Unclaimed Property Reporting Basics 101

1. Unclaimed Property Reporting Basics 101

2. Fast Facts about Unclaimed Property • All States, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands have Unclaimed Property Programs • Three Canadian Provinces (Quebec, British Columbia and Alberta) have an Unclaimed Property Program.

3. Fast Facts about Washington Unclaimed Property • Over $1 billion received since 1955 • Holding over $750 million for lost owners • Over $417 million returned to date • 1 in 5 chance of finding unclaimed property • Program funded from receipts – no tax burden

4. Escheat vs. Unclaimed Property History of Unclaimed Property • Based on English Common Law • WC Fields Law • First Model Unclaimed Property Act in 1954 • Latest Washington Unclaimed Property Act 1981

5. Purpose of the Act • Protect the property rights of the owner. • Relieve holder from liability of the property • Provide economic benefit to “all” citizens of the State, not individual holders.

6. Definitions • Holder • Holding assets that the owner is entitled to • Owner • Person whose name appears on the records of the holder as the person entitled to the assets held or issued by a holder • Claimant • Person who is claiming the property

7. Benefits of the Act • Maintains good customer relations. • Keeps records current. • Reunites property with owners. • Reduces risk of audit findings.

8. Unclaimed Property Act • Duties of the State: • Notify Owner (through advertisements, website, claim form mailings) • Pay owner or heirs • Keep records • Safeguard property until claimed

9. Unclaimed Property Act • Duties of the Holder • Identify and protect property • Notify owner (due diligence) • Report and Remit property • Retain Copies of Holder Reports

10. Rules of Jurisdiction Texas vs. New Jersey (1965) Primary Rule • Property is reportable to the State of the owner’s last known address Secondary Rule • If the address is unknown, property is reportable to the holder’s State of domicile

11. Identifying Unclaimed Property

12. What kind of property might a holder have? • Do you have employees? (payroll) • Do you have retail customers? (credits, overpayments) • Are you a utility? (deposits, refunds) • Do you deal with patients? (overpayments, credits) • Do you hold escrow accounts? (trust funds)

13. Examples of Intangible Property • Bank Accounts • Uncashed Checks and Money Orders • Wages/Payroll • Travelers Checks • Stocks & Dividends • Credit Balances • Matured Life Policy Funds/Insurance Proceeds • Refunds/Rebates • Bail Bond Deposits

14. Examples of Tangible Property • Jewelry • Silver/Gold • Monies (cash, coins) • Antiques • Collectibles • Musical Instruments • Toys/Video Games

15. When Does Property Become Unclaimed?

16. Property becomes unclaimed when the owner: • Has not communicated, in writing or by other means, with the holder regarding the property or the account in which the property is held for a specified period of time.

17. Actions that do NOT Prevent Abandonment • Automatic Payments • Posting of Interest • Absence of Returned Mail • Service Charges • Holder’s Awareness of Owner

18. Dormancy PeriodsCaution: May vary by state

19. Dormancy Holding Periods • Vary by property type and state receiving the report • The end of a dormancy period is when property is reportable • Most dormancy periods are 1,2,3 or 5 years • Dormancy Periods vary among states • Incidental Property

20. One Year Conversion TablePayroll & Utilities

21. Two Year Conversion TablePublic Agencies

22. Three Year Conversion TableMost Property

23. Five Year Conversion TableMoney Orders & Safe Deposit Box Contents

24. Effective Due Diligence

25. Due Diligence • Due diligence is the process of attempting to locate the owners of dormant property on a holder’s books and records. • The process is conducted by the company holding the account – “Holder”

26. Due Diligence • Due diligence is mandated by state law • “Reasonable” efforts must be made to locate owners

27. Due Diligence Requirements • Mailings • For amounts $75 or greater • Between May 1 and August 1 (prior to November 1 reporting) • First class mailings to owners • For owners with good addresses • Put an annual reoccurring appointment on your electronic calendar - May

28. Why practice due diligence? • Increased good will • Reestablish communication with customer • Good customer service • Good business • It’s the law

29. Tips to Increase Due Diligence Responses • Color coded return envelope for simplified processing • Ensure outgoing envelope doesn’t look like “junk” mail • Key words on the envelope • Time sensitive • Response Mandatory • Unclaimed Funds/Money

30. Tips to Increasing Due Diligence Responses • Short due date • Administrators may have a certain number of days required to be given for a response • Give response options: • Fax • Mail • Telephone • E-mail

31. Preparing Your Report

32. When to Report? • Reports are due by November 1st • Put an annual reoccurring appointment on your electronic calendar - September

33. How to Report • Electronic Reporting Software (Preferred) • FREE at http://ucp.dor.wa.gov • Click on “Are you holding Unclaimed Property? Report it to us.” • Paper • Forms can be accessed via our website at http://ucp.dor.wa.gov • Click on “Are you holding Unclaimed Property? Report it to us.”

34. Common Reporting Errors • Invalid Property Type Codes • Invalid Date of Last Transaction • Invalid Joint Owners/Relationship Codes • Incorrect use of deduction code • Payment does not match amount reported • Incorrect Country Code • Punctuation of any kind in the name fields • Business Name is First and Last Name field (Should be in last name only)

35. Common Remittance Errors • A check for each property on the report • One check, one report • Check made payable to the owner • Make payable to Washington State Department of Revenue/UCP • Remittance not included with the report • Mailed to the incorrect address

36. Advantages of Electronic Reporting • Accounts available to owners sooner • Eliminates keying errors • Data can be imported from Excel • Produces due diligence letters and reports • Accepted by all states • Easier!

37. Develop a Strong Unclaimed Property System • Prepare an unclaimed property manual • Establish written procedures • Conduct internal training, and cross train • Identify personnel responsible for preparing reports • Develop strong internal controls • Utilize internal audit function

38. Online Help and Information • Washington State: • www.ucp.dor.wa.gov • Forms and Publications • Questions: • ucp@dor.wa.gov

39. Q&A

40. Please complete a workshop evaluation