As States continue to keep lose their income from tax dollars, due to decline in business development and employment they have been are seeking new forms of Revenue.
On of the more politically correct forms is that of Unclaimed Property. States have increased there collection practices for getting companies to submit their unclaimed property to the State. This new form of foundmoney, allows the State to use funds for their operating budgets yet not increase taxes for citizens and businesses.
The one draw back however, is that the Sates are starting in increase their appetite for such free money, thereby increasing their aggressiveness in collection procedures.
States are now changing laws to include non-traditional types of unclaimed property. They are also now reducing the dormancy periods for unclaimed property on when they have to be transferred to the State. For example, New York, has lowered dormancy periods for unclaimed property from five to three years for a number of different types of assets that financial institutions hold.
These new practices by the States, are having profound effects on both large and small businesses from this new form of scrutiny. Companies and organizations that are not prepared face substantial penalties even if any noncompliance was intentional or not. In fact, these new scrutiny can go back years and even decades.
No organization is immune to potential unclaimed property liability. The scrutiny comes in the form of increasingly aggressive audit practices by the States who hire outside auditing firms.
In most cases these firms work on a contingency basis, whereby, if do do not find anything they do not get paid. This raises the issues of such auditors possibility ensuring that they find unclaimed property using any means.
In order to help with the penalties that organizations could face, most Sates offer a voluntary disclosure agreements (VDAs) offering companies the chance to bring themselves into compliance.
The of the most aggressive State in their collection practices for unclaimed property is Delaware. They now rely on hundreds of millions of dollars of unclaimed property handed over to them. The numbers speak for themselves. Their State budget budget is $3.7 billion dollars and of that 15% is from unclaimed property revenue. It went fro from $450.3 million in 2009 to $670.6 million in 2013, they used the $670 million from abandoned property to help fund Delaware operations, road improvements and debt payments.
According to the deputy secretary of Delaware, Mr. D. Gregor,, who runs the program to collect the money "If you have someone who has been incorporated in this state for 50 years and has never filed, it's our duty to say we need to look at them".
The only conclusion that can be made from the changes in unclaimed property legislation and the new aggressive tactics is that States have become addicted to the Revenue form Unclaimed Property and Money.
There are many forms of unclaimed property, some may be obvious but others are not so obvious. That is why it is always a good idea to continuous check unclaimed property records...you never know when something may turn up.
When checking records don´t just check under your name, but check under your family name, mothers maiden name and even your friends and neighbors. People find all sorts of unclaimed property from across North America and overseas. Although you may not find any unclaimed accounts in your name, won´t be a great felling to tell one of yours friends or a relative that they have some unclaimed property they can claim.
The obvious forms of unclaimed property include:
Savings or checking accounts
uncashed dividends or payroll checks
unredeemed money orders or gift certificates (in some states)
insurance payments or refunds and life insurance policies
certificates of deposit
utility security deposits
mineral royalty payments
and of course contents of safe deposit boxes
Depending on where you live some of the not so obvious forms of unclaimed property are:
property of unclaimed successions
property found on an unidentified or unclaimed body
property abandoned by dissolved legal persons (corporations)
property abandoned on public highways
credit union accounts
intestate estates (death without a will and next of kin cannot be located)
overpaid debt collections
real estate deposits
You never know if your name is found on some of these accounts unless you check unclaimed property databases. You may be richer that you think.
The Insurance Industry will be facing many hurdles in 2014. The most significant hurdle is the Federal roll out of the new healthcare law. This law will now place Insurers under federal oversight for the first time, not to mention that the Federal Reserve will now begin to transition away from its current below-market interest rate policy.
The other hurdle in 2014 is with regards to unclaimed life insurance policies.
In November 2011, the National Conference of Insurance Legislators (NCOIL) passed a private resolution that dealt with unclaimed property policies for insurers, which is now referred to as the Unclaimed Life Insurance Benefits Act.
In the past, after the death of a policy holder, insurers were not obligated to cross check their records with that of the Social Security Administration Death Master File (DMF) to see if any benefits were to be paid out. Sometimes it would take years if at all, for beneficiaries to come forward and make a claim to proceeds that they are entitled to. The unclaimed insurance policies amount to millions of dollars that insurers were keeping.
State governments started to file law suits against the insurers to help re-claim the money for the beneficiaries. As the lawsuits continued, more and more insurers started to adopt the NCOIL policy. The ones that have not to date may find that in 2014, state regulators will be very aggressive in their pursuit of fines and millions of dollars in unclaimed insurance policies. This aggressiveness many put many of the smaller insures at risk of insolvency.
Nevada has passed new legislation in 2014 for Unclaimed Life Insurance Benefits under Assembly Bill 226. This new bill creates will impose the NCOIL Model on insurers as well as, impose an additional obligations on insurers by setting forth provisions regarding establishing the identity and death of an insured or beneficiary and the payment of death benefits.
Rhode Island and Indiana has introduced similar legislation to the Unclaimed Life Insurance Benefits Act.
Each State has their own regulations on how Unclaimed Child Support Payments are handled. New Mexico has strict rules on when support payments are deemed unclaimed and what then happens to them.
The Legislation can be found in Social Services, Child Support Enforcement Program under Unclaimed Child, Spousal or Medical Support
New Mexico's Statutory Authority comes from the Public Assistance Act, NMSA 1978, Section 27-2-27 (A)(5) and the human services department is the single state agency for the enforcement of child and spousal support obligations pursuant to Title IV-D of the Social Security Act (42 USC 651 et. seq.).
Child, Spousal or Medical Support gets classified as unclaimed when, no person to whom to deliver the support received or seized by the department can be located or identified.
Before support may be declared unclaimed by the Act, the human services department must make reasonable attempts to locate the owner.
The Support becomes classified as unclaimed when 36 months have passed from the date the support is paid to the department and the department is unable to disburse a payment to the owner because the owner can not be located. After this period a new letter is sent out stating that if the money is not claimed within 30 the unclaimed support payment reverts to the department and can not then me claimed.
When the funds get transfer the payer will still receive credit for payment and will not be deemed in default of the Act.
It is important that any one that is owned money from support payments in New Mexico but has not received the funds, to contact the human services department to file a claim, otherwise they will lose the money forever once it gets transferred.
Colorado has recently enacted unclaimed property legislation with respect to Gift Cards and their exemption to the "UNCLAIMED PROPERTY ACT" when issued by small businesses.
This new legislation is under HOUSE BILL 13-1102.
The Sentor's that signed the Bill were Brophy, Aguilar, Baumgardner, Cadman, Jahn, King, Lambert, Newell, Steadman, Tochtrop, Todd.
SECTION 1. In Colorado Revised Statutes, 38-13-102, add (5.7) as follows:
38-13-102. Definitions and use of terms. As used in this article, unless the context otherwise requires:
(5.7) (a) "GIFT CARD" MEANS A PREFUNDED TANGIBLE OR ELECTRONIC RECORD OF A SPECIFIC MONETARY VALUE EVIDENCING A BUSINESS ASSOCIATION'S AGREEMENT TO PROVIDE GOODS, SERVICES, CREDIT, MONEY, OR ANYTHING OF VALUE.
(b) "GIFT CARD" INCLUDES, BUT IS NOT LIMITED TO, A TANGIBLE CARD; ELECTRONIC CARD; STORED-VALUE CARD; OR CERTIFICATE OR SIMILAR INSTRUMENT, CARD, OR TANGIBLE RECORD, ALL OF WHICH CONTAIN A MICROPROCESSOR CHIP, MAGNETIC CHIP, OR OTHER MEANS FOR THE STORAGE OF INFORMATION AND FOR WHICH THE VALUE IS DECREMENTED UPON EACH USE.
(c) "GIFT CARD" DOES NOT INCLUDE A PREFUNDED TANGIBLE OR ELECTRONIC RECORD ISSUED BY, OR ON BEHALF OF, ANY GOVERNMENT AGENCY; A GIFT CERTIFICATE THAT IS ISSUED ONLY ON PAPER; A PREPAID TELECOMMUNICATIONS OR TECHNOLOGY CARD; A CARD OR CERTIFICATE ISSUED TO A CONSUMER PURSUANT TO AN AWARDS, LOYALTY, OR PROMOTIONAL PROGRAM FOR WHICH NO MONEY OR OTHER ITEM OF MONETARY VALUE WAS EXCHANGED; A CARD ISSUED FOR WAGES OR OTHER PAYROLL PURPOSES; A CARD USED FOR REBATES OR REFUNDS; OR A CARD THAT IS DONATED OR SOLD BELOW FACE VALUE AT A VOLUME DISCOUNT TO AN EMPLOYER OR CHARITABLE ORGANIZATION FOR FUNDRAISING PURPOSES.
SECTION 2. In Colorado Revised Statutes, add 38-13-108.9 as follows:
38-13-108.9. Unclaimed gift cards - limited exception. THIS ARTICLE DOES NOT APPLY TO UNCLAIMED GIFT CARDS WHERE THE HOLDER OR ISSUER IS A BUSINESS ASSOCIATION WITH ANNUAL GROSS RECEIPTS FROM THE SALES OR ISSUANCE OF ALL GIFT CARDS TOTALING TWO HUNDRED THOUSAND DOLLARS OR LESS.
SECTION 3. Applicability. This act applies to business associations with annual gross receipts from the sales of gift cards totaling two hundred thousand dollars or less on or after the effective date of this act and to any unresolved claims by the state treasurer against any business association for payment related to unclaimed gift cards as of the effective date of this act.
SECTION 4. Safety clause. The general assembly hereby finds,
with three key provisions affecting gift card issuers.
Capital letters indicate new material added to existing statutes; dashes through words indicate deletions from existing statutes and such material not part of act.
The above Changes basically now adds a statutory definition of gift cards to the Colorado Unclaimed Property Act (“Act”) that was non-existent before. It creates an express statutory exemption under the Act for smaller issuers of gift cards, which are businesses with with annual gross receipts of $200,000 or less.
The new changes also addresses unresolved claims by the State Treasurer against any business association for payment related to unclaimed gift cards.
Coloradans with unused gift cards may now be able to redeem them for cash if they were transferred to the State. The State Treasurer’s office of Colorado is has over $13 million in unused gift certificate and card balances waiting to be handed over their owners. The only catch is that somehow, owners will need to prove that the gift card is their, unless they have a receipt or the retailer put their name on the card, the actual owners may be out of luck.
In the vast majority of States Unclaimed Property is consistent when it comes to when an owner can make a claim. Simply put they can make a claim at anytime, the unclaimed money will allows belong to them no matter how long the State holds on to it.
Until recently Unclaimed Property Laws in the State of Idaho where different, they had a 10 limitation period where a claim must be filed, otherwise the state kept the funds. This changed in 2012 and now all unclaimed property can be claim at any time as amended to the Idaho Unclaimed Property Act.
In General terms property in Idaho, is deemed to be unclaimed after five (5) years if an owner of the account can not be located. This period does not apply to Gift certificates with an expiration date prominently displayed on their face, Nonrefundable airline tickets and any certificates, passes or vouchers which are nonrefundable or which is nonredeemable due to the passage of time.
When a property owner files a claim, the State has ninety (90) days to review it. This may be extended by both parties agree.
Idaho has over $100 million setting in their unclaimed property accounts. They have recently started a unique program that allows unclaimed property owners to donate their property to one of four public purposes: The State General Fund, The Public School Permanent Endowment Fund, The Veterans Cemetery Maintenance Fund or The Park and Recreation Capital Improvement Account.
Idaho Classifies the following Property as Abandoned and must be handed over to them when they are deemed unclaimed by the holders of the property.
TRAVELERS CHECKS AND MONEY ORDERS
CHECKS, DRAFTS AND SIMILAR INSTRUMENTS ISSUED OR CERTIFIED BY BANKING AND FINANCIAL ORGANIZATIONS
BANK DEPOSITS AND FUNDS IN FINANCIAL ORGANIZATIONS
FUNDS OWING UNDER LIFE INSURANCE POLICIES
DEPOSITS HELD BY UTILITIES
REFUND HELD BY BUSINESS ASSOCIATIONS
STOCK AND OTHER INTANGIBLE INTERESTS IN BUSINESS ASSOCIATIONS
PROPERTY OF BUSINESS ASSOCIATIONS HELD IN COURSE OF DISSOLUTION
PROPERTY HELD BY AGENTS AND FIDUCIARIES
PROPERTY HELD BY COURTS AND PUBLIC AGENCIES
GIFT CERTIFICATES AND CREDIT MEMOS
CONTENTS OF SAFE DEPOSIT BOX OR OTHER SAFEKEEPING REPOSITORY
As State tax dollars continue to dwindle, government offices search for new sources of income. One of the more popular sources are now unclaimed property accounts. Unclaimed Property has become a quick and easy source of extra dollars to help balance budgets, without any increase in taxes. Politicians like these new source of Revenue, since they to not have to go to their constituents and say that taxes must go up to keep.
The government Legislature are changing policies regarding unclaimed property in order to create these new sources of income.
In Texas for example, all proceeds from unclaimed property are deposited in the Unclaimed Money Fund, 551, which has strict safe investment guidelines. Unclaimed property in these accounts must be investment U.S. government securities and the highest-rated commercial paper.
The Texas Unclaimed Money Fund gets some of their property in the form of stocks and bonds which, which cannot be reinvested. However, Texas is now considering allowing such unclaimed securities to be re-investement so that more money can be made from them.
Texas has 150 different types of unclaimed property, most of which are negotiable instruments or otherwise easily converted to cash. One form of unclaimed property that gets over looked, is child support payments. In some states the cities keep unclaimed support payments until the parent comes forward to make a claim, while in Texas, child support payments must be transferred the the Texas Unclaimed Property Office after a certain period of time.
Texas is known as a custodial state, which means they act as trustees for the property forever unless it is claimed by a legal owner. Owners can make a claim for the property at any time, however, interest is not paid out. The State gets to keep any interest earned on the money.