Preface xi
Chapter 1 Four Myths of Unclaimed Property 1
Myth 1: "We Don't Have Unclaimed Property." 1
Myth 2: "Unclaimed Property Compliance is Voluntary." 1
Myth 3: "If I Don't Have Records, the Auditor Can't Determine Any Unclaimed Property Liability for My Company." 2
Myth 4: "I Am Only Liable for Reporting Unclaimed Property to States Where I Conduct Business (i.e., Have Nexus)." 3
Chapter 2 What is Unclaimed Property? 5
Purpose of the Unclaimed Property Laws 7
Terminology 8
What Types of Property Can Become Abandoned Property? 9
When Does an Item Become Unclaimed Property? 10
States' Responsibilities 12
Holder's Responsibilities 12
Notes 14
Chapter 3 Basics of Unclaimed Property Reporting 15
Why You Must Report Your Unclaimed Property 15
Determining Your Liability 16
Where You May Have a Reporting Obligation: Jurisdiction 18
Due Dates, Due Diligence, Aggregates, and Dormancy Periods 19
Preparing the Report 20
Note 22
Chapter 4 Calculating Unclaimed Property Liability 23
Gather Your Records 23
Identify Your Company's Unclaimed Property Types 24
Determining Your Liability 24
You Do Not Have All of the Records for the Audit Period: Determining the Best Estimation Technique for Your Company 28
Do Your Due Diligence 34
Complete the Final Summary Report and Pay the Money! 34
Chapter 5 Preparing for and Managing an Unclaimed Property Audit 37
Audit Targets: Are You Next? 37
Offense-Contact the States for a Voluntary Disclosure Agreement 38
Beware the Gift Horse 39
Where to Start 40
Defense-Your Company Has Received Notification of an Audit: Do Not Ignore the Letter! 41
First Contact 43
Recruit Your Team 45
Know Your Enemy: Unclaimed Property Auditors 46
Audit Timeline 49
Records Requests 49
Opening Meeting 50
Site Visit and Records Analysis 51
Closing Meeting 52
Final Assessment 53
Appeal Process 54
Audit Best Practices 55
Post-Audit Cleanup 56
Notes 57
Chapter 6 Developing Unclaimed Property Policies and Procedures 59
Compliance Timelines: Due Diligence, Aggregates, and Dormancy Periods 64
Content of Due Diligence Letters 65
Timing of Due Diligence Mailings 66
Aggregates 67
Dormancy Periods 69
Record Retention Policies 70
Managing Your Exceptions and Exemptions 70
Internal Controls: Checks and Balances 71
Internal Audits 71
Handling a Desk Audit or Fishing Call from a State Auditor's Office 72
Note 72
Chapter 7 Exemptions and Exceptions to Unclaimed Property Reporting 73
Business-to-Business Exemptions 74
Current Business Relationship 78
Gift Certificates/Gift Cards 80
Gift Card Corporations 85
Dormancy Fees 86
Customer Credits/Credit Balances 89
Tangible Personal Property 89
Notes 91
Chapter 8 Special Industry Considerations 93
Insurance 93
Offers to Settle 94
Demutualization of Shares 96
Banking 97
When is an Account Considered Dormant? 97
What Fees Can Be Imposed on Dormant Accounts? 98
Safe-Deposit Boxes 98
Money Orders and Traveler's Checks 99
Health Care 99
Not-for-Profit Medical Service Providers 103
Oil, Gas, Utilities, and Energy 103
Oil, Gas, Coal Mining, and Other Mineral Mining Industries 103
Utilities 105
Utility Co-ops 106
Retail 107
Customer Loyalty/Incentive Programs 107
Gift Certificates/Gift Cards 107
Notes 108
Chapter 9 Foreign Unclaimed Property Laws 111
U.S. Laws on Foreign Escheat 112
Indian Reservations 112
U.S. Territories 113
Other Nations' Laws 115
Canada 115
United Kingdom 118
Australia 119
New Zealand 124
Hong Kong 127
Notes 128
Chapter 10 Selected Legal Issues in Unclaimed Property Audits 129
Lack of Nexus as an Audit Defense 129
Dormancy Fees and Service Charges 130
Expiration Dates and Other Contractual Limitation Periods 131
Unclaimed Employee Benefits 132
Unclaimed Property of Bankrupt Holders 133
Mergers and Acquisitions: Successor Liability 134
Asset Acquisitions 135
Notes 137
Chapter 11 How Not to Be a Victim of Unclaimed Property Fraud 139
Psychology of Fraud 140
Types of Fraudsters 141
Mitigating the Risk of Unclaimed Property Fraud 143
Note 146
Chapter 12 Trends in Unclaimed Property 147
Legislative Trends 147
Non-Legislative Trends 150
Conclusion 153
Appendix A XYZ Corporation: Unclaimed Property Holder Questionnaire 155
Appendix B Sample Policy and Procedure Manual 159
Appendix C Sample Due Diligence Letter 171
Appendix D State Unclaimed Property Office Contacts 173
Appendix E Sample Audit Records Request 185
Appendix F Summary of Current Gift Certificate Law 187
Glossary 201
Index 203
