30 States in MoneyGram Dispute Awaiting Next Steps

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Leslie A. Pappas

A special master for the U.S. Supreme Court will soon decide whether to narrow or expand a dispute between Delaware and 29 states over abandoned MoneyGram payments ( Delaware v. Wisconsin & Pennsylvania , U.S., No. 22O145, status conference 6/5/17 ; Arkansas v. Delaware, U.S., No. 22O146, status conference 6/5/17 ).

The Hon. Pierre N. Leval, the special master assigned to the case, met with the parties in a conference June 5 to hear opinions on a number of motions that could broaden the scope of the case.

The conflict involves as much as a quarter-billion dollars in unclaimed “official checks” from MoneyGram Payment Systems Inc., a wholly owned Texas-based subsidiary of MoneyGram International Inc. The case has the potential to rewrite laws governing unclaimed property, a topic the Supreme Court last addressed almost a quarter century ago in Delaware v. New York.

Leval is soon expected to decide whether:

  •  MoneyGram should be added as an official party to the case, which would make it more than a dispute among states;
  •  Delaware may expand its claims to include official checks from other companies such as Pittsburgh-based PNC Financial Services Group Inc. and Englewood, Colo.-based Integrated Payment Systems Inc.;
  •  Proceedings should be split into two stages, one for liability and the second for damages, as proposed by Texas on behalf of several states in a letter April 26.

The dispute centers on which state has the right to escheat the official checks, prepaid notes similar to both a teller’s check and a money order. Delaware asserts the abandoned payments belong to Delaware because MoneyGram is incorporated there. Other states liken the payments to money orders, which, under federal law, belong to the state where they were purchased.

Unclaimed property is Delaware’s third-largest revenue source and is increasingly sought after by other states.

The parties in the case declined to comment, saying they were awaiting Leval’s decision. Leval could decide on the matters within a few weeks, they said.

To contact the reporter on this story: Leslie A. Pappas in Philadelphia at LPappas@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

Filings made with the special master are at http://src.bna.com/pyq.

Copyright © 2017 Tax Management Inc. All Rights Reserved.

Request Daily Tax Report: State