senate Bill 258, which would create a short-term amnesty program under the authority of the Secretary of State.  Under the proposed legislation, which has been sent to the Governor for signature, holders who come forward by June 2013 (and pay outstanding amounts by June 2014) will only have to review records back to 1996.  Holders who come forward by June 2014 (and pay by June 2015) will only have to review records back to 1993.  If the bill passes, interested holders are advised to act fast:  by the express terms of the legislation, holders that receive audit notices from the State Escheator are not eligible to participate in this amnesty program.

Monday, July 2, 2012

New Jersey Gift Card Legislation Passes

According to Escheatable's contacts in the New Jersey State Government (read: the Internet) Governor Christie signed Senate Bill 1928 into law.  While it did not go as far as many hoped it would (by, for example, repealing all references to gift cards in New Jersey's unclaimed property law) it does provide some regulatory relief for gift card issuers.  In particular, this bill:
  • extends the dormancy period for stored value cards to 5 years (up from the current 2);
  • restricts the application of expiration dates and dormancy fees; 
  •  provides that retail gift cards are escheatable at 60% of the face value (thereby giving retailers the benefit of some profit margin).  Note that this does not apply to "general purpose" cards as defined in the legislation;  and
  • requires issuers to redeem cards in cash if there is a balance of less than $5
The full text of the legislation can be found here.  While the gift card industry's response to the bill is yet to be seen, already gift card provider InComm has announced that it will return to New Jersey.  The issuer previously left the state in April, citing the requirements of the unclaimed property law.