escheatment

7/27/2019 escheatment

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Escheatment Update for APEscheatment U

pdate for AP

By Dan MayerAssociate Director of Advisory Services

Abandoned Property Services, LLC

[email protected]

Accounts Payable Operations 2009

March 11-13, 2009

San Antonio, TX


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Refresh the escheatment compliance basics

Suggest practices for minimizing liability

Consider hot issues in audits, legislation and

pending lawsuits

Presentation ObjectivesPresentation O

bjectives


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BasicBasic

Unclaimed PropertyUnclaimed PropertyTerminologyTerminology

3


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Basic TerminologyBasic Terminology

4

Holder The business or any other entity which holds inactive property that

belongs to another and is deemed to be presumptively abandoned under state law.

(In some case law, the debtor.) In A/P, this is the entity that is the payer of

the check.

Owner The person or entity to whom the property belongs. (Sometimes this is

the creditor.) In the A/P realm, this is the check payee.

Escheat In the UP industry, this means delivering or remitting property to the

applicable state.

Last Activity Date The date of last owner-generated activity. In A/P, the last

activity date is the check date. This date is used to determine dormancy and

correspondingly, when property is due for reporting and remitting to states.

Dormancy Period The period of time property remains inactive before it is

presumed abandoned by state law. Dormancy periods differ by property type and

state. In A/P, most uncashed checks have a 3 or 5 year dormancy period.


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WhatWhat is Unclaimed Property?is Unclaimed Property?


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Unclaimed Property Basics:Unclaimed Pro

perty Basics:

What is Unclaimed Property?What is Unclaimed Pro

perty?

Definition: Any intangible personal property that is held, issued or owing inthe ordinary course of business and has remained unclaimed by the apparentowner for a specified period of time after it became payable ordistributable is presumed abandoned. Accounting errors are NOTunclaimed property.

The most common unclaimed property:1. A/P uncashed vendor checks2. Payroll uncashed wage and expense checks3. A/R unused customer/client credits, refunds4. Equity uncashed dividend checks and underlying shares, certificates returned from

the post office5. Insurance-claims payments, refunds

6. Mineral Interests uncashed checks7. Bonds uncashed interest checks and bond equity8. Bank Accounts and CDs idle account proceeds (savings and checking accounts,

official checks, timed deposits, etc.)9. Third Party Administrator records10. Suspense Accounts

6


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Do unclaimed property lawsDo unclaimed property laws

apply to my business?apply to my business?

1.1. Does every business have to comply withDoes every business have to comply with

state unclaimed property laws?state unclaimed property laws?

2. Does it matter if our company doesn2. Does it matter if our company doesnt dot do

business or isnbusiness or isnt registered in the state?t registered in the state?


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Business Nexus Not RequiredBusiness Nexus Not Required!! Answers: Yes, most businesses have to comply with state

unclaimed property laws. No, it doesnt matter for

unclaimed property purposes whether or not your

company is registered to do business in a state. Business

Nexus is NOTa consideration in determining whether

property is due or the state to which it is to be reported.

Texas v. New Jersey (USSC-1965): 3 rules

Last known address of the payee/creditor controls

When no address, the state of incorporation of the holder

controls

When the state does not have a law pertaining to the

property, the state of incorporation of the holder controls


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What is a dormancyWhat is a dormancy

period?period?

What is anWhat is an as ofas of oror

endend date?date?

When are theWhen are the

reporting deadlines?reporting deadlines?

When Does a Business Comply?When Does a Business Comply?


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StateCredit

Balances

(MS09)/A-R

VendorChecks

(CK 13)

PayrollChecks

(MS 01)

AnnualReporting

Deadline

As of /End

Date

California 3 years 3 years 1 year 11/01 06/30

Connecticut 3 years 3 years 1 year 03/31 12/31Delaware 5 years 5 years 5 years 03/01 12/31

Massachusetts 3 years 3 years 3 years 11/1 6/30

New York 3 years (1H*)

5 years (1G)

3 years (2G) 3 years

(8A)

02/15 (1H)

03/10 (2G, 8A)

12/31

Ohio 3 years 3 years** 1 year 11/01 6/30

Pennsylvania 5 years 5 years 2 years 4/15 12/31

Texas 3 years 3 years 1 year 11/01 6/30

1H is the NY Code for Consumer Credit Balance

**May be exempt under certain circumstances.

Examples of Dormancy Periods and

End Dates for non-financial corporations


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Example - FactsExample - Facts Yurco Industries (a business that is not a life insurance

company) issued a check for $100 in payment to

Yursupplier on Feb. 15, 2006. It appears from Yurcos records that Yursupplier has not

cashed the check issued on Feb. 15, 2006.

Yurcustomers address in Yurcos records is inCalifornia (where CK13 vendor checks have a 3-yeardormancy period).


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Is this check reportable toIs this check reportable to

California on the Fall 2009California on the Fall 2009reporting deadlinereporting deadline??


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Answer to Example QuestionAnswer to Example Question

Calculation: CA Fall 09 End Date = 6/30/2009

LAD or Issue Date = 2/15/2006Dormancy Time = 3 years, 4 months, 13 daysCA Dormancy (CK13) = 3 years

Answer:

This check would be eligible for reporting to CA on theFall 2009 deadline for businesses that are not life insurancecompanies.


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Compliance and Best PracticesCompliance and Best Practices


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The Basic Compliance Obligations*The Basic Compliance Obligations*

1. Records Review

2. Due Diligence/Owner Contact

3. Reporting and Remitting

4. Record Retention

*All of the above must be done within thetime frames and/or in the formats/modes

required by the various applicable state

laws.


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RECORDS REVIEWRECORDS REVIEW

(aka(aka Procedural Due DiligenceProcedural Due Diligence))

As a part of a businesses unclaimed property procedures,

the appropriate accounts and ledgers must be reviewedand data collected.

ITEMS TO REVIEW:ITEMS TO REVIEW:

Vendor Items uncashed vendor checks

Payroll ItemsCredit Memos / Balances

3rd Party Benefit Checks


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Three Questions:

Is the owner really lost?

owner-generated activity ongoing client or vendor relationship

pertinent owner/payee address

Indication of bad address?

Is the property really unclaimed?

Procedural Due Diligence Offsetting Entries?

Is the property exempt from reporting?

RECORDS REVIEW/PROCEDURALRECORDS REVIEW/PROCEDURAL

DUE DILIGENCE: VENDOR CHECKSDUE DILIGENCE: VENDOR CHECKS


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DUE DILIGENCE: VENDOR CHECKSDUE DILIGENCE: VENDOR CHECKSQuestion 1: Is the owner/payee really lost? Other addresses in vendor file

Finding a new address:

Forwarding Address: Payroll Checks

Internet Sources Switchboard.com

PeopleFind.com

People.yahoo.com

Anywho.com

www.free-people-search-engines.com Outsource Services

Credit Bureaus (TransUnion, Equifax, etc.)

Heir Finders


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DUE DILIGENCE: VENDOR CHECKSDUE DILIGENCE: VENDOR CHECKSQuestion 2: Is the property really unclaimed?

Re-issues without voiding original. Duplicate items on Vendor Master Duplicate payments.

Wrong payee. Inter-company payments (payments between related

party companies). Periodic/recurring vendor payments (utilities,

landlords, etc.).

Reconciliation error (i.e., Bank rec has checks withsequential numbers outstanding/bad check run). Large dollar checks with familiar payee names. Check represents payment for an invoice for which

a credit was issued.


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DUE DILIGENCE: VENDOR CHECKSDUE DILIGENCE: VENDOR CHECKS

Question 3: Is the property exempt from reporting?

No automatic de minimus property exemptionNo automatic de minimus property exemption Business to Business Exemption (tricky-generally, for MS09-

Credit Memos, ) AZ, IL, IN, IA, KS, MD, MA, NC, OH, TN,

VA, WI (WY-only for merchandise credits from gift

certificates)

Floridas under $10 exemption for credit balances

Gift Certificate / Card Exemption (tricky)


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DUE DILIGENCE: PAYROLL ITEMSDUE DILIGENCE: PAYROLL ITEMS

Payroll - Follow-up on items outstanding once per year(internally)

Review Listing of Eligible Escheatment

Are Employees active or retired?

Are Employees on overseas assignment?

Are Employees retired and receiving a pension?

Direct Deposit (monthly review / clear)

Third Party Checks (Benefits, etc.) Follow-up on itemsoutstanding periodically (for items over 90 days old)


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Procedural Due DiligenceProcedural Due Diligence

Best PracticesBest Practices1. Review / research outstanding checks/payments on a regularbasis (60 90 days) for accounting errors, familiar payeenames, or offsets.

a. Set a materiality limitb. Reverse identified accounting errors, make appropriate offsets

Review supplemental information that may lead to the addressof an employee or former employee.

Establish contact with the payee through correspondence andtelephone calls and resolve outstanding checks.

a. If appropriate, do electronic database searches for betteraddresses for items over the materiality limit and for those itemswith familiar payee names

4. Retain documentation of reversals resulting from research orcontact.

5. Maintain written procedures for record review and make them apart of your companys policy or manual.


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Statutory Due Diligence:Statutory Due Diligence:Attempt to Contact the Payee/OwnerAttempt to Contact the Payee/Owner


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Statutory Due DiligenceStatutory Due Diligence

(the 2(the 2ndnd Obligation)Obligation)

The Due Diligence Requirement: A last attempt to contact theowner/payee prior to reporting and remitting unclaimed property

Important Elements:Method

Letter Content

Timing

Form or Mode of Delivery

Limitations/ExceptionsAllowable Deductions


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Statutory DiligenceStatutory Diligence

(the 2(the 2ndnd

Obligation)Obligation)1. Methods:

a. Generally A letter to the owner at the last known address in the records

of the holder

b. Banks/Insurance Companies Delaware (Life Insurance) and New York

(utilities, too) require publication in newspapers2. Letter Content:

a. Generally 1995 Uniform Act (Section 7e):

i. Must state that the holder is in possession of the property subject to the

unclaimed property law

ii. b. Must state that the claim of the owner is not barred by the statute of

limitations

iii. That the value of the property is greater than $50.


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Sample Due Diligence LetterSample Due Diligence LetterDate

Name, AP or AR Manager

Company

Street Address

City, State Zip

Dear AP or AR Manager:

Our records indicate that your company may be the owner of funds or have an interest in funds represented by the items listed below. Notransaction or other activity has occurred for a significant period of time. If you have an interest in the funds and wish to prevent the fundsfrom being reported and remitted as unclaimed property to the State of ________, please indicate the disposition of the items listed below.After you complete the form, please fax it to us immediately at XXX-XXX-XXXX or mail it to us in the enclosed stamped, self-addressedenvelope. Please reply by __________.

Nature of Funds Date Issued Amont Description/ReferenceCheck #XXXX XX/XX/XX $XXXX Invoice No. XXX-4 gross widgets

Credit memo #XXX XX/XX/XX $XXXX

Disposition of Items (Check the blank next to one of the following.)

____ The above (s) / credit memo was cashed/or applied on ________.

____ Check (s) / credit memo was received but not cashed/applied. (If you still possess the check (s) / credit memo please return it/them alongwith this letter indicating if you are still entitled to these funds.

____ Check (s) / credit memo is no longer required. There are no outstanding invoices for this amount and the obligation has been satisfied.

____ This check (s) / credit memo was not received and our records indicate the amount is still due. Please issue another check.

____ Other: ____________________________________________________________________________________________

Name: ___________________________ Signature:___________________________________________________________

Address (if different from above)__________________________________________

SSN/Federal ID No. __________________________________ Date: ______________________________________________

Sincerely,


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(the 2(the 2ndnd Obligation)Obligation)3. Timing:a. Generally Not more than 120 days nor less than 60 days prior to the reporting deadline.

(1995 Uniform Act, Section 7(e)): AL, AR, DC, FL, GA, IL, IN, KS, KY, LA, ME, MT, NE,NV, NH, NJ, NM, NC, TN, UT, VT, WV, WI

b. Within 180 to 365 days prior to filing report: CA

c. Not required but recommended: DE*, TX, PA

d. Required but no timing specified: IA*, MS, SD, WA

*Please see state statute for more details. Time frames for due diligence may change as newlegislation is adopted.

4. Form of Delivery:

a. Generally No specification in the1995 Uniform Act, Section 7(e), but most states requirefirst class mail.

b. Notable exceptions:Iowa - Requires Banks and Financial Institutions only to send due diligence letters

by certified mail.New Jersey For items that are greater than $50, the letter must be sent certified

mail, return receipt requested.New York - First notice by first class mail within 90 days prior to reporting

deadline; second notice by certified mail, return receipt for $1000+Ohio - Certified mail requirement for items $1000 & greater


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5. Limitations/Exceptions:

a. DUE DILIGENCE MINIMUMS - By Item Amount/Value (ex. Securities):

$10 IL

$25 - NE

$50 AR, AZ, CA, CO, DC, FL, GA, HI, ID, IN, LA, ME, MI, MO, MT, NC,

ND, NH, NJ, NM, NV, OH, OK, RI, SC, SD, TN, UT, VI, VT, WI, WV, WY

$75 WA

$100 - AK, KS, KY, MA, MD, MN, OR, VA

No minimum AL, CT, IA, MS, NE, NY, PR

b. No Statutory Letter Due Diligence RequirementDE, PA & TX

c. Self-Addressed Stamped Envelope Requirement-OH

d. Publication requirement

1. Delaware - Banks, courts, and life insurance2. New York - Banking organizations, insurance companies, and utilities must publish

in newspaper in city of residence of owner. Due Diligence mailing still required!

3. Puerto Rico has an advertising requirement.


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6. Allowable Deductions:

CA Banks and financial organizations may impose a service chargefor the notice in an amount not to exceed $2.00 on items over $50.

DE Expense incurred for advertisement is deducted fromremittance due

IL May deduct first class mailing costs (postage, stationary, andenvelopes

IA May deduct cost of mailing from amount owed

NV Charge of not more than $2.00 may be deducted from ownerswith over $50 and must be listed as line item on the report

NY May deduct cost of certified mail and return receipt as a

service charge. Also, may deduct costs of publication on a pro ratabasis (using a specified formula.)

OH Deductions are allowed up to $20.00 for certified mail

OK May deduct only the cost of postage.

PR May deduct expenses incurred in advertising


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Reporting and RemittingReporting and Remitting


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(the 3rd Obligation)(the 3rd Obligation)

Important Considerations:

Type of Report

Report FormatNegative Reporting

Report Aggregate Limits

Form of Remittance

Report & Remittance Delivery

Filing Extensions


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(the 3rd Obligation)(the 3rd Obligation)The Report

1. Type - Paper, Diskette, CD, Magnetic cartridge, tape or Internet

a. Most states require electronic (diskette or CD) reporting if there are more than

25 items to report

b. Note that some states that require electronic reporting also require that a hard

copy of the report accompany the electronic report.c. Internet! Some states have on-line reporting. Examples:

Massachusetts:

https://abpweb.tre.state.ma.us/abp/frmLoginTaxId.aspx

First time call: 617-367-0400 x471 or 1-800-647-2300 x 471

New York:First time call: 1-800-221-9311 or email

[email protected] to get username and password.

Texas:

https://txcpa.cpa.state.tx.us/unclpropholder/welcomeAction.do?actio

n=Holder


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(the 3rd Obligation)(the 3rd Obligation)

2. Format

NAUPA II Standard Reporting Format accepted by 44 states. See:

www.wagers.net/NaupaSpec/NaupaRevisedStandard.pdf

Standard relationship and property type codes listed as well.

NY does not use the NAUPA II Format or property type codes. CA accepts

the NAUPA II Format see: www.sco.ca.gov/col/ucp/holder/stdnaupa.pdf

3.Negative Reporting - Required by 30 states. Some states permit negative reportingon-line.

Example: Ohio - www.ohiobusinessgateway.ohio.gov

4. Aggregate limits Most states have a limit under which the property does NOT have to

be reported with name and address detail. Items are combined by property type and

reported as an aggregate lump sum. $25, $50, & $100 are usual the limits. Most states

do not permit aggregate reporting of dividends or mineral interests.


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(the 3rd Obligation)(the 3rd Obligation) The Remittance

a.Form Cash (uncashed vendor, dividend and payroll checks, credits,refunds) are usually by check written to the appropriate state official oragency. Example: TX-Texas Comptroller of Public Accounts -Unclaimed Property Exception: Some states do not permit checks tobe used for the remittance if the total amount is greater than a

specified sum. Examples:1. CA requires that if the sum (including interest penalty amounts) is

greater than $20,000 it must be delivered by electronic funds transfer inthe specific manner designated in CCP Section 1532. Seewww.sco.co.gov for details.

2. TX law requires holders who paid $100,000 or more during the previousstate fiscal year to make subsequent payments by electronic fundtransfer. The preferred method is through TEXNET for moreinformation, see: http://www.window.state.tx.us/up/reporting.html


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(the 3rd Obligation)(the 3rd Obligation)5.The Remittance -

b. Form Certificate or Confirmation (stock, mutual funds, book entryshares, etc.) While some states want shares to be liquidated prior toremittance, most want certificated or book entry confirmation shares

registered in the name of the appropriate state official or agency ornominee.

6. Report and Remittance Delivery -

a. Timing on or before the deadline specified.

(Fall By Nov. 1st, Spring varies by state)

b. Verifiable delivery is very important.

7. Filing Extensions -a. Notification of state administrator

b. Reason

c. Estimated, timely payment required? (i.e. NJ, TX)


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Reporting Red Flags!Reporting Red Flags!

Tips - Preventing Reporting Red Flags by:

Making sure your reports/cover sheets are completed and

signed (and notarized if required)

Making sure the report reflects the same dollar amount thatis reflected by your remittance

Filing negative reports if required (one exception)

Requesting filing extensions at least 2 weeks prior to the

filing deadline

Using the state prescribed cover sheets and/or holdernumbers when filing reports

Filing all property types: securities and general ledger-

related and filing them accurately (not disproportionately)


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Record RetentionRecord Retention


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(the 4th Obligation)(the 4th Obligation)

1. Retention Time Period 1995 Uniform Act (Section 21) a holder required to file a report must

maintain the records containing the information required to be included in

the report for 10 years after the report is filed. (Drafters notes indicate

records are to be kept for 10 year from the date the property was first

reportable.)

TX Statutes Title 6, Section 74.103- Holders must maintain records for 10years after the property was reportable.

2. Records to Retain

1995 Uniform Act (Section 21) Silent on this issue.

TX Statute is specific that records maintained must include:

(1) the name, the social security number, if known, and the last knownaddress of each person who, from the records of the holder of the property,

appears to be the owner of the property;

(2) a brief description of the property, including the identification number,

if any; and (3) the balance of each account, if appropriate


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(the 4th Obligation)(the 4th Obligation)Practical Considerations: Audit Protection

Verification of reversals - accounting and data errors

Evidence of reporting and timely reportingEvidence of due diligence including certified mailing if it was

required.

(Note: OH law specifically requires retention of proof ofcertified mailing, or proof of valid exemption of certifiedmailing, for at least 5 years from the report filing date orcompletion of a State compliance audit, whichever is earlier.)


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AUDITSAUDITS

Preparing for An Audit

Working with the State

Considerations

Penalty Review


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Preparing for An AuditPreparing for An Audit

Preliminary Questions1. Who is performing the audit?

(State or contract/third party auditors?)

2. Which states are involved?

3. What is the scope of the audit? (Number of years covered in

the audit.)4. What audit procedures will be used? (What procedures will

be used when records are incomplete or nonexistent?)

5. What are the auditors schedules and site requirements?

6. Will the state(s) or their agent sign a confidentialityagreement?

7. Have you considered obtaining legal counsel and outside

expertise to address audit issues?


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Internal Review Prior to AuditDocument internal controls

Review chart of accounts

Consider all company policies and procedures related to

unclaimed property compliance and reporting

Review previously filed unclaimed property reports

Compile supporting documentation, including due

diligence records

Review voided and outstanding check lists

Obtain non-ERISA benefit plan information and evaluatepotential liability

Involve legal counsel in the internal review and in

correspondence with the auditors


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Data to Provide to Auditors

Organization Chart

Chart of Accounts

Merger and Acquisition history

Unclaimed Property Reports

in previous years

Bank Account Related Info (Reconciliations, Statements

and Outstanding, Voided and Stopped Check Lists)

General Ledger Trial Balance Documentation (includingA/P, Payroll and Write-off Account Detail)


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Working with the StateWorking with the State

Audit Considerations

Consider Documentation Availability

Timeframe Available

Research Depth (to determine dispositionof specific items)

System Conversions/Upgrades may

impact historical data available

Understand Write-Off History for A/P andPayroll Accounts

Review Chart of Accounts and Trial Balance

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Working with the State:Working with the State:

Penalty and Interest AssessmentsPenalty and Interest Assessments Is the penalty accurate?Consider time frame/scope of the penalty (CA

corporate fiscal year controls)Does state law permit compounding?

Recalculate penalty to determine accuracy Was the penalty assessed in error or is it unenforceable? Is there a statute of limitations on penalty assessment?Was the property that is the subject of the penalty filed

during an amnesty period?

Are there circumstances that may permit the state to setaside the penalty ?Can the state waive penalties and interest? (If so, what

are the parameters for waiver?)


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Latest DevelopmentsLatest Developments


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Latest Developments: Audit IssuesLatest Developments: Audit Issues

Received Not Invoiced/Unmatched receivers

Assuming excess merchandise shipped over

order and not invoiced.

Extrapolations Unreasonable basis Extended Audit Periods Eroding the holders

will

Audit Costs Indiana now requires holders to

pay the costs of third party audits


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Latest Developments: Legislation/Latest Developments: Legislation/

Dormancy Period ChangesDormancy Period Changes Delaware SB 334 Effective Date: 7/1/2008 - Reduced the securities-related dormancy periods

from 5 years to 3 years (except SC20 Credit Balances which remain at 5 years).

Hawaii - HB 2559 Effective date: 7/1/2009 - the HI legislature adopted the 1995 Uniform

Unclaimed Property Act to replace the current Hawaii unclaimed property law. This legislation

impacts reporting for the October 31st, 2009 deadline. As of or cut-off date for that year will

be June 30th for all entities except life insurance which will have a December 31st cut-off date

AND an October 31st reporting deadline. The report aggregate limit will be $50.

New Hampshire HB 1533 Effective date: Approx. 8/3/2008 - Various changes to the NHAbandoned Property law. Significant provisions in the bill include: 1) All reports with 20 or more

items must be reported in an electronic format prescribed by the administrator; 2) Securities

dormancy periods (including underlying shares) were reduced to 3 years from 5 years; and 3)

Requires the unclaimed property administrator to precede a sale of securities with a mailing to

the owner.

Virgin Islands: Bill 27-0169 Effective Date: 7/12/08 Repeals the unclaimed property law and

replaced it with a new one. Generally, the new law has 5, 3 and 1 year dormancy periods (i.e., giftcertificates, customer credits in retail and insurance payments = 3 years; utility deposits and

refunds, payroll and property held by a court or government = 1 year, securities, savings accounts

and checking accounts = 5 years). The new law has a due diligence minimum and aggregate

limit of $50. The reporting deadline is November 1st for all entities except life insurance which

has a May 1st reporting deadline.


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Latest Developments:Latest Developments:

Legislation/Various ChangesLegislation/Various Changes Tennessee - HB 3793 Effective Date: 5/16/2008

- Safeguards the working papers and identity of

holders involved in unclaimed property audits.

Makes such paper confidential and not publicrecords unless certain circumstances exist.

Wisconsin: AB 617 Effective Date: 3/21/2008

The fiscal year is defined to be from July 1st toJune 30th for the purposes of the report

information cut-off and penalty assessment.

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Gift Cards and CertificatesGift Cards and Certificates

Over 30 states have statutes that restrict gift card andcertificates. Some prohibit dormancy fees and expirationdates.

The statutes vary dramatically from each other. Some do

not apply to prepaid phone cards, pay cards, or other opensystem cards that can be used with multiple stores

Simon Lawsuits federal preemption for certain cards notsubject to state restrictions

Newest legislation: Nebraska exempts from the NEunclaimed property law, gift cards or certificates that haveno expiration date or dormancy fees. If have such then lawapplies with a 3 year dormancy period. Does not apply toprepaid cards.


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Gift Cards and Certificates (2)Gift Cards and Certificates (2)Options:1. Incorporate a gift card issuing company in a state

where gift cards are exempt from escheatment.

May need a consultant to make it is done

correctly.

2. Remove expiration dates and dormancy fees from gift

cards.

3. Retain name and address of purchasers of gift cards

and certificates.4. Consider transactional rules.

5. Consider privacy issues.


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Third Party DisbursementsThird Party Disbursements

A Third Party Administrator (TPA) is aspecialized service provider that may manage all

or parts of specific functions within a company.Transfer Agent Securities/Dividend

Payroll & Vendor Payments

HR Benefit / 401K

Paying Agent


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Third Party DisbursementsThird Party Disbursements

Who is Liable for Escheat?

What functions were outsourced?

Issuer/Company may still be liable

Best Practices

If TPA is required under contract to do the escheatment:Make sure contract permits audit of escheat activities

Add a clause to contract that the TPA must provide proof of

compliance with state escheat laws (i.e., copies of due diligence

letters, reports and remittances)

Add a clause to the contract that requires the TPA to indemnifyyour company if the TPA fails to comply or inadequately

complies and your company is assessed penalties and/or interest


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Latest Developments: RebatesLatest Developments: Rebates

Third party rebate processors

Whose obligation is it?

Ongoing litigation Fitzgerald v. Young AmericaCurrent status

Rebate creation/construction

Problem provisions

Current Audit Ramifications


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Pending LawsuitsPending Lawsuits

1. Massachusetts B2B Exemption - Outstanding credit

balances to a vendor or commercial customer from a

vendor resulting from a transaction occurring in the

normal and ordinary course of business shall be exempt

from the provisions of this chapter. M.G.L. ch. 200A, 5.

Massachusetts reverses its application of this statute,

resulting in lawsuits:

Biogen v. Cahill

Stride Rite v. Cahill


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Pending LawsuitsPending Lawsuits

2.California Release of Liability No Bar to SuitCA Court of Appeals

overturned the summary judgment granted by the lower court stating

that Hewlett Packard is not immune from suit when it transferred the

plaintiffs abandoned property to the state of California under the

California unclaimed property law. Vondjidis v. Hewlett Packard, 85

Cal. Rptr. 3d 806 (6th App. Dist., Nov. 25, 2008)

3. Holder challenges Delaware in assessing interest and for enforcement

of terms of a voluntary disclosure agreement. Computer Associates,

Inc. v. Cordrey, et. al. (Filed 10/22/08).

4. California Violates Due Process and Must Make More Effort to

Contact Owners - In a California US District Court, the initial rulings

caused California to change how unclaimed property reports must be

filed. Main case pending. Taylor v. Westly, 488 F.3d 1197, 1201-02

(9th Cir. 2007).


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ResourcesResources

1. National Association of Unclaimed Property Administrators(NAUPA) www.unclaimed.org

2. NAUPA II Standard Reporting Format:www.wagers.net/NaupaSpec/NaupaRevisedStandard.pdf

3. 1995 Uniform Unclaimed Property Act Reporting

Specifications:http://www.law.upenn.edu/library/ulc/fnact99/1990s/uupa95.txt

4. National Association of State Treasurers (NAST)www.nast.net

5. Unclaimed Property Professionals Organization (UPPO)www.uppo.org

Annual Conference March 10 13, 2009Hyatt Regency Jacksonville, FL


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Your Presenter Today:Your Presenter Today:

Dan Mayer

[email protected]

escheatment

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