Unclaimed Property

Preface xi Chapter 1 Four Myths of Unclaimed Property 1 Myth 1: “We Don’t Have Unclaimed Property.” 1 Myth 2: “Unclaimed Property Compliance is Voluntary.” 1 Myth 3: “If I Don’t Have Records, the Auditor Can’t Determine Any Unclaimed Property Liability for My Company.” 2 Myth 4: “I Am Only Liable for Reporting Unclaimed Property to States Where I Conduct Business (i.e., Have Nexus).” 3 Chapter 2 What is Unclaimed Property? 5 Purpose of the Unclaimed Property Laws 7 Terminology 8 What Types of Property Can Become Abandoned Property? 9 When Does an Item Become Unclaimed Property? 10 States’ Responsibilities 12 Holder’s Responsibilities 12 Notes 14 Chapter 3 Basics of Unclaimed Property Reporting 15 Why You Must Report Your Unclaimed Property 15 Determining Your Liability 16 Where You May Have a Reporting Obligation: Jurisdiction 18 Due Dates, Due Diligence, Aggregates, and Dormancy Periods 19 Preparing the Report 20 Note 22 Chapter 4 Calculating Unclaimed Property Liability 23 Gather Your Records 23 Identify Your Company’s Unclaimed Property Types 24 Determining Your Liability 24 You Do Not Have All of the Records for the Audit Period: Determining the Best Estimation Technique for Your Company 28 Do Your Due Diligence 34 Complete the Final Summary Report and Pay the Money! 34 Chapter 5 Preparing for and Managing an Unclaimed Property Audit 37 Audit Targets: Are You Next? 37 Offense—Contact the States for a Voluntary Disclosure Agreement 38 Beware the Gift Horse 39 Where to Start 40 Defense—Your Company Has Received Notification of an Audit: Do Not Ignore the Letter! 41 First Contact 43 Recruit Your Team 45 Know Your Enemy: Unclaimed Property Auditors 46 Audit Timeline 49 Records Requests 49 Opening Meeting 50 Site Visit and Records Analysis 51 Closing Meeting 52 Final Assessment 53 Appeal Process 54 Audit Best Practices 55 Post-Audit Cleanup 56 Notes 57 Chapter 6 Developing Unclaimed Property Policies and Procedures 59 Compliance Timelines: Due Diligence, Aggregates, and Dormancy Periods 64 Content of Due Diligence Letters 65 Timing of Due Diligence Mailings 66 Aggregates 67 Dormancy Periods 69 Record Retention Policies 70 Managing Your Exceptions and Exemptions 70 Internal Controls: Checks and Balances 71 Internal Audits 71 Handling a Desk Audit or Fishing Call from a State Auditor’s Office 72 Note 72 Chapter 7 Exemptions and Exceptions to Unclaimed Property Reporting 73 Business-to-Business Exemptions 74 Current Business Relationship 78 Gift Certificates/Gift Cards 80 Gift Card Corporations 85 Dormancy Fees 86 Customer Credits/Credit Balances 89 Tangible Personal Property 89 Notes 91 Chapter 8 Special Industry Considerations 93 Insurance 93 Offers to Settle 94 Demutualization of Shares 96 Banking 97 When is an Account Considered Dormant? 97 What Fees Can Be Imposed on Dormant Accounts? 98 Safe-Deposit Boxes 98 Money Orders and Traveler’s Checks 99 Health Care 99 Not-for-Profit Medical Service Providers 103 Oil, Gas, Utilities, and Energy 103 Oil, Gas, Coal Mining, and Other Mineral Mining Industries 103 Utilities 105 Utility Co-ops 106 Retail 107 Customer Loyalty/Incentive Programs 107 Gift Certificates/Gift Cards 107 Notes 108 Chapter 9 Foreign Unclaimed Property Laws 111 U.S. Laws on Foreign Escheat 112 Indian Reservations 112 U.S. Territories 113 Other Nations’ Laws 115 Canada 115 United Kingdom 118 Australia 119 New Zealand 124 Hong Kong 127 Notes 128 Chapter 10 Selected Legal Issues in Unclaimed Property Audits 129 Lack of Nexus as an Audit Defense 129 Dormancy Fees and Service Charges 130 Expiration Dates and Other Contractual Limitation Periods 131 Unclaimed Employee Benefits 132 Unclaimed Property of Bankrupt Holders 133 Mergers and Acquisitions: Successor Liability 134 Asset Acquisitions 135 Notes 137 Chapter 11 How Not to Be a Victim of Unclaimed Property Fraud 139 Psychology of Fraud 140 Types of Fraudsters 141 Mitigating the Risk of Unclaimed Property Fraud 143 Note 146 Chapter 12 Trends in Unclaimed Property 147 Legislative Trends 147 Non-Legislative Trends 150 Conclusion 153 Appendix A XYZ Corporation: Unclaimed Property Holder Questionnaire 155 Appendix B Sample Policy and Procedure Manual 159 Appendix C Sample Due Diligence Letter 171 Appendix D State Unclaimed Property Office Contacts 173 Appendix E Sample Audit Records Request 185 Appendix F Summary of Current Gift Certificate Law 187 Glossary 201 Index 203