PORTFOLIO

Unclaimed Property (Portfolio 1600)

Be a trusted advisor to your clients with Bloomberg BNA Tax Portfolios. In this Portfolio, our expert authors provide a comprehensive overview of the National Conference of Commissioners on Uniform Laws' (NCCUSL) Uniform Unclaimed Property Acts.

 

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DESCRIPTION

The Unclaimed PropertyPortfolio provides an in–depth discussion of the features of the 1954, 1966, 1981, and 1995 NCCUSL Acts, which highlights the unique legal issues created by each version and explains the problems addressed by each act.

 

 

 

The Portfolio also addresses the availability of important constitutional protections to thwart an unwarranted “fishing expedition” by a state or private auditor.

 

 

An overview of the organizations representing unclaimed property administrators and unclaimed property holders is provided but specific issues such as compliance, internal accounting statutes of limitations, and audit considerations are discussed as well.

 


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AUTHORS

KENDALL L. HOUGHTON, ESQ.

Kendall L. Houghton, Esq., is currently with Alston & Bird LLP. Kendall was a partner with the state and local tax practice group of Sutherland, Asbill & Brennan LLP, Washington, D.C. Previously, she was a partner with Alston & Bird LLP in Atlanta, Ga. From September 1993 through December 1997, Kendall served as General Counsel to the Committee On State Taxation (COST), a nonprofit trade association that represents the interests of approximately half of the “Fortune 1000” corporations. While at COST, she was responsible for the organization's legal affairs, overseeing its tax policy work (including major initiatives in the nexus and electronic commerce arenas), and conducting its judicial advocacy program (filing amicus briefs in numerous United States Supreme Court and state supreme court cases addressing state and local taxation). Prior to serving with COST, Kendall served as an associate in Alston & Bird's Atlanta, Georgia office. Kendall was also Editor in Chief of the ABA Section of Taxation's State and Local Tax Lawyer and is a member of the Advisory Boards of the National Institute on State and Local Tax, and the State Income Tax Alert, and Interstate Tax Insights publications. She is also a member of the Operating Committee for the National Tax Association – sponsored Communications and Electronic Commerce.

 

 

 

Credentials / A.B. degree (magna cum laude) from Harvard University, J.D. degree from the New York University School of Law, and LL.M. in Taxation from Emory University School of Law. Kendall is admitted to practice in Georgia and the District of Columbia.

 


JOHN L. COALSON, ESQ.

John L. Coalson, Esq., is a partner in the Atlanta law firm of Alston & Bird LLP, where his practice focuses exclusively on state and local tax matters. John is Past Chair of the State Bar of Georgia's Section of Taxation, and he continues to serve as the Taxation Section's Liaison with the Georgia Department of Revenue. He is also a member of the Executive Committee of the National Association of State Bar Tax Sections, and serves on the Advisory Board of the Paul Hartman State and Local Tax Forum at Vanderbilt University. In addition, John has served as an Adjunct Professor at Emory University School of Law, teaching courses in state and multistate taxation.

 

 

 

Credentials / B.B.A. degree (with highest distinction) from Emory University, and J.D. degree (summa cum laude) from the University of Georgia. John is admitted to practice in Georgia.

 


TABLE OF CONTENTS

Detailed Analysis

1600.01. INTRODUCTION

1600.02. HISTORY AND EVOLUTION OF CURRENT UNCLAIMED PROPERTY LAW

Introductory Material

A. Definitions Under Common Law

1. Escheat and Bona Vacantia

a. Escheat

b. Bona Vacantia

2. Abandoned Property

3. Mislaid and Lost Property

a. Mislaid Property

b. Lost Property

4. Treasure–Trove

5. Unclaimed Property

B. American Statutory Law

1. State Statutes

2. Constitutionality of Escheat Statutes, Generally

1600.03. THE UNIFORM ACTS

Introductory Material

A. Uniform Disposition of Unclaimed Property Act (1954)

1. Prefatory Note to the 1954 Uniform Act

B. Revised Uniform Disposition of Unclaimed Property Act (1966)

C. Uniform Unclaimed Property Act (1981)

D. Uniform Unclaimed Property Act (1995)

1600.04. FEATURES OF THE UNIFORM ACTS

Introductory Material

A. Property Subject to Custody

1. Property Enumerated in the Uniform Acts

2. Non–Specified Property Alleged To Be Subject To State Unclaimed Property Acts

3. Property Removed From The Scope Of Uniform Acts By State Law

a. In General

b. Specific States

(1) Idaho

(2) Iowa

(3) Maryland

(4) North Carolina

(5) North Dakota

(6) Ohio

(7) Oregon

(8) Rhode Island

(9) Virginia

B. Periods for Presumption of Abandonment

C. Special Provisions for Certain Holders

1. Financial Institutions

a. Travelers Checks, Money Orders, etc.

b. Checks, Drafts and Similar Instruments Issued or Certified by Banking and Financial Organizations

c. Bank Deposits and Funds in Financial Institutions

2. Insurance Companies

a. Funds Held by Insurers

b. Unclaimed Proceeds Resulting from an Insurer's Demutualization

c. State Dormancy Periods for Unclaimed Demutualized Funds

(1) Arkansas

(2) California

(3) Florida

(4) Indiana

(5) Iowa

(6) Kansas

(7) Kentucky

(8) Maine

(9) Massachusetts

(10) Michigan

(11) Missouri

(12) Nebraska

(13) New Hampshire

(14) New Jersey

(15) New York

(16) Rhode Island

(17) South Carolina

(18) Tennessee

(19) Virginia

(20) Vermont

(21) Wisconsin

3. Utilities

4. Business Associations

a. Refunds

b. Stock and Other Intangible Interests in Business Associations

c. Property of Business Associations Held in Course of Dissolution

5. Agents and Fiduciaries

6. Retailers and Manufacturers

D. Rules Governing Priority of State Claims

1. Priority Rules

a. Texas v. New Jersey

b. Interpretation and Application of Texas v. New Jersey

c. Special Priority Rules

2. An Unclaimed Property “Throwback” Rule: The Third Priority Claim

a. Introduction

b. Effect of Federal Common Law Priority Scheme

(1) Federal Common Law Governing State Unclaimed Property Jurisdiction

(2) Texas v. New Jersey

(3) Pennsylvania v. New York

(4) Delaware v. New York

c. State Court Decisions Adopting Different Priority Schemes

(1) Texas: Liquidating Trustees

(2) New Jersey: Chubb Corp. and Elsinore Shore Associates

(3) District of Columbia: Riggs National Bank

(4) Oklahoma: TXO Production Co.

d. Analysis of the Relative Strength of the Positions Regarding the Transactional Priority Rule

3. “Good Faith” Defense When Reporting Unclaimed Property to the Holder's Domicile State

1600.05. CONSTITUTIONAL ASPECTS OF UNCLAIMED PROPERTY ACTS AND THEIR ENFORCEMENT

A. Nexus: Jurisdiction of a State to Enforce Its Unclaimed Property Statute

B. Holder Record Audits (Fishing Expeditions)

1. 1954 and 1966 Uniform Acts – Reason to Believe

2. 1981 and 1995 Uniform Acts–Elimination of Reason to Believe Standard

3. Nonetheless, the Examination Must be Reasonable

4. The Fourth Amendment – Administrative Examinations Should be Conducted Pursuant to a Search Warrant or Functional Equivalent

5. Application of the Examination Standards to Holders

6. Due Process Jurisdictional Defense Against “Fishing Expeditions”

C. Contingent Fee Audits

1. Introduction

2. Due Process Requirements

3. Cases Involving Challenges to the Multistate Tax Commission's Multistate Audit Program

4. State Court Decisions Addressing the Public Policy Implications of Third Party Tax Audits

5. Other State Court Cases Involving Third Party Tax Audits and Public Policy

6. Factors Bearing Upon the Public Policy and Due Process Implications of Third Party Contract Audits

a. Is the contract audit firm compensated in whole or in part on a contingent fee?

b. Does the contract audit firm have discretion to select (or “recommend”) targets for audit?

c. Does the “audit” involve examination of confidential books and business records, or merely review of returns or other publicly filed information and advice to governmental authorities in interpreting and evaluating such records?

d. Is information received by the contingent fee auditors specifically made confidential by statute or agreement, and does the confidentiality extend to prohibit use by the auditor for its own purposes?

e. Does the audit firm work exclusively for governments or does it “play both sides of the fence”?

f. Does the audit firm have the authority to conduct audits simultaneously on behalf of multiple jurisdictions?

D. Federal Supremacy Clause and Federal Preemption

1. ERISA Benefit Plans

2. Bankruptcy

3. Federal Banking Laws

a. Custodial Taking of Unclaimed Accounts

b. Service Charges

4. Miscellaneous Laws

1600.06. OTHER ISSUES

A. Compliance

1. Reporting

2. Payment or Delivery of Abandoned Property

B. Internal Accounting, Auditing and Tracking Unclaimed Property

C. Statute of Limitations

1. Derivative Rights Doctrine Versus Anti–Limitations Provisions

2. Contractual Periods of Limitation: Expiration Dates

3. Limitations Period for State Enforcement Actions

1600.07. AUDIT ISSUES

A. Multijurisdictional Audits

1. Authority for Such Audits

2. SNAP or Bounty Hunters

3. Likelihood of Multistate Audit

B. Issues Raised When State Retains Outside Consultants as Auditors

1. Confidentiality

2. Compensation

C. Handling an Audit Request (Single–State or Multistate)

D. Retention of Records

E. Estimates and Statistical Sampling

F. Amnesty Programs

1600.08. ORGANIZATIONS REPRESENTING UNCLAIMED PROPERTY ADMINISTRATORS AND UNCLAIMED PROPERTY HOLDERS

A. National Association of Unclaimed Property Administrators [NAUPA]

B. National Association of State Treasurers [NAST]

C. Unclaimed Property Professionals Organization [UPPO]

D. Council On State Taxation [COST]

E. Consultants for Holders

1600.09. STATE–BY–STATE SUMMARY

A. In General

B. Specific States

1. Alabama

2. Alaska

3. Arizona

4. Arkansas

5. California

6. Colorado

7. Connecticut

8. Delaware

9. District of Columbia

10. Florida

11. Georgia

12. Hawaii

13. Idaho

14. Illinois

15. Indiana

16. Iowa

17. Kansas

18. Kentucky

19. Louisiana

20. Maine

21. Maryland

22. Massachusetts

23. Michigan

24. Minnesota

25. Mississippi

26. Missouri

27. Montana

28. Nebraska

29. Nevada

30. New Hampshire

31. New Jersey

32. New Mexico

33. New York

34. North Carolina

35. North Dakota

36. Ohio

37. Oklahoma

38. Oregon

39. Pennsylvania

40. Rhode Island

41. South Carolina

42. South Dakota

43. Tennessee

44. Texas

45. Utah

46. Vermont

47. Virginia

48. Washington

49. West Virginia

50. Wisconsin

51. Wyoming


WORKING PAPERS

Working Papers

Item Description Sheet

Worksheet 1 Uniform Disposition of Unclaimed Property Act (1954)

Worksheet 2 Revised Uniform Disposition of Unclaimed Property Act (1966)

Worksheet 3 Uniform Unclaimed Property Act (1981)

Worksheet 4 Uniform Unclaimed Property Act (1995)

Worksheet 5 U.S. Supreme Court DELAWARE v. NEW YORK, 507 U.S. 490 (1993)

Opinion

Worksheet 6 U.S. Supreme Court PENNSYLVANIA v. NEW YORK, 407 U.S. 206 (1972)

Opinion

Worksheet 7 U.S. Supreme Court TEXAS v. NEW JERSEY, 379 U.S. 674 (1965)

Opinion

Worksheet 8 State Unclaimed Property Offices

Worksheet 9 Unclaimed Property Filing Dates

Worksheet 10 State Unclaimed Wages Laws - Comparison Chart

Worksheet 11 Shut-Down of California's Unclaimed Property Program Should Be Warning to Other States, COST Report Says An Interview with Jana Leslie Malone

Bibliography

Bibliography