For cash-strapped states, unclaimed property has emerged as a hot new revenue source, and they are going after that money through a variety of means—cutting down dormancy periods, expanding the scope of unclaimed property laws, and hiring third-party auditors to review the books of property holders, according to attorneys Kendall L. Houghton and Maryann H. Luongo, both with Alston & Bird.
Unclaimed property—or escheat—laws were originally intended to protect the interests of the owners of abandoned property by providing for the state to step in and take possession until the owner could be located.
But according to Houghton and Luongo, many states have lost sight of the original intent of such laws and instead are approaching unclaimed property as a lucrative new source of funds.
The shortening of dormancy periods is a prime example. Traditionally, property was deemed abandoned after a number of years of inactivity. For many property types, the dormancy periods have been fairly standard, Luongo said. For payroll, it is usually one year; for uncashed checks, three to five years; for other kinds of property, it has been as long as seven years or more.
But recently, states have enacted legislation reducing dormancy periods from five to three years, in many cases. For certain kinds of property, the dormancy periods are shorter still.
Similarly, states are expanding the scope of their escheat laws to include property that had not been covered before.
The full article on this developing trend, published in this week's issue of the Weekly State Tax Report, can be read in its entirety here.
In other developments,
Sutherland reports that the New York State Department of Taxation and Finance is planning to lay off 37 of its 42 lawyers in the Office of Counsel.
Joseph Henchman, of the Tax Foundation, takes a look at the new state online sales tax bill introduced in Congress.
Reed Smith looks at the possibility of Pennsylvania joining the click-through nexus bandwagon.
For a look at how the ever-present quest for revenue is pushing many states to reconsider their tax treatment of cloud computing, check out Alex Joya’s article in this week’s issue of the Weekly State Tax Report.
By Dolores W. Gregory
Follow us on Twitter at: @SALTax
Join BNA's State Tax Group on LinkedIn here: http://www.linkedin.com/groups?gid=1821701&trk=hb_side_g
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