Portfolio 74-2nd: Unclaimed Property

I. Introduction 1

II. History and Evolution of Unclaimed Property Law
A. Common Law Origins
1. Escheat
2. Bona vacantia
3. Abandoned property
4. Lost property, mislaid property, and treasure trove
a. Lost property
b. Mislaid property
c. Treasure trove
B. Early American Statutory Law
1. State statutes
2. Constitutionality of escheat statutes, generally

III. The Uniform Acts
. Introductory Material
A. Uniform Disposition of Unclaimed Property Act (1954)
B. Revised Uniform Disposition of Unclaimed Property Act (1966)
C. Uniform Unclaimed Property Act (1981)
D. Uniform Unclaimed Property Act (1995)

IV. Features of the Uniform Acts
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. The Uniform Acts as enacted in various jurisdictions
a. Alabama
b. Alaska
c. Arizona
d. Arkansas
e. California
f. Colorado
g. Connecticut
h. Delaware
i. District of Columbia
j. Florida
k. Georgia
l. Hawaii
m. Idaho
n. Illinois
o. Indiana
p. Iowa
q. Kansas
r. Kentucky
s. Louisiana
t. Maine
u. Maryland
v. Massachusetts
w. Michigan
x. Minnesota
y. Mississippi
z. Missouri
aa. Montana
bb. Nebraska
cc. Nevada
dd. New Hampshire
ee. New Jersey
ff. New Mexico
gg. New York
hh. North Carolina
ii. North Dakota
jj. Ohio
kk. Oklahoma
ll. Oregon
mm. Pennsylvania
nn. Rhode Island
oo. South Carolina
pp. South Dakota
qq. Tennessee
rr. Texas
ss. Utah
tt. Vermont
uu. Virginia
vv. Washington
ww. West Virginia
xx. Wisconsin
yy. Wyoming
B. Periods for Presumption of Abandonment
C. Special Provisions for Certain Holders & Bankruptcy
1. Financial institutions
a. Traveler’s 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 119
(1). Alabama
(2). Alaska
(3). Arkansas
(4). California
(5). District of Columbia
(6). Florida
(7). Illinois
(8). Indiana
(9). Iowa
(10). Kentucky
(11). Louisiana
(12). Maine
(13). Massachusetts
(14). Michigan
(15). Missouri
(16). Nebraska
(17). New Hampshire
(18). New Jersey
(19). New York
(20). Oklahoma
(21). Pennsylvania
(22). Rhode Island
(23). South Carolina
(24). Tennessee
(25). Texas
(26). Vermont
(27). Virginia
(28). 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 gift certificates
7. Foreign property

V. Rules Governing Priority of State Claims
A. Rules of Jurisdiction
1. Introduction
2. Texas v. New Jersey
3. Pennsylvania v. New York
4. Special priority rules for traveler’s checks and money orders
5. Delaware v. New York
6. Incorporation of the priority rules into the Uniform Acts
B. The Transactional Rule
1. Introduction
2. Court decisions adopting different priority schemes
C. Effects of ‘Good Faith' Payment of Unclaimed Property

VI. Unclaimed Property Laws and State Enforcement Authority
A. State Custodial and Enforcement Responsibilities
1. Custodial laws
2. Enforcing the law
3. Finding the lost owner/heirs
4. Claims processing
5. Interest/dividend income
6. Reimbursement of holders
7. Release/indemnification
B. State Agency Responsible for Unclaimed Property
C. How Unclaimed Property Differs From a ‘Tax'
1. Similarities between unclaimed property and taxation
2. Differences between unclaimed property and taxation
a. The derivative rights doctrine
b. Determining which jurisdiction holds collection and enforcement authority
c. Procedures for addressing disputed items
d. Statute of limitations for bringing state enforcement actions
D. State Tools and Resources Used to Enforce the Law
1. Characteristics generally common to state audits
a. State audit guidelines are generally broad, affording auditors significant authority
b. State authority to calculate an estimated liability in the absence of records
c. Use of standardized examination programs
2. Typical audit formats
a. Desk audits and field audits explained
b. Multi-state/joint audits
c. Collaboration with other state agencies
d. Contract audits
E. Penalties, Interest, and Audit Costs
1. Penalties and interest
2. Audit costs
F. Federal Supremacy Clause and Federal Preemption
1. ERISA benefit plans
2. Bankruptcy
3. Federal banking laws
4. Other federal laws impacting state unclaimed property regulations

VII. Unclaimed Property Noncompliance May Result in Violations of the Sarbanes-Oxley Act of 2002 and Generally Accepted Accounting Principles
. Introductory Material
A. Sarbanes-Oxley
1. Overview
2. Sarbanes-Oxley Section 404
3. Sarbanes-Oxley Section 302
B. Generally Accepted Accounting Principles
C. Summary: Unclaimed Property Noncompliance May Result in Violations of Requirements Under Sarbanes-Oxley and GAAP

VIII. Special Rules, Trends, and Unique Practices Applicable to Certain Property Types and Certain Entities
A. Gift Certificates/Gift Cards
B. Business-to-Business Exemption
1. B2B exemptions do not apply in every instance
2. Several noteworthy caveats apply in the B2B exemption area
C. Rebates
D. Unbilled Payables or Uninvoiced Receipts
E. Rules, Trends, and Unique Practices Applicable to Certain Entities
1. Governmental entities
2. Cooperatives
3. I.R.C. § 501(c)(3) entities

IX. Compliance and Business Practices
A. Compliance
1. Reporting requirements
2. Payment or delivery of abandoned property
3. Due diligence
4. Amnesty programs and other initiatives to encourage compliance
a. Amnesty programs
b. Outreach programs
c. Voluntary compliance initiatives
d. Companies can benefit from amnesty programs and other similar initiatives
e. Potential disadvantages of amnesty programs and other similar initiatives
B. Business Practices
1. Unclaimed property service charges

X. Best Practices and Helpful Tools
A. What a Holder of Unclaimed Property Needs to Know
1. What is a holder?
2. The importance of becoming compliant
3. Implementing policies and procedures to become compliant
4. Approaches to consider when selected for audit
B. Record Retention
1. For what period should records be retained?
2. Retention of last known addresses
3. Records retained to establish deductions
4. Record retention procedures

XI. National Organizations
A. National Association of Unclaimed Property Administrators
B. Unclaimed Property Professionals Organization
C. Council On State Taxation