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Showing posts from November, 2018

IRS Extends Compliance Deadline for Withholding & Reporting Requirements on IRA Accounts Remitted to States as Unclaimed Property

Earlier this year, in Revenue Ruling 2018-17 the IRS issued guidance stating that holders of traditional IRAs required to report IRA assets to a state as unclaimed property were required to withhold federal income tax upon such amounts and issue a 1099-R form indicating the owner as the recipient of the funds.  The IRS originally set the compliance date for this guidance as January 1, 2019. This ruling was not without controversy.  For example, it seems incongruous to impose taxes upon the owner of an IRA on account of that owner taking a “distribution” from the IRA when, in fact, the reason that the proceeds are being transferred as unclaimed property is because there has been no contact with, or activity by, the IRA owner for several years.  In addition, the Revenue Ruling raised practical problems for the securities broker-dealer and/or trustees.  For example, when a securities account such as an IRA is escheated to the state, the state generally takes custody of t

Ohio Legislative Update (With Some Interesting Stats)

Recently, Ohio passed House Bill 353 , which broadens the scope of the current exemptions for gift cards and gift certificates under the unclaimed property act.  Effective January 22, 2019 the bill will exempt certain "open-loop" prepaid cards, "closed-loop" prepaid cards, and rewards cards.  The revised legislation also exempts any "obligation" due to a retail customer (as opposed to just "credits"). As is often the case, a non-partisan legislative committee prepared a " Fiscal Note " regarding the potential economic impact of the new law.  That report, in turn, sets forth the amount of money reported to, and repaid by, the State of Ohio during the most recent five-year period.  For example, according to the Note, holders reported and remitted nearly $300 million to the state during Fiscal Year 2018.  During that same period, the state returned $97 million to owners.  Over the five year period 2014-2018, the state collected $1.4 bill

Election Day Roundup -- Meet Your New (and Returning) Escheators

You may not have noticed, given that there was almost no news coverage of it, but this past Tuesday was Election Day in the United States.  While the consequences of that election on national policies are being hotly debated, there were several elections that may impact the future course of unclaimed property policies.  Most state unclaimed property offices are run by an elected State Treasurer (or State Comptroller).  There were several such elections this week.  Among the new (in bold) or returning unclaimed property elected officials are: Alabama -- John McMillan Arkansas -- Andrea Lea (Auditor of State) California -- Betty Yee (State Comptroller) Colorado -- Dave Young Connecticut -- Shawn Wooden Florida -- Jimmy Patronis Idaho -- Judy Ellsworth Illinois -- Michael Frerichs Iowa -- Michael Fitzgerald Kansas -- Jake LaTurner Massachusetts -- Deb Goldberg Nebraska -- John Murante Nevada -- Zach Conine New York -- Thomas DiNapoli (State Comptroller) Oklahoma -- Randy McDaniel Rho