California State Controller’s Office Unclaimed Property Division Presented by : Joyanne Washington

1. California State Controller’s Office Unclaimed Property Division Presented by: Joyanne Washington Date: October 13, 2017

2. Our Mission The mission of the Unclaimed Property Division is to reunite lost and abandoned property with its rightful owners and to safeguard these properties from being used by private interest for personal gain.

3. Today’s Topics • California's Unclaimed Property Program • California’s Reporting Process • Potential Interest, Fines, and Penalties • Common Errors • Frequently Asked Questions • Resources • Questions All materials and information contained within this presentation are for informational purposes only and do not constitute legal advice.

4. What is Your Experience?

5. Unclaimed Property in California • The Unclaimed Property Program started • in 1959 as part of a nationwide system • to provide customer protection. • The program exists to relieve businesses and financial institutions (holders) of the burden and liability of maintaining the property. • Each state has their own unclaimed property program. • In California, the State Controller manages this program.

6. Definitions • Unclaimed Property: Any financial asset that has been left inactive by the owner for a period of time specified in the law, generally three (3) years. • Holder: Any business entity in possession of property belonging to another is potentially a holder of unclaimed property. • Property Owner: A person or entity who appears to be entitled to the property held by the holder. • Escheat: To transfer or vesting in the state of title to property, the whereabouts of whose owner is unknown subject to the right of claim.

7. Types of Unclaimed Property • Overpayments • Pre-Payments • Securities • Insurance Proceeds • Other property belonging to someone other than the entity holding it • Payroll • Commissions • Customer Refunds • Vendor Payments • Payments for Goods and Services • Safe Deposit Boxes

8. Trivia What was the average unclaimed property claim paid by California in 2016? a) $27 b) $136 c) $419 d) $542

9. Reporting Overview

10. Before You Begin • Determine where you will need to report the property to, and • Determine your “As of” Date.

11. Where to Report Report based on the last known address of the property owner. If the address is unknown or in a foreign country, report to the State where the holder is domiciled.

12. Determine “As of” Date Defines the end of a period of time in which property is reportable and determines which properties will be reported. • Must be your fiscal year-end date or the State’s fiscal year-end date (June 30). • Must be stated on the Universal Holder Face Sheet (UFS-1). • Must be used consistently.

13. Reporting Overview: Step 1

14. Review Books and Records for Unclaimed Property Holders should review records annually. • Identify the property type and then the dormancy period. • Then determine the last transaction date.

15. Identify Property Type and Dormancy Period • Payroll Checks (1-year dormancy) • Accounts Payable Checks – vendor payments (3-year dormancy) • Refunds (3-year dormancy) • Accounts Receivable – customer credit refunds, overpayments (3-year dormancy) • Credit Balances (3-year dormancy) • Customer Overpayments (3-year dormancy) • Insurance Proceeds (3-year dormancy) • Money Orders (7-year dormancy) • Travelers Checks (15-year dormancy)

16. Determine Date of Last Contact This date determines when due diligence is performed and when the property is reportable. • The date the property became payable or distributable to the owner. For example: • Issue date of a check or direct deposit • Last date of employment • Date of last contact

17. Identify Unclaimed Property 2017 Report Cycle Considering the dormancy period, last transaction date, and holder’s “As of” date.

18. Reporting Overview: Step 2

19. Perform Holder Due Diligence Due Diligence is the process of attempting to locate owner(s) of dormant property before escheating property to the State Controller. • Mandated by California State law. • For properties valued $50 or more, securities, and safe deposit boxes. • In general, mail notice 6-12 months before reporting property.

20. Heading must appear at the top. Clearly state the property is in danger of escheating to the State if the owner does not respond in a timely manner. Include a form for owner to indicate interest.

21. Respond to Owner Claims What if contact is made? • Ensure claimant is the entitled owner. • Reunite property. • Reinstate account • Reissue payment • Reset dormancy period. • Update holder records.

22. Reporting Overview: Step 3

23. Submit Holder Notice Report • Submit after Holder Due Diligence is performed • Due annually before November 1 (May 1 for Life Insurance Companies) • Do not remit property

24. Holder Notice Report Contents Universal Holder Face Sheet (UFS-1) Property Owner Details List

25. State Form: UFS-1 X Tax ID number Fiscal Year-End Company Name Company Address Your Name Claims Contact Name Claims Contact Email

26. State Form: UFS-1 Original Signature Required

27. Property Owners Detail List Must be in Standard NAUPA II format. • Electronic Report must be used when reporting 10 or more properties. • Free reporting software at unclaimed.org/reporting • Paper Report may be used when reporting nine properties or less. • Must use State’s form: Annual Report of Unclaimed Personal Property Owner Detail Sheet (UDS-1)

28. Required Fields • Property Owner Name • Last Transaction Date • Social Security Number/FEIN • Property Type Code • Relationship Type Code • Owner Type Code Other helpful identifying information may include a date of birth or death, driver’s license number, email address, or phone number.

29. State Form: UDS-1

30. Required Codes • Property Type: • Describes the type of property reported. • Relationship Type: • Describes the relationship between the reported property and owner. • Owner Type: • Describes the property owner classification (known, unknown, aggregate, or disputed).

31. UDS-1: Required Codes Property Type: Describes the type of property reported. Owner Type: Describes the property owner classification (known, unknown, aggregate, or disputed). Relationship Type: Describes the relationship between the reported property and owner.

32. UDS-1: Example

33. Reporting Overview: Step 4

34. Remittance Reminder Letter (14F) Contains Report ID number and Holder Remit Report due date SAMPLE Sign and return with the Holder Remit Report.

35. Reporting Overview: Step 5

36. Submit Holder Remit Report

37. Update UFS-1 ######## Tax ID number

38. Update UFS-1 Original Signature Required

39. Update Property Owner Information • Reunited properties may be excluded or indicated as reunited. • Do not add new properties. • Submit on a Supplemental Report.

40. Remit Property Remit all unclaimed cash as one payment to the California State Controller. $20,000 or greater must be remitted via electronic funds transfer (EFT). Send funds at the same time as the report. Maintain reported safe deposit box and safekeeping items until contacted by the State Controller with delivery instructions.

41. EFT Options • Register at any time • EFT Desk • (916) 464-6220 • UPDscoEFT@sco.ca.gov

42. 2017 Report Cycle 1-Year Dormancy

43. “Off-Cycle” Reports May occur when the Holder Notice Report is received after the report due date. • Holder Remit Report and remittance due date is then subject to change. • Holder Remit Report due date will appear on the Remittance Reminder Letter (14F).

44. Supplemental Reports If the holder identifies additional property owner accounts that were not included on the original Holder Notice Report, they must be reported on a separate “Supplemental Holder Notice Report.” • You will receive a separate Holder Remit Reminder Letter (14F). • You will file a separate Holder Remit Report for the Supplemental Report.

45. Supplemental UFS-1 Fiscal Year-End Tax ID number Company Name Company Address Your Name Claims Contact Name Claims Contact Email

46. Potential Interest, Fines, and Penalties • California may assess a 12% per annum interest charge on late reports or remittances (CCP §1577). • A fine can be assessed by the courts for willful failure to report, remit, deliver property, or for filing a fraudulent report. • $100 per day ($10,000 maximum) for failure to report (CCP§1576(a)) • $5,000 - $50,000 for refusing to deliver property (CCP §1576(b)) • Remittances $20,000 or greater in any form other than electronic funds transfer (EFT). • A Civil Penalty of 2% of the payment amount shall be assessed (CCP §1155.200).

47. Common Reporting Errors • Reporting property too early • Remitting property with the Holder Notice Report • Incorrect file format • Not in Standard NAUPA II Electronic Format • Paper report exceeds limit of more than nine properties • Invalid Property Starting Transaction Date or Date of Last Contact.

48. Common Reporting Errors • Invalid codes • Sending in a report via email • Adding new names to the Holder Remit Report • Property owner accounts not included on the original Holder Notice Report must be reported on a separate Supplemental Holder Notice Report.

49. Common Reporting Errors • Lack of Social Security Number (SSN) • Required for the following property types: • Wages/Salaries • Commissions • Workers Compensation Benefits • Pension and Profit Sharing • IRAs • Bank Accounts • Expense Checks • Pension Checks • Securities Accounts • If any SSNs are not reported, attach a cover letter on company letterhead explaining why this information is not available. Have an officer of the company sign the cover letter. • Lack of SSN may delay the processing of your report.

50. Common Remittance Errors • More than one check included. • Remitting a check for unclaimed property amounts $20,000 or greater. • Proof of securities remittance (SS-1) form not included, if applicable.