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Déjà Vu – Marketplace Model Debate May Resume Again

The debate over state marketplace laws may resume again, after the Uniform Law Commission (ULC) announced it has set up a committee to study whether to draft a uniform state law on online sales tax collection, focusing on marketplaces. The study committee is chaired by Utah Sen. Lyle Hillyard. The lead staffer (“reporter”) will be Professor Adam Thimmesch of the University of Nebraska College of Law. The members of the committee are listed here and information to sign up to be notified of developments is available here.

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Washington Legislature Introduces Revised Uniform Unclaimed Property Act

On January 10, 2018, a bill was introduced in the Washington State Legislature that would substantially enact the Revised Uniform Unclaimed Property Act (RUUPA) finalized by the Uniform Law Commission (ULC) in late 2016. The bill, House Bill (HB) 2486, is sponsored by Representative Paul Graves at the request of the ULC and would be effective beginning January 1, 2019. The House Committee on Finance conducted a public hearing on the bill on January 16, 2018, but only the sponsor testified and the bill was held for further consideration. While similar (or identical) to RUUPA in most respects, the bill contains a number of significant deviations. Below is a brief summary of several provisions that we flagged in our initial review and the potential impact on Washington holders. (more…)




Illinois Unclaimed Property Law Substantially Revised As Part of Revenue Package Supporting Illinois Budget

Yesterday the Illinois House of Representatives voted to override Governor Bruce Rauner’s veto of Senate Bill (SB) 9, the revenue bill supporting the State’s Fiscal Year (FY) 2017-2018 Budget. Just days before the vote, SB 9 was amended to include a revised version of the Illinois Unclaimed Property Bill (House Bill (HB) 2603) on which we’ve previously reported. The new law (part of Public Act 100-0022) is known as the Revised Uniform Unclaimed Property Act (RUUPA). The RUUPA becomes effective January 1, 2018. Below is a brief summary of a few of the highlights of which holders should be aware.

Gift Cards, Loyalty Cards and Game-Related Digital Content Exempt

Unlike HB 2603, the Illinois RUUPA expressly excludes “gift cards” from the definition of “property” subject to escheat. Pulling (in-part) from the Uniform Law Commission (ULC) definition, “gift card” is defined in the Illinois RUUPA as “a stored-value card: (i) issued on a prepaid basis in a specified amount; (ii) the value of which does not expire; (iii) that is not subject to a dormancy, inactivity, or service fee; (iv) that may be decreased in value only by redemption for merchandise, goods, or services upon presentation at a single merchant or an affiliated group of merchants; and (v) that, unless required by law, may not be redeemed for or converted into money or otherwise monetized by the issuer.” (more…)




Illinois UP Bill Would Retroactively Require Reporting of Gift Cards and B2B Transactions

Earlier this year, an unclaimed property rewrite bill (HB 2603) was introduced in the Illinois House that would require holders to retroactively report a number of property types currently exempt. The provision would require a retroactive period of 10 report years. Items that are currently exempt that would become reportable include gift cards and property resulting from business-to-business (B2B) transactions. (more…)




Revised Uniform Unclaimed Property Act Finalized for State Enactment—Legislative Drafting Notes and Interpretative Comments Added

The fourth iteration of a uniform unclaimed property act—entitled the Revised Uniform Unclaimed Property Act (RUUPA or Act)—has been finalized by the Uniform Law Commission for state enactment. The new Prefatory Note, Legislative Notes, and Comments components offer further explanatory guidance on the Act.

Read the full article.




Uniform Law Commission Completes First Reading of the Revised Uniform Unclaimed Property Act

On Tuesday, July 14, 2015, at their Annual Meeting the Uniform Law Commission (ULC) completed their first reading of the Revised Uniform Unclaimed Property Act (RUUPA or the Act). While over half of the sections comprising the current draft of the Act were passed over due to strict time constraints imposed by the ULC President Harriet Lansing, the RUUPA Drafting Committee (Committee) did their best to focus the time they did have on sections they felt were most in need of feedback from the ULC Commissioners (Commissioners) as a whole. The Committee even went so far as to invite discussion by allowing American Bar Association (ABA) Advisors and National Association of Unclaimed Property Administrators (NAUPA) to explain their stances on hot button issues such as the derivative rights doctrine, life insurance provisions and the inclusion of a business-to-business exemption. Despite this attempt, Commissioner feedback was sparse (to non-existent) for a majority of the reading and was often technical in nature when provided. While over 250 of the 400 Commissioners were present at the Annual Meeting, only about half of those present attended the morning session of the RUUPA reading. After a lunch break, the afternoon session of the reading was even more sparsely attended, with less than 100 Commissioners present. While the turnout and participation was not ideal, the Committee provided some guidance to the Commissioners that may be useful to interested parties going forward.

Highlights

  • Committee Co-Chair Rex Blackburn made it clear that they would be considering the application of the derivative right doctrine, which generally stands for the proposition that state unclaimed property administrators cannot receive greater rights than those of the true owner, on a property-type basis (as opposed to a blanket inclusion or exclusion). Aside from the short ABA-NAUPA debate on the issue, there was no substantive discussion of the derivate rights doctrine.
  • A return to the 1981 Act’s 10-year statute of repose was discussed. Commissioner Raymond Pepe noted that the Committee reverted back to this based on the widespread abuse of statistical sampling. Several Commissioners were supportive of this change, and even encouraged the Committee to shorten this period further since the statute does not begin running until after the report was due. Nebraska Commissioner Harvey Perlman suggested that the Committee simply limit the use of abusive statistical sampling instead of establishing a statute of repose. The Committee responded that a bright-line rule is necessary here to provide certainty.
  • The Committee confessed that the current section on the conduct of audits (Section 20) needs to be broken out into four distinct sections in the next draft. A majority of the discussion in this area was on the use of contingent fee contract auditors—which is permitted in the current draft with numerous protections that seek to enhance the transparency of this process. Connecticut Commissioner David Biklen suggested that his state would not be able to audit holders without the use of contract auditors and expressed concern [...]

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Extraordinary Turnout and Discussions at ULC Unclaimed Property Drafting Meeting

Failing to attend last week’s Uniform Law Commission’s (ULC’s) Drafting Committee meeting to revise the 1995 Uniform Unclaimed Property Act (the Act) was worse than missing the 2012 Extravakranza.  On November 7 and 8, 2014, the Who’s Who of the Abandoned and Unclaimed Property world (AUP for insiders needing abbreviations for texting) met in Washington, D.C. for a two-day marathon to modernize state unclaimed property law.  The chair of the committee noted that several thousand pages of comments had been received so far and that attendance at the meeting was greater than any other issue the ULC pursued other than the Uniform Commercial Code.

The attendees hailed from a wide variety of stakeholders including: representatives from more than 20 states; major third-party auditors including several representatives of Kelmar; numerous trade associations including representatives of the securities and the life insurance industries, and general business associations such as the Council on State Taxation and the U.S. Chamber of Commerce.  Several representatives from the state of Delaware were in attendance; Delaware is a state that has historically not adopted any of the Uniform Acts and is considered one of the most aggressive states in interpreting its unclaimed property laws to the detriment of holders.

As to the Act itself, no policy or language is set in stone at this point, but the Drafting Committee took votes on numerous issues in order to give the reporter (the person responsible for actually drafting potential language for the Act) guidance.  The votes by the Drafting Committee were a mixed bag from a holder’s perspective, and a lot could still change before the final Act is adopted.   Unfortunately, but not surprisingly, the Committee rejected banning states from using contract auditors as well as rejected banning states from using contingency fees to pay such auditors.  The Committee also voted to allow both estimation and sampling in unclaimed property audits (though there was some confusion demonstrated by the Committee’s discussions and questions regarding the difference between these two).  The Committee left discretion with the reporter regarding the inclusion of guidelines and limitations on use of such audit techniques.  The Committee also rejected exempting from remittance low balance property – a proposal supported by the American Bar Association and a proposal that would be an administrative benefit to holders.

The Committee voted to change the interest provision on holders for unremitted balances from offering a flat rate option to solely a floating interest rate pegged to a T-bill + standard.  Currently some states have interest rates of 12 percent and 18 percent.  The National Association of Unclaimed Property Administrators lobbied to leave the interest rate up to the individual states because every state has different investment profiles.  This was ultimately a losing argument as it was noted that if any state is currently getting 12 percent or 18 percent on its investments, everyone wanted to know what that state was doing so they could do the same.  The Committee also voted to include, for discussion purposes only, a draft [...]

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