Thursday, October 30, 2014

'Twas the Night Before Fall Reporting

‘Twas the night before Fall Reporting, and all through the firm,
Everyone in unclaimed property was starting to squirm.
Wire transfer instructions were given to disbursements with care,
In the hope that remittance confirmations soon would be there.
In state capitals, Treasurers smiled at the incoming proffers,
Knowing that millions would soon be in the states’ coffers.
Bob was in payables, and me with the CFO,
Was it all out?  Both of us wanted to know.
When down from the Controller there arose such a wailing,
I assumed there must be a late response to a due diligence mailing.
Away to accounting we ran down the hall,
Where Bob and I nearly tripped over the accumulated sprawl.
UP-1s, NAUPA codes, and Holder Reporting Guides,
Covered every flat surface with big stacks besides.
When, what led my stomach to churn and contort,
But hundreds of names that were left off the report.
When I asked how this many names could’ve been missed,
I was told they were still working off last quarter’s list.
Quickly, Bob and I each stifled a cry,
Certainly an exemption or two must here apply.
Airline miles? Lottery winnings? Stale B2B credits?
Perhaps just small balances with offsetting debits?
Alas, no, we would be late, and it might be gory,
With penalties and interest (both statutory).
There just wasn’t enough time to report all the names
Relationship codes, amounts less “lawful claims.”
We needed an answer, and the clock was still ticking,
Through each statute and reg, we just kept on clicking.
Then I noticed on the ledger I continued to assess,
All of the amounts listed were $50 or less.
My mood picked right up, and I started to sing:
We’ll just add it all up and report the whole thing!
Aggregate reporting -- that was the way!
We’d still get this report out by the end of the day!
We quickly revised, and added, and listed,
Everyone in tax helped, even legal assisted.
When it was ready, we unleashed the whole thing,
Breathing a sigh of relief (at least 'til next spring).
And I said to Bob, as the remittance flew out of sight,
Happy fall reporting to all, and to all a good night!

Monday, October 6, 2014

Say "Aloha" to Your Unclaimed Property

Modern day unclaimed property laws are "custodial" in nature, meaning that the state takes possession of, but not legal title to, property that is reported and remitted to the state.  As a consequence, it is the rule in most states that although unclaimed money and assets may be remitted to the state's general fund and used for state spending, the owner never loses the right to reclaim his or her property.  This is in contrast the the historical practice of bona vacantia in England and prior Roman civil law, where "ownerless goods" would be owned by the crown.

In fact, it is the custodial nature of these laws and the unlimited opportunity for the owner to reclaim his or her money that serve as the states' most prominent response to frequent holder complaints that state unclaimed property laws are increasingly unfair, complex or burdensome.  Some states, however, are quietly limiting owners' rights to make claims for property held by the state. 

For example, pursuant to Hawaii Senate Bill 2321, effective July 1 of this year, an owner has 10 years to file a claim for property valued at $100 or less.  After that time, according to the new law, the property "shall escheat to the state" permanently.  According to testimony by the Director of the Department of Budget and Finance (who, to his credit, testified against this legislation) the new law means that there are 275,000 items (in an aggregate value in excess of $20 million) that are now subject to escheating permanently to the state.

Similarly, in Idaho, the amendment to Section 14-518 of the Act means that items valued at less than $100 need not be listed on the state's website database of unclaimed property held by the state.  While this represents a small fraction of unclaimed property held by the states as a whole, as states become more addicted to unclaimed property as a revenue raising measure, such initiatives will probably increase (to the detriment of owners).