REVISED UNIFORM UNCLAIMED PROPERTY ACT
The fourth, latest version of the uniform unclaimed property act (Revised Uniform Unclaimed Property Act, or RUUPA) was finalized by the Uniform Law Commission July 13, 2016, and now goes to each state for enactment. It has taken several years to develop, with numerous documents and testimony provided by holders and state administrators. Experience has been for some states to adopt the entire Act, some will adopt some features of it, and some will not adopt any of it. Below is a summary.
- Definitions: The new act has provided new definitions for certain property types that are not usually considered in the prior act. This includes stored value cards, gift cards, loyalty and promo vehicles, and other specific definitions. With the advent of electronic business practices, it is incumbent to provide provisions for electronic owner contact due diligence and search processes.
- Holder compliance Uniformity: RUUPA provides for uniform due diligence letters and waiting periods, dormancy periods, aggregation, and provisions for electronic reporting and remittance, all of which will make compliance more certain and reporting less burdensome.
- Holder protections: Holders and state administrators have been in conflict regarding the aggressive audit methods used by states, which often are viewed as punitive. The new act provides limitations on audit lookback, proposing a 5-year statute of limitations on auditing non-fraudulent reports and a 10-year lookback limitation on auditing where no reports have been filed. Holders are provided effective means for challenging audits on protest or review. New provisions for holder records’ safety and confidentiality have been proposed. Priority rules have been re-interpreted to prevent states of second priority from taking properties exempt in the state of first priority, thereby negating the exemption. New record retention provisions help holders to better ascertain those records necessary for confirmation of compliance and offer further protection from egregious audits.
- Owner protections: New provisions require holders make paper notifications of ownership, redemption, and reporting in many instances where the owner may have actual paper securities, or may have opted for elected electronic notification in lieu of paper. Rules for deciding date of death, especially by using the Social Security Administration’s Death Master File (DMF) in conjunction with other proof, have been better defined.
- Audits: Administrative Appeal with Independent Reviewer Section 1101 – informal conference, Section 1103 administrative appeal. The act requires an informal conference requested within 30 days of liability determination and an administrative appeal requested within 90 days of liability determination (request for informal conference tolls the 90-day period until conference decision rendered)
- Audits – Contingent Fee Ban: There was no provision to ban contingent fee audits but some transparency measures were added including administrator disclosure/report (Section 1011), competitive bidding for audit contracts (Section 1009), and the holder must be provided a copy of the state’s contract with third party auditor.
- Due Diligence Timing: The new Act provides for open ended due diligence timing (at least 60 days prior to the reporting deadline) Section 501 Not more than 180 days nor less than 60 days before filing the report.
- Email Due Diligence (Section 501 Notice/letter by first class mail). New addition requires that if the owner has consented to electronic mail delivery from the holder, the holder must send the notice by BOTH first class US mail AND electronic mail.
- Foreign Addressed Property Exemption Section 304 of the new Act allows the state of holder domicile to take property if the foreign country of the owner’s last known address does not have a UP law.
- Gift Card/Certificate and Merchandise Credits Exemption Section 207 (Gift Card) and Section 102 C (24) (Merchandise Credit) This was left as an optional exemption, leaving it up to the state legislatures whether to exempt or not.
- Non-transferrable, Restricted and Worthless Securities: No reporting and/or delivery requirement Sections 402 (a)(9) and Section 603(h) (Non-transferrable), Section 102 (24)(iii)(I) and (II). Restricted and Worthless Non-transferrable securities that are reportable but delivery is no longer required unless they become transferrable, then delivery must occur on the next regular reporting date. Restricted and worthless securities that are not reportable/deliverable are excluded from the definition of “property.”
- Reasonable Record Retention Period Section 404 states that records must be kept for 10 years after the report was filed or should have been filed whichever is later. (Similar to previous provisions)
- Retirement Accounts – Federal Tax Deferred: Section 202 (IRAs and HSAs) This section allows2 consecutive RPO trigger if the 2nd mailing occurs within 30 days that the 1st mailing RPO OR the earlier of owner reaching 70.5; or if mandatory distribution required by law, 2 years after the date the holder receives notice of death. If the owner doesn’t receive USPS mail communication, the holder must send the owner an email within 2 years after owner’s last indication of interest. If it bounces or no response received within 30 days, the holder must send notice via USPS and dormancy triggered as noted above for 2 consecutive RPOs.
- Securities Liquidation Curtailed Sections 702 and 703. This prohibits state administrators from selling securities until 3 years after receipt and notice given to owner. If the administrator sells security before 6 years after delivery and it is claimed, the claimant must receive replacement of the security or the security’s market value at the time claim is made plus dividends, interest, and other increments on the security until the claim is paid.
- Securities Trigger as RPO Standard Section 2082. This section allows consecutive RPO triggers so long as 2nd mailing occurs within 30 days of when the 1st mailing RPO. If the owner doesn’t receive USPS mail communication, the holder must send email with 2 years after owner’s last indication of interest. If it bounces or there is no response within 30 days, the holder must send notice via USP if mail RPO dormancy triggered on date of RPO.
- Statute of limitations with a time period commensurate with other regulatory schemes, Section 610. This section prohibits administrators from bringing an action to enforce the Act related to reporting, payment or delivery of property until 5 years after the business filed a non-fraudulent report. Also, the administrator is prohibited from bringing an action or examine a holder related to a duty under the act until 10 years after the duty arose.