Keane's Unclaimed Property Blog

Competing Bills Propose to Reverse Recent Illinois Unclaimed Property Law

Illinois S 2901 and S 3229 are two bills currently making their way through the State Legislature. Introduced on February 14, 2018, and February 16, 2018, respectively, both bills seek to amend the new Illinois unclaimed property law (IL SB 9) which became effective on January 1, 2018.

Though the bills seek to amend the same law, there are key differences in the provisions proposed in each bill. Two of the most concerning provisions from the recent Illinois Uniform Unclaimed Property Act, the removal of the Business to Business Exemption and the transitional compliance period, have been addressed by one or both of the pending bills.

Additional highlights of the proposed changes contained within the bills are outlined below.

Business to Business Exemption

IL S 2901IL S 3229
Adds a broad business-to-business exemption:

“Notwithstanding anything to the contrary in this Section, any property due or owed by a business association to or for the benefit of another business association resulting from a transaction occurring in the normal and ordinary course of business is exempt from this Act.”
No change to current law, which does not include a business-to-business exemption.

Transitional Period

IL S 2901IL S 3229
Removes the transitional provision in its entirety.Removes the transitional provision in its entirety.

Dormancy Periods and Trigger Changes

IL S 2901IL S 3229
Increases dormancy periods from 3 to 5 years for the following property types:

• Instruments on which financial organizations or business associations are directly liable

• State or municipal bonds, bearer bonds or original-issue-discount bonds

• Debt of a business association

• Demand, savings or time deposits, inducing automatically renewable deposits

• Money or a credit owed to a customer as a result of a retail business transaction, other than an in-store credit for returned merchandise

• Amounts owed by an insurance company on a life or endowment insurance policy or an annuity contract that has matured or terminated or, if a policy or contract has not matured by proof death:

• For amounts owed on a life or endowment insurance
policies, the earlier of: 5 years after the death of the insured; or 2 years after the insured has attained, or would have attained if living, the limiting age under the mortality table on which the reserve for the policy is based; and for amounts owed annuities, 5 years after the death of the annuitant

• Property held by a court, including property received as proceeds of a class action

• Property held by a government or governmental subdivision, agency, or instrumentality, including municipal bond interest and unredeemed principal under the administration of a paying agent or indenture trustee

• For all other property not specified in Section 15-201, - or 202-208, the earlier of 5 years after the owner first has a right to demand the property or the obligation to pay or distribute the property arises
Increases dormancy periods from 3 to 5 years for the following property types:

• Demand, savings, or time deposits after the later of the maturity date or the date of the last indication of interest in the property, unless, with respect to time deposits, the apparent owner consented in a record on file with the holder to automatic renewal.

Wages, Commissions and other Compensation for Personal Services

IL S 2901IL S 3229
No change to current law.Wages, commissions, bonuses or reimbursements to which an employee is entitled, or other compensation for personal services not held on a payroll card, are presumed abandoned 1 year after the amount becomes payable. If the funds are held on a payroll card, funds are presumed abandoned 5 years after the date of the last indication of interest in the property by the apparent owner. (Currently, these properties are presumed abandoned 1 year after the amount becomes payable).

Owner Interest in the Property

IL S 2901IL S 3229
No change to current law.Permits a recurring ACH debits or credits previously authorized by the apparent owner to constitute indication of interest.

Automatically Renewable Certificates of Deposit

IL S 2901IL S 3229
No change to current law.If property included in a report is an automatically renewable time deposit and a penalty or forfeiture in the payment of interest would result from paying the deposit to the administrator at the time of the report, the date for payment of the property to the administrator is extended until a penalty or forfeiture no longer would result from payment, if the holder informs the administrator of the extended date.

Removes the language in current law which adds "if the holder informs the administrator of the extended date."

Periods of Limitation and Repose

IL S 2901IL S 3229
Prohibits the administrator from bringing an action to enforce the Act more than 5 years after the filing of a non-fraudulent report.

The administrator is also barred from commencing an action, proceeding or examination with respect to a duty of a holder more than 10 years after the duty arose.
Decreases the time period in which the state may bring an action or proceeding to enforce the Act from 10 years to 5 and removes current language tolls the period of limitation in the absence of an unclaimed property report or express notice to the administrator of a dispute regarding the property, or with the filing of a fraudulent report.

Examinations and the Use of Estimation

IL S 2901IL S 3229
States that if a person subject to examination has failed to retain the required records, the administrator may use estimation techniques conforming either to generally accepted auditing standards or generally accepted accounting principles to determine the amount of unclaimed property. However, the State is prohibited from requesting records relating to property that is not subject to this Act. Estimation techniques used shall incorporate a "net" method to extrapolation, meaning the numerator shall consist of only property located in Illinois or Illinois-sourced property and the denominator shall be a reasonable surrogate, such as sales or payroll.

Removes the current provision stating that a payment made based on estimation is a penalty for failure to maintain the required records. Within 60 business days of the receipt of a final examination report, a holder may request a hearing to contest the use or validity of estimation techniques. The examination will become final if the holder fails to request a hearing. If a hearing is held, the Treasurer’s order approving or disapproving the use or validity of the estimation techniques is a final order under the Administrative Review Law.
A new section states that the examination of State-regulated financial organizations shall occur at reasonable times and upon reasonable notice if the State Treasurer has reason to believe that a financial organization has failed to report property that should have been reported pursuant to this Act.

Use of Contingency Fee Based Audit Agreements

IL S 2901IL S 3229
Prohibits the administrator from entering into contingency fee based audit agreements.Permits contingency fee based audit agreements unless the company under audit is a financial organization, in which case the compensation must be based upon a fixed or hourly fee.

The introduction of such competing bills in the Senate illustrates the apparent dissonance among the Senators. This most likely stems from key stakeholder input from multiple perspectives regarding amendments to an unclaimed property law that became effective only a few months ago.

Keane will continue to track and monitor activity on each bill and their proposed amendments to Illinois unclaimed property law. We also invite you to sign up for our free legislative alerts to receive real-time updates on the latest happenings within the unclaimed property industry.

Go from Competing Bills Propose to Reverse Recent Illinois Unclaimed Property Law back to the blog.


Compliance, Legislative Alerts


I'm looking for information on...