Our Unclaimed Property Team provides a line of sight into the developing trends, ongoing policy debates, and litigated disputes that may shape the future of unclaimed property law and compliance.
- Legislation, both federal (H.R. 8696) and state (RUUPA)
- State compliance and enforcement programs (audits and VDAs)
- Holder planning and implementation of compliance and risk-management best practices
- Holder/state litigation perhaps no longer a “last resort”
Unclaimed property professionals who run holder compliance programs, as well as the community of external holder advisors, should buckle themselves in for what portends to be a 2021 “perfect storm” of legislative, enforcement, and litigation contests between state unclaimed property administrators, third-party contract auditors / voluntary disclosure agreement (VDA) program supervisors, and holders and their advisors.
Legislation
We are monitoring (and/or otherwise anticipating the introduction of) federal bills further impacting retirement accounts, following the two momentous pieces of legislation in late 2019 and early 2020 – the Setting Every Community Up for Retirement Enhancement (SECURE) Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Of particular note is H.R. 8696, which would again increase the required beginning date for IRAs to April 1 of the year following the year the owner turned age 75. This is in addition to the expected flurry of state bills that (1) continue the adoption of the Revised Uniform Unclaimed Property Act (RUUPA); (2) continue focus on Interest on Lawyer Trust Accounts, treasury bonds, and other issues for which we see NAUPA promoting certain positions; and (3) are informed by a desire to accelerate reporting of unclaimed property or to expand the scope of property interests that are deemed subject to escheat.
Indeed, the volume of unclaimed-property-related legislation introduced in 2021 may eclipse prior years given that many state legislative sessions were cut short in 2020 due to the pandemic, not to mention the fact that the pandemic has had a substantial negative impact on state budgets. For example, within the first week of 2021, new RUUPA bills have been filed in Indiana and North Dakota; Indiana’s bill in particular breaks with the state’s long-standing exemption for gift certificates and gift cards by expressly subjecting “gift cards” and “stored value cards” to escheat. The Indiana legislation also sheds the state’s long-standing business-to-business (B2B) exemption. And, per RUUPA’s standard “transitional” provision, gift cards and B2B property would be required to be reported to Indiana going back 10 years, raising a number of serious constitutional concerns. No doubt this aggressive reversal is motivated by revenue-raising considerations. Nevada has also introduced legislation for 2021 that would clarify the escheatment of “virtual currency” – which will presumably be a new area of focus for states in 2021 and beyond – and grant the state administrator significantly more power in enforcing the unclaimed property laws.
While there will be plenty to keep holders and their representatives and trade associations busy on the legislative front, one glaring absence from the 2021 landscape was created when the California State Controller’s Office (SCO) summarily rejected the prospect of an unclaimed property amnesty program in 2020. Legislation in 2019 directed the SCO to submit a report on plans for an amnesty program or “other options to increase compliance.” That report, which...
