ESCHEATMENT[what to do with unclaimed property]

TRMGOCTOBER 10, 2011

WANDA BORGES, ESQ. BORGES & ASSOCIATES, LLC

575 UNDERHILL BLVD.SYOSSET, NY 11791516-677-8200 x 225

borgeslawfirm@aol.com

1TRMG_ 2011

TRMG_ 2011 2

ESCHEATMENT

Origination stems from feudal England

Escheat was a privilege granted exclusively to the King to take the property of a person who died intestate (without a will)

Modern Day:◦Escheat is a power which each state has to

acquire title to property for which there is no owner

TRMG_ 2011 3

UNIFORM UNCLAIMED PROPERTY ACT

Completed by the Uniform Laws Commissioners in 1995 ◦Superseded

Uniform Disposition of Unclaimed Property Act of 1954

Uniform Unclaimed Property Act of 1981. Adopted by:◦Alabama, Arizona, Arkansas, Hawaii,

Indiana, Kansas, Louisiana, Maine, Michigan, Montana, Nevada, New Mexico, North Carolina, U.S. Virgin Islands, Vermont, West Virginia

◦ Introduced in 2011 to Mississippi

TRMG_ 2011 4

UNIFORM UNCLAIMED PROPERTY ACT

Even those states who have not adopted the UUPA have some version of an Abandoned/Unclaimed Property Statute

◦ Each state which has adopted the UUPA Has or will modify it to its own

requirements Statute may contain the words

Abandoned Property Unclaimed Property The word “escheat” is rarely used in the

statutes

TRMG_ 2011 5

UNIFORM UNCLAIMED PROPERTY ACT

U.S. Supreme Court cases which lead to the creation of the Uniform Unclaimed Property Act

◦Texas v. New Jersey (1965)

◦Pennsylvania v. New York (1972)

◦Delaware v. New York (1993)

TRMG_ 2011 6

UNIFORM UNCLAIMED PROPERTY ACT

U.S. Supreme Court cases clarified:

◦Unclaimed intangible property is payable to the state of the owner’s last known address

◦The state of the last known address can claim the abandoned property

◦ If no claim is asserted by that state, then it is payable to the state of the holder of the property

TRMG_ 2011 7

PROPERTYDEFINED BY THE UUPA

Tangible property (that held in a safe deposit box or other safekeeping depository

Intangible property held, issued, or owed ◦ in the course of the holder’s business –

OR – ◦By a government, governmental

subdivision, agency, or instrumentality – AND

◦All income or increments therefrom

TRMG_ 2011 8

EXAMPLES OF UNCLAIMED PROPERTY

Money (checks, drafts, dividends) Credit Balances Deposits Uncashed money orders Traveler’s checks Expense Reimbursement checks Payroll checks Commission checks Rebates

TRMG_ 2011 9

PRESUMPTION OF ABANDONMENT UNDER THE UUPA

Property is presumed abandoned if it is unclaimed by the apparent owner during the times set in the UUPA

Pertinent times:◦Money or credits owed to a customer as a

result of a retail business transaction – 3 yrs

◦Wages or other compensation for personal services – 1 yr

◦All other property – 5 yrs

TRMG_ 2011 10

UNCLAIMED PROPERTY UNDER THE UUPA

Property is unclaimed if, for the applicable period set forth, the apparent owner has not communicated in writing or by other means reflected in a contemporaneous record prepared by or on behalf of the holder, and has not otherwise indicated an interest in the property

TRMG_ 2011 11

REPORTING REQUIREMENTS UNDER THE UUPA

Description of the property Name, last known address SS number or taxpayer id number The date, if any, on which the

property became payable, demandable, or returnable, and the date of the last transaction with the apparent owner of the property

Other information required by Rule

TRMG_ 2011 12

FILING REQUIREMENTS UNDER THE UUPA

Report must be filed before November 1 of each year

Report must cover 12 months next preceding July 1 of that year

CAVEAT – remember this is the rule under the UUPA – each state WILL DIFFER

TRMG_ 2011 13

NOTIFICATION REQUIREMENTS UNDER THE UUPA

Written Notice must be sent to the apparent owner◦Not more than 120 days◦Not less than 60 days◦Before filing report

TRMG_ 2011 14

NOTIFICATION REQUIREMENTS UNDER THE UUPA

Notice must advise

◦ that the holder is in possession of abandoned property

◦ that address for apparent owner is holder believes to be accurate

◦The claim of apparent owner is not barred by a statute of limitations

◦The value of the property is $50 or more [Most state statutes use a $25 minimum]

TRMG_ 2011 15

PENALTIES AND INTEREST UPON FAILURE TO FILE REPORT Interest accrues at rate of EITHER◦12% per annum◦2 percentage points above the annual

rate of discount in effect on the date the property should have been paid or delivered

Interest accrues on value of property from the date the property should have been reported, paid or delivered.

TRMG_ 2011 16

PENALTIES AND INTEREST UPON FAILURE TO FILE REPORT

Civil Penalty of $200 for

◦each day the report, payment, or delivery is withheld – OR

◦The duty is not performed◦Up to a maximum of [$5,000] [subject to

periodic adjustment or state’s discretion]

TRMG_ 2011 17

PENALTY UPON WILLFUL FAILURE TO FILE REPORT

WILLFUL failure to report, pay or deliver shall result in

◦Civil Penalty of [$1000] for each day the report, payment or delivery is withheld – OR the duty is not performed

◦Up to a maximum of [$25,000]

TRMG_ 2011 18

PENALTY UPON FILING A FRAUDULENT REPORT

A holder who makes a fraudulent report shall pay, in addition to interest, ◦Civil Penalty of [$1000] for each day from

the date a report was due, ◦Up to a maximum of [$25,000]◦PLUS 25% of the value of any property

that should have been but was not reported

TRMG_ 2011 19

GENERALLY

The Definition of Property does not change substantially when comparing the UUPA with various state statutes and therefore will not be outlined below.

Unclaimed Property must be delivered to the state which is the last known residence of the owner of the unclaimed or abandoned property

TRMG_ 2011 20

DISCLAIMER

The information set forth below has been gathered from the various state statutes. This information is intended to present guidelines ONLY as to what each state statute provides and is presented for educational purposes. This information is NOT intended to be legal advice regarding any individual company reporting or not reporting unclaimed or abandoned property. Each company should rely on its own accountant or lawyer in determining what kind of reporting and to which state the reporting is required.

TRMG_ 2011 21

FLORIDAREPORTING REQUIREMENTS

Description of the Property Name, last known address SS number or taxpayer id number Date of birth, if known, for individuals Evidence of diligence performed to locate

owner Other information required by Rule Value of unclaimed property > $50◦ <$50 may be reported in the aggregate◦ < $10 credit balances shall not be presumed to

be unclaimed

TRMG_ 2011 22

FLORIDAFILING REQUIREMENTS

Report must be filed by May 1 of each year

Applicable to the preceding calendar year

TRMG_ 2011 23

FLORIDANOTIFICATION REQUIREMENTS

Written Notice must be sent to the apparent owners

Notice to be sent to last known address Due diligence must be used to locate them◦Not more than 120 days◦Not less than 60 days◦Prior to filing required report

TRMG_ 2011 24

FLORIDAPENALTIES AND INTEREST UPON

FAILURE TO FILE REPORT $500 per day up to a maximum of $5,000

and 25 percent of the value of property not

reported until a report is rendered for any person who willfully fails to render any report required under this chapter . ◦ If the holder acted in good faith and without

negligence, the department shall waive the penalty provided herein.

Interest at the rate of 12 % p.a. from the date such property shall have been paid or delivered. ◦ The department may waive any penalty due under

this subsection with appropriate justification.

TRMG_ 2011 25

FLORIDAPENALTY UPON

WILLFUL FAILURE TO FILE REPORT

$500 per day up to a maximum of $5,000 and

25 percent of the value of property not paid or delivered until the property is paid or delivered for any person who willfully refuses to pay or deliver abandoned property to the department as required

TRMG_ 2011 26

FLORIDAPENALTY UPON FRAUD

Any person who willfully or fraudulently conceals, destroys, damages, or makes unlawful disposition of any property or of the books, records, or accounts pertaining to property which is subject to the provisions of this chapter is guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083.

TRMG_ 2011 27

GEORGIADISPOSITION OF UNCLAIMED

PROPERTY ACT

All tangible and intangible property including any income or increment thereon, less any lawful charges, that is held, issued, or owing in the ordinary course of the holder's business and has remained unclaimed by the owner for more than five years after it became payable or distributable is presumed abandoned.

TRMG_ 2011 28

GEORGIAREPORTING REQUIREMENTS

Description of the Property Name, last known address SS number or federal identification

number Date of birth, if known, for individuals Date when property became payable,

demandable, or returnable and the date of the last transaction with the owner

Other information required by Rule Value of unclaimed property > $50◦ <$50 may be reported in the aggregate

TRMG_ 2011 29

GEORGIAFILING REQUIREMENTS

Report must be filed by November 1 of each year

Applicable to the preceding year as of June 30

TRMG_ 2011 30

GEORGIANOTIFICATION REQUIREMENTS

Written Notice must be sent to the apparent owners

Communicate with the owner to prevent abandonment

Notice to be sent to last known address Due diligence must be used to locate them◦Not more than 120 days◦Not less than 60 days◦Prior to filing required report

TRMG_ 2011 31

GEORGIAPENALTIES AND INTEREST UPON

FAILURE TO FILE REPORT

$100 per day up to a maximum of $5,000 and

25 percent of the value of property not reported until a report is rendered for any person who willfully fails to render any report required under this chapter .

TRMG_ 2011 32

GEORGIA PENALTY UPON WILLFUL FAILURE

TO PAY OR DELIVER PROPERTY

A person who refuses after written demand by the Commissioner to pay or deliver

◦ Guilty of a misdemeanor

◦ Subject to fine not more than $1000

◦ Subject to a prison term of not more than six months

◦ OR Both

TRMG_ 2011 33

GEORGIA

RECIPROCITY WITH OTHER STATES◦ Exchange information◦ Enable Georgia or Other State to:

Audit Otherwise determine Unclaimed/Abandoned Property $100 per day up to a maximum of $5,000 and

TRMG_ 2011 34

MINNESOTAREPORTING REQUIREMENTS

Description of the Property Name, last known address Nature & Identifying Number Evidence of diligence performed to locate

owner Other information required by Rule Value of unclaimed property > $100

TRMG_ 2011 35

MINNESOTAFILING REQUIREMENTS

Report must be filed by November 1 of each year

Applicable to the preceding year as of June 30 of that year

TRMG_ 2011 36

MINNESOTANOTIFICATION REQUIREMENTS

Written Notice must be sent to the apparent owners

Notice to be sent to last known address Due diligence must be used to locate them◦Not more than 120 days◦Prior to filing required report

TRMG_ 2011 37

MINNESOTAINTEREST UPON FAILURE TO PAY

OR DELIVER UNCLAIMED PROPERTY Upon failure to pay or deliver unclaimed

property by the date set

Interest at the rate of 12 % p.a. on the value of the unclaimed property

From the date of written demand by the Commissioner

TRMG_ 2011 38

MINNESOTA PENALTY UPON WILLFUL FAILURE TO FILE REPORT or PAY OR

DELIVER UNCLAIMED PROPERTY

Any person who willfully refuses to file a report shall be guilty of a Misdemeanor◦ Fine of not more than $1000◦ Imprisonment of not more than 90 days◦ OR Both

Any person who willfully refuses to pay or deliver abandoned property to the department as required shall be guilty of a Gross Misdemeanor◦ Fine of not more than $3000◦ Imprisonment of not more than 1 year◦ OR Both

TRMG_ 2011 39

OHIOSTATUTE

Unlike most other states the Statute governing Unclaimed Funds in Ohio is simply called

UNCLAIMED FUNDS

It is found in Ohio Revised Code §169

GENERALLY Period of time for property to be unclaimed and deemed abandoned is 5 years

TRMG_ 2011 40

OHIOREPORTING REQUIREMENTS

Description of the Property

Name, last known address

Nature of property & identifying number

Social Security number, if an individual

TRMG_ 2011 41

OHIOREPORTING REQUIREMENTS

If value of unclaimed property >$1000◦ Statement of Efforts to locate owner◦ Documentation will be maintained by holder for 5

years Other information required by Rule Value of unclaimed property< $50◦ <Each category of items of unclaimed funds◦ The number of items in each category◦ The aggregate value of unclaimed funds

Report must contain information as to due diligence to locate owner

TRMG_ 2011 42

OHIOFILING REQUIREMENTS

Report must be filed by November 1 of each year

Applicable to the preceding calendar year as of June 30th

TRMG_ 2011 43

OHIONOTIFICATION REQUIREMENTS

Written Notice must be sent to the apparent owners of property having a value of $50 or more

Due Diligence includes:Internet Searchmanual search of public recordsNotification to last known address of owner

Notice to be sent to last known address◦ 30 days prior to filing required report ◦ By U.S. mail if value is = to or >$50 but <$1000◦ By certified mail, RRR, if value is $1000 or more

TRMG_ 2011 44

OHIOPENALTIES AND INTEREST

VIOLATION OF 169.10 OF STATUTE

Knowingly Fails to File Report Knowingly Fails or Refuses to Pay or Deliver

Unclaimed Funds Not more than $500 per day ◦ For each day of continued violation◦ Each day of non-compliance is a separate violation

TRMG_ 2011 45

PENNSYLVANIAREPORTING REQUIREMENTS

Description of the Property Name, last known address Nature and identifying number Date when property became payable,

demandable or returnable Date of last transaction with owner Other information required by Rule Value of unclaimed property > $50◦ <$50 may be reported in the aggregate

TRMG_ 2011 46

PENNSYLVANIAFILING REQUIREMENTS

Report must be filed by April 15 of each year

Applicable to the preceding calendar year

TRMG_ 2011 47

PENNSYLVANIAPENALTIES AND INTEREST UPON

FAILURE TO FILE REPORT

$1000 per day up to a maximum of $10,000 and ◦ If the holder acted in good faith and without

negligence, the department shall waive the penalty provided herein.

TRMG_ 2011 48

PENNSYLVANIA PENALTY UPON REFUSAL TO FILE REPORT OR

DELIVER ABANDONED PROPERTY

Misdemeanor Fine or not less than $1000 and not more

than $10,000 – OR Imprisonment for not more than 24 months OR BOTH

TRMG_ 2011 49

TEXAS

Texas Personal property is presumed

abandoned if, for longer than three years: ◦ the existence and location of the owner of

the property is unknown to the holder of the property; and

◦according to the knowledge and records of the holder of the property, a claim to the property has not been asserted or an act of ownership of the property has not been exercised.

TRMG_ 2011 50

TEXASREPORTING REQUIREMENTS

Description of the Property Name, last known address SS number or taxpayer id number Date property became payable,

demandable, or returnable Date of last transaction with property

owner Other information required by Rule Value of unclaimed property > $50◦ <$50 may be reported in the aggregate

Without furnishing any of the above required information

TRMG_ 2011 51

TEXASFILING REQUIREMENTS

Report must be filed by November 1 of each year

Property held as of June 30

TRMG_ 2011 52

TEXASRECORD RETENTION REQUIREMENTS

Any person required to file a Report must maintain◦ For 10 years◦ Information contained on the reports◦ Regardless of whether amounts are reported in the

aggregate

TRMG_ 2011 53

TEXASPRIVATE ESCHEAT AGREEMENTS PROHIBITED

Texas Statute 74.309 prohibits Any person…business…corporation…from

entering into any private agreement relating to escheatment of unclaimed/abandoned property

TRMG_ 2011 54

TEXASPENALTIES AND INTEREST UPON

FAILURE TO PAY OR DELIVER UNCLAIMED PROPERTY

10 percent of the value of the unclaimed/abandoned property

◦ From Date property should have been turned over

◦ To Date on which property is actually turned over

TRMG_ 2011 55

VIRGINIAREPORTING REQUIREMENTS

Description of the Property Name, last known address SS number or taxpayer id number Date of on which property became

payable, demandable, or returnable Other information required by Rule Value of unclaimed property > $100◦ <$100 may be reported in the aggregate

TRMG_ 2011 56

VIRGINIAFILING REQUIREMENTS

Report must be filed by November 1 of each year

Applicable to the preceding calendar year as of June 30

TRMG_ 2011 57

VIRGINIANOTIFICATION REQUIREMENTS

IF whereabouts of owner is known BEFORE filing report Communicate with owner and attempt to

prevent abandonment Due diligence must be used to locate owner

if value of property is >$100◦Not more than 60 days prior to report

TRMG_ 2011 58

VIRGINIAPENALTIES AND INTEREST UPON

FAILURE TO PAY OR DELIVER UNCLAIMED PROPERTY

Interest at same rate as charged to delinquent taxes◦ From date property should have been delivered◦ To date of actual delivery

Failure to exercise due diligence shall pay a civil penalty not more than $50 for each account

TRMG_ 2011 59

VIRGINIA cont’dPENALTIES AND INTEREST UPON

FAILURE TO PAY OR DELIVER UNCLAIMED PROPERTY

Failure to file report File false report Fails to perform any other Duty◦ Civil Penalty of $100 for each each report not filed

or other duty not performed◦ UP TO a maximum of the lesser of $10,000 or 25%

of the value of the property which should have been but was not reported

TRMG_ 2011 60

VIRGINIAPENALTY UPON WILLFUL FAILURE TO FILE REPORT OR DELIVER PROPERTY

$1,000 per day up to ◦ a maximum of the lesser of $50,000 or

◦ 100 percent of the value of property not paid or delivered until the property is paid or delivered

◦ FOR GOOD CAUSE PENALTY MAY BE WAIVED

TRMG_ 2011 61

VIRGINIAPENALTY UPON A FRAUDULENT REPORT

$1,000 per day up to ◦ a maximum of the lesser of $50,000 or

◦ 100 percent of the value of property not paid or delivered until the property is paid or delivered

◦ FOR GOOD CAUSE PENALTY MAY BE WAIVED

◦ Same as for willful failure