Overview of Presentation -...
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Transcript of Overview of Presentation -...
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Overview of Presentation Introduction Definitions History of Unclaimed Property Law
Holder’s Obligations Under the Unclaimed Property Law
Reporting Unclaimed Property
Questions & Answers
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Introduction - DefinitionsWhat is Unclaimed Property?Unclaimed property consists of intangible
personal property, including general ledger and securities-related property, for which there has been no owner-initiated activity for a specified period of time, usually five years.
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Introduction - Definitions Holder: An entity that is
in possession of property belonging to another, or is indebted to another on an obligation
Owner: A person or entity having a legal right to or an equitable interest in the unclaimed property
Intangible Property: Property that has no intrinsic value but is merely representative of value Example 1 – A check Example 2 – A credit memo
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Introduction - DefinitionsDormancy Period1:The period of time, also referred to as the abandonment period, during which an owner of property does not take action in regards to the property. Dormancy periods range from 1 to 15 years, depending on the property type.
Due Diligence: The use of reasonable and prudent methods under particular circumstances to locate apparent owners of inactive accounts.
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1: See our website for a chart listing dormancy periods for different property types.
Introduction – History History of Unclaimed Property LawOrigins in British Common LawLand was returned to the local Lord if a tenant died without heirs. Personal property was subject to claim by the Crown under the bona vacantia (“ownerless goods”) doctrine.When English colonists settled in America, they brought the common laws of escheat and bona vacantia with them which developed into modern-day unclaimed property laws.
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Introduction – History Modern Unclaimed Property LawEvery state has an unclaimed property law.The Uniform Law Commission has enacted aseries of Uniform Property Acts to promoteuniformity among the states’ unclaimed propertylaws (1954, 1966, 1981, 1995).
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Introduction – History South Carolina Unclaimed Property LawFirst unclaimed property statute passed in 1971South Carolina’s current unclaimed property law is a version of the 1981 Uniform Unclaimed Property Act. Program was transferred to the State Treasurer’s Office from the Department of Revenue in 1996.
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Introduction – History Custodial Escheat Law
Derivative Rights Doctrine
What does this mean?The State “stands in the shoes of the owner.” The State holds the property for the owner. The owner may claim it at any time.
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Introduction – History
Owner: Protects the property
owners interest Provides a centralized
search for abandoned assets
Benefits of Unclaimed Property Law
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Holder: Creates a system in
which an obligation due an owner can be removed from the holder’s books and records forever
Transfers custody and liability to the state
Holder’s Obligations Under the Unclaimed Property Law
WHAT YOU NEED TO KNOW
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Holder’s Obligations Identify unclaimed property
Perform due diligence
Report and remit unclaimed property before November 1st each year
Keep adequate supporting records
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Holder’s ObligationsCommon Property Types1
Wages Outstanding Checks Customer Credit Balances Bank Accounts Utility Deposits Stocks and Dividends Bonds Insurance Proceeds and Annuities Money Orders Travelers Checks
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1: See our website for a listing of property types and corresponding codes.
Holder’s Obligations Unclaimed property law applies to all
categories of intangible property unless specifically exempted or excluded by the administrator.
Examples: Gift Certificates Capital Credits (issued by South Carolina Telephone and
Electric Cooperatives) Safe Deposit Box Contents, with the exception of US
Savings Bonds
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Holder’s Obligations Property types to focus your review on:Payroll ChecksVendor ChecksCredit BalancesUtility Deposits
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Holder’s Obligations How to determine if property is abandoned Aging:Age property from the date payable to the owner (dormancy trigger). Reissuing a check does not restart the dormancy period.
Activity: No owner-generated activity or written communication for the duration of the dormancy period. The owner has not communicated an interest in the account. The owner does not have another relationship with the holder with owner-generated activity (where applicable).
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Holder’s Obligations – SC Dormancy Periods1
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1: See our website for Dormancy Chart and Report Conversion Table.
One Year:WagesUtility Deposits
Three Years:Stocks & Securities
Five Years:Outstanding ChecksBank AccountsInsurance Proceeds & AnnuitiesCredit Balances
Seven Years:Money Orders
Fifteen Years:Travelers Checks
Holder’s ObligationsIdentifying Unclaimed Utility DepositsReview all deposits for customers who haveended their service.If a customer ended their service more than ayear ago and there are no outstanding chargesto apply the remaining deposit against, thisamount is unclaimed property.Outstanding deposits should never be written-offto income, regardless of how small theremaining deposit balance might be.
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Holder’s ObligationsDue DiligenceRequired by Section 27-18-180 of the SouthCarolina Unclaimed Property LawFor property valued at $50 or more, the holdermust send written notice to the owner at theowner’s last known address not more than 120days before the report is filed.Sample letter provided on our website
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Holder’s ObligationsTips for effective due diligence Allow enough time for response. Make the letter easy to understand. Clearly state the purpose of the letter.Include a deadline for receipt of the response. Indicate what will happen if the response is not received.If providing state contact information, include when the property will be sent to the state. Provide holder contact information for customer questions.
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Reporting Unclaimed Property
Texas v. New Jersey (1965) State of owner’s last known address State of holder’s incorporation or domicile if owner’s address is not known
Further detail can be found in Section 27-18-40 of the South Carolina Code of Laws
Unclaimed property is reported based on the rules of jurisdiction set by the U.S. Supreme Court in Texas v. New Jersey (1965).
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Reporting Unclaimed Property To ease the reporting
burden, most states, including South Carolina, will accept incidental property with a last known address in another state. Incidental property is
defined as less than ten accounts totaling less than $1,000.
Reciprocity Matrix www.treasurer.sc.gov Check requirements of both
states.
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Reporting Unclaimed Property Reports and remittances are due before November 1 for property that has reached its dormancy period as of the previous June 301. One-year property (i.e., paychecks and utility
deposits) issued between July 1, 2013 and June 30, 2014 must be reported by November 1,2015. Five-year property (i.e., vendor checks and credit
balances) with a last activity date between July 1, 2009 and June 30, 2010 must be reported by November 1, 2015.
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1: See our website for Report Conversion Table.
Reporting Unclaimed Property To better safeguard
owner information, SC does not accept paper reports.
Reports must be filed via email or through UPExchange or UPExpress and must be encrypted or password protected.
NAUPA format required
UPExchange and HRS Pro both offer free holder reporting software to create a NAUPA-formatted file.
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Reporting Unclaimed Property UPExchange and HRS ProUPExchange is web-based, while HRS Pro is a program you can
download.Both programs provide Excel templates UPExchange has online reporting availableBoth create an encrypted fileA link to UPExchange and HRS Pro can be found on the South
Carolina State Treasurer’s website.
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Reporting Unclaimed PropertyTo ensure proper payment to the owner:Provide the full name and last known address (if known) for all ownersUse the correct property, owner, and relationship codes1
“and” vs. “or”
Provide as much other owner information as possible
Further detail can be found in Section 27-18-180 of the South Carolina Code of Laws
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1: See our website for reporting codes.
Reporting Unclaimed PropertyReported accounts cannot be reduced by fees or service charges unless specifically allowed in the SC Uniform Unclaimed Property Act.For the definition of lawful charge, please see Section 27-18-20(12) of the SC Unclaimed Property Act.Section 27-18-70(C) also includes information about dormancy fees.
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Reporting Unclaimed PropertyAll properties are reportable.
Negative Reports If your organization does not have any reportable
property, SC doesn’t generally require negative reporting.
Specific reporting instructions are available on the State Treasurer’s website.
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Reporting Unclaimed Property Submitting the report Reports must be submitted electronically viaemail or online through UPExchange/UPExpress in a NAUPA-formatted file. Email address for report [email protected] password-protected files, send the password
in a separate email.
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Reporting Unclaimed PropertyRemitting Payment ACHBank WireCheck
Instructions for remitting payment and delivering securities are available on State Treasurer’s website.
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Reporting Unclaimed Property Requesting an extension Request for a filing extension must be in writing to Dayle DeLong at [email protected] and is due before November 1. Extensions are granted for extenuating circumstances. Late filing penalties and interest waived Negative reports required when an extension is approved
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Reporting Unclaimed PropertyRecord Retention All holders are required to retain unclaimed property records for ten years after the property becomes reportable (S.C. Code Ann. § 27-18-320).
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Reporting Unclaimed Property
We will work with your organization to report past-due property without penalty.
If your company may be holding past-due unclaimed property, please contact Dayle DeLong at (803) 734-2683 or [email protected] to help your company achieve compliance with the unclaimed property law. Voluntary Disclosure Program
(Self-Audit)
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Disclaimer The information provided on these slides and in this presentation pertains only to South Carolina unclaimed property reporting. Unclaimed property laws vary by state. If your organization is holding property due to other states, please check with those states for unclaimed property reporting requirements.
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UPExchange Demonstration
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Questions? QUESTIONS CAN ALSO BE SUBMITTED VIA EMAIL TO [email protected] “HOLDER REPORTING PRESENTATION” IN THE SUBJECT LINE.
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Need More Information? Mailing Address:
State Treasurer’s OfficeUnclaimed Property ProgramP.O. Box 11778Columbia, SC 29211
Courier Delivery Address:State Treasurer’s OfficeUnclaimed Property ProgramWade Hampton Building, Room 2241200 Senate StreetColumbia, SC 29201
Visit our website:www.treasurer.sc.gov
Phone: (803)737-4771
Email:[email protected]
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