Several states have recently passed laws which will affect holders’ 2018 reporting. This is the first of a series of informative articles about law changes. This session includes:
Delaware SB13 – passed July 29, 2017, effective with 2018 reporting period, revising many key provisions of Delaware unclaimed property law, including:
- 10-year look back period
- 10-year statute of limitations and record retention
- Ability to convert certain audits to the VDA program
- Expedited audit provision
- Delaware “compliance reviews”
- Increase in interest and penalties
- Limited liability for the State
- Information sharing provision
- E-Filing requirement
Pennsylvania HB1605 – Passed July 13, 2016, with an effective date of September 11, 2016 (to be implemented with 2018 reporting)
- Now requires Property Held by Agents-In-Fact or Fiduciaries to be reported after a 3-year dormancy
- Requires the escheatment of retirement plans 3 years after the holder has lost contact with the owner unless there has been certain types of contact/activity
- Revised the presumption of abandonment for retirement accounts by deleting the requirement for the owner to attain 70.5 years of age
- Now requires holders to perform due diligence by sending a first-class letter not more than 120 days no less than 60 days prior to the report due date for property valued $50 or more unless the owner has previously agreed to a method of electronic notice.
- Implements a date in which a holder has lost contact with the owner to be the date of the 2nd RPO (if sent within 30 days); OR the date the 1st communication is returned if the second communication was made more than 30 days from the 1st communication
- Allows Electronic communication no later than 2 years after the last indication of interest, gives 30 days to respond before sending a First-Class communication, and if First Class mail is returned, the holder is deemed to have lost contact with the owner on the date of last indication of interest
Illinois SB 9, which was override of Governors’ veto”, which is RUPA, or overhaul of the unclaimed property statute. However, a subsequently filed HB 4078 will repeal the changes contained in SB 9 if passed. Tentative changes include:
- Dormancy period reduction for various property types
- Clarification regarding the types of action defined as owner initiated activity
- Specific provisions relating to IRAs, HSAs, custodial accounts
- Removal of business-to-business exemption and changes to stored value card exemption
- Changes to Due diligence and reporting processes
- Changes to Statute of limitation and record retention
- Creating Mineral interest pay-to-current provision
- State selling securities
Tennessee HB 420, signed 5/9/2017 – will take effect with 2018 reporting, implemented numerous changes to the unclaimed property law including:
- Specific references to new property type
- Uniform Life Insurance Benefits Act (ULIBA) DMF matching requirement
- General reduction in dormancy periods (from 5 to 3 years)
- Reduction of look back period (from 10 to 5 years)
- Promulgation of examination rules
- Sale of securities provision
- Provision to request informal conference with Treasurer
Utah HB 42 & SB 175 – signed 3/24/17 – effective 2018 reporting – also “RUUPA” revisions to the UP statute, including:
- Retirement Accounts to be escheated 2 years after the later of RPO, Second RPO (within 30 days); OR the earlier of Age 70.5, if determinable. If the plan requires a distribution to avoid tax penalty, 2 years after the holder receives confirmation of death or confirms the death of owner
- Amended Unclaimed Life Insurance properties pertaining to the definition of “knowledge of death”
- Explicitly requires personal information reported to the Unclaimed Property Division by holders be encrypted to protect the identities of Utah’s unclaimed property owners.
- Defines virtual currency for the first time in Utah’s unclaimed property statutes. Expressly provides coverage of new and evolving payment mediums.
- Expands standards of owner contact including certain types of online activity, including account balance inquiries (acknowledges that that owner contact may also occurs electronically).
- Removes mandatory distribution requirements for triggering the commencement of the abandonment period for retirement plans and creates reporting criteria for Roth IRAs.
- Creates abandonment parameters for college savings and other tax-deferred investments where distributions are not mandatory.
- Expressly authorizes an offset against an approved claim for owner obligations, including child support, taxes and civil judgments.
- Changes interest rate charge for late reporting of unclaimed property to a floating rate more in line with interest charges for late filing of Utah State income tax returns.
Keep tuned for the next article, “Audit Related Legislation”. For more information, contact the knowledgeable staff at UPCR!