Recent legislative, regulatory and legal developments that occurred during the month of June 2010 in the areas of state unclaimed property law and regulation are summarized below, by state and by topic:
Unclaimed Property Reporting Laws: State By State Changes
Delaware Unclaimed Property Reporting
Introduced 5/13/10, Passed Senate 6/22/2010, Passed House 6/29/2010.
Section 1 of the Act provides for an administrative review process at the conclusion of an unclaimed property examination. This review process may be invoked at the option of the unclaimed property holder. It will allow the holder to file a written protest, submit additional information in support of the protest and request that the Audit Manager reconsider the Department’s findings following an examination.
Section 2 of the Act creates a limited exemption from the definition of property for abandoned property purposes that arises from transactions between merchants covered by the Uniform Commercial Code where, for whatever reason, a merchant holder receives goods for which the holder was never invoiced by the seller.
Sections 3 and 4 of the Act clarify that, in accordance with established accounting and industry practice, the State may employ estimation techniques in certain circumstances in order to determine a holder’s liability for abandoned or unclaimed property.
Sections 5 through 10 reduce the administrative burden of compliance by holders by reducing the number of reports to be made and eliminating the duty to hold such reports for public inspection in their headquarters.
Section 11 of the Act corrects the unintended omission to include all enumerated items of property in the exception to the definition of property for purposes of the Abandoned Property Law in subdivision 1198(11) when that definition was amended in 76 Del. Laws, c. 277, §2 (June 30, 2008). Prior to its amendment, the exception had included all enumerated items in subdivision 1198(11), and the General Assembly did not intend to change that result when it amended the subdivision in 2008.
Introduced 6/15/2010, Passed House 6/24/2010
This Act remedies confusion that exists as a result of the current statutory construction of Delaware Code Title 12, §1203(a) and (b). §1203 concerns the discharge of liability once a holder has turned over property in escheat. In certain cases, a legal argument can be made that §1203(a) and (b) apply contemporaneously to a similar set of facts. This amendment eliminates that illogical result by making clear that subsections (a) and (b) are mutually-exclusive.
State Dormancy Periods For Escheatment
New Jersey Dormancy Periods
SB 2112, A3002
Introduced 6/21/10, Passed 6/30/2010, Effective 7/1/2010
This Act reduces the dormancy period for traveler’s checks from 15 years to 3 years and the dormancy period for money orders from 7 years to 3 years. The bill also includes several provisions relating to stored value. The bill also includes several provisions relating to stored value. The bill also limits the imposition of dormancy fees as follows: 1)Precludes the imposition of dormancy fees on travelers checks or money orders in the first 12 months after issuance and limits permissible dormancy fees to $2 per month; and 2) Precludes the imposition of dormancy fees on stored value cards, credit balances, overpayments, security deposits, unused tickets, refunds, credit memoranda and similar instruments.
New York Dormancy Periods
Introduced 6/28/2010, Referred to committee 6/30/2010
These bills propose to reduce dormancy periods from five to three years for all banking property including unclaimed deposits, as well as bank-held bond and mortgage property. The legislation also proposes a dormancy reduction from five to three years for escrow property.
North Carolina Committee Research
Introduced 3/25/09, Passed 7/22/2010
This Act provides for studies by the Legislative Research Committee. The relevant topic proposed is for the Legislative Research Committee to study the need for statutory changes to the law governing location of the legitimate owner of unclaimed property prior to the assumption of the abandonment of the property by the State Treasurer. The Committee is also to investigate permitting holders to charge fees for due diligence compliance.
Gift Card Escheatment Legislation
New Jersey Gift Cards
Introduced 6/28/2010, Referred to committee 7/1/2010
Adjusts period triggering abandonment for stored value cards from 2 to 5 years and exempts stored value cards useable solely for telephone services from State’s escheatment processes
New York Gift Cards
Proposed 5/5/10, Filed 7/20/10, Adopted 8/4/10, Effective 8/4/10
Requires disclosure to consumers of the type of rebate being offered, whether additional fees may apply, and remittance of the rebate to the consumer.
Hawaii Gift Cards
Introduced 1/22/10, Passed 7/7/10, Effective 7/7/10
In order to comply with the Federal Credit Card Accountability Act of 2009, Hawaii amended its existing statute concerning gift certificates by extending the minimum expiration period for gift certificates from two to five years; limiting the imposition of issuance or activation fees; amending the definition of “gift certificate;” defining “service fee” to exclude activation or issuance fees.
Court Registry Funds
SB 2560, HB 7898
Introduced 2/11/2010, Enacted 6/25/2010, Effective 6/25/10
This act would bring uniformity to the state courts’ treatment of unclaimed money and funds by extending the application of the escheatment statutes to all of the courts within the state court system and would provide for the uniform treatment of all unclaimed money and funds held in the court registries. The act would allow for yearly escheatment of funds unclaimed for five (5) years or more and would impose a five (5) year limitation period on the ability of individuals to file a claim for funds held in the court registries.
This list is not exhaustive, but it does contain some important developments. To receive unclaimed property legislative updates and alerts in real-time, subscribe to Keanotes, our premium quarterly newsletter.
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