Unclaimed Property: Revenue Bonanza for US States
Originally published: May 2012
Aggressively Seeking Revenue Sources US States Focus on Businesses
Since the demise of the Build America Bonds program on December 31, 2010, US states facing budget shortfalls (at least 42 according to an April 2012 post in Forbes CIO Network blog) have not been receiving much help from Washington. This, together with the generally poor economy and resulting decrease in income from state taxes, has left many states desperate for additional revenue. In response, state governments are looking at their unclaimed property laws as a possible solution to budgetary woes.
In an aggressive pursuit of untapped revenue, states are increasing the number of unclaimed property audits, scrutinizing annual reports, enacting new statutes or re-interpreting existing provisions for potential under reporting and aggressively pursuing companies they consider in violation of their statutes.
These intensified enforcement efforts are costing businesses billions of dollars in liability and non-compliance penalties. Every company needs to be aware of the unpaid property laws in the state where they are incorporated, as well as the laws in every state in which they do business. And they need to make sure they are in absolute compliance with all (old and new) requirements.
Items Receiving Special Attention by State Governments
Property Types subject to unclaimed property laws
- Stored Value Cards, ranging from gift cards to prepaid calling cards, incentive cards and even HSA (Health Savings Account) and transit system fare cards.
- Consumer Rebate Checks
- Class Action Settlements where a party has not cashed their proceeds.
- Digital Property, such as online accounts with social media websites, promotional codes redeemable for digital content or merchandise, point award systems.
- Unused coupons or magazine subscriptions
“Look back” periods and Estimated Liability
Additionally, when no documentation is available, some states use a limited sample of data from select years to extrapolate a company’s liability. And, the burden of proof that the statutes were adhered to is on the unpaid property holder.
Imposing Excessive Penalties and Interest
How to Ensure Compliance with Unpaid Property Statutes
Some Sources of Further Information on Unpaid Property Laws
by Eric Savitz, Forbes Staff
posted April 20, 2012
“Spotlight on Unclaimed Property: Trends to Follow”,
by Baker Donelson Bearman Caldwell Berkowitz PC (Memphis Office)
posted by Martindale Legal Library, January 24, 2011
“Unclaimed Property Audit Triggers”
posted January 18, 2012, , Bargainer and Associates
“Unclaimed Property: The Solution to State Budget Woes?”
by Ethan D. Miller and Kendall L. Houghton, Alston & Bird LLP
posted September 12, 2011