An interesting article regarding state escheatment rules is circulating today. It is just the latest front in the States’ continuing battle to collect unclaimed and abandoned property.
Covered here by the Los Angles Times, the short version of the story is this – there are some $16.7 billion in war bonds from World War II that are classified as “unclaimed property.” Right now, those assets reside with the Treasury Department at the Federal level. The States believe that these assets should escheat to be held at the state level, and six states are suing to claim these unclaimed assets as their own.
Move past the significant issues here regarding State versus Federal power. The core issue here is money.
As I’ve discussed in past posts, unclaimed property offers an attractive source of revenue for states, particularly as many of them face budget issues through the economic downturn. The State of Delaware even lists abandoned property as its third largest revenue source in its budget projections.
Not surprisingly, the unclaimed assets represented by the war bonds are just as attractive to the cash strapped Federal Government.
This situation is a vivid illustration of how states are willing to go to great lengths to collect unclaimed and abandoned property. From auditing businesses and organizations for how and what they report (and levying fines in a number of cases), to pursuing legal action, they remain very driven.
The lawsuit is a strong reminder to businesses to review their unclaimed property and reporting, ensure they are in compliance with all state escheatment rules, and protect themselves from unnecessary risk and compliance issues.
Be sure of one thing, these assets are an attractive form of revenue right now, and in this case, both the Federal and State Governments are willing to do legal battle over it.
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