Unclaimed Property Reporting and Compliance

Transcription

1 Unclaimed Property Reporting and Compliance FEATURED FACULTY: Karen Anderson, Senior Vice President, Unclaimed Property Recovery and Reporting, LLC

2 FEATURED FACULTY: Karen Anderson, Senior Vice President, Unclaimed Property Recovery and Reporting, LLC Karen Anderson has been involved in the unclaimed property compliance industry for over 30 years and has been in the forefront of unclaimed property holder education and training. As a member of the policy staff of a former Illinois Governor, Karen was assigned to guide policy and programs relating to state business regulation. For five (5) years, Ms. Anderson served as Illinois' Unclaimed Property Administrator and later served as the first Director of the National Association of Unclaimed Property Administrators (NAUPA). Anderson holds a law degree from Loyola University of Chicago. Ms. Anderson services as the current second vice president and former treasurer on the Board of the Unclaimed Property Professionals Organization (UPPO) and is the Board liaison to the UPPO Government Relations and Advocacy Committee. Also, she is a member of the Securities Transfer Association s Unclaimed Property Committee. She frequently speaks at industry association conferences and writes articles for trade publications. Ms. Anderson holds a law degree from Loyola University of Chicago.

3 **Certificates of attendance and CEUs, when available, must be requested through the online evaluation.** Evaluation for Live Event: We d like to hear what you thought about the audio conference. Please take a moment to fill in the survey located here: Requests for continuing education credits and certificates of attendance must be submitted within 10 days of the live event. Evaluation for CD Recording: Please use the following link to submit your evaluation of the recorded event: Please note: All links are case sensitive Receive 1.5 CPE credits by attending the live Audio Conference! CCM is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, Web site: No prerequisite courses, advanced preparation or experience is required for admittance to this workshop. This intermediate level audio conference qualifies for 1.5 CPE Credits, delivery method Group-Live. Recordings of the program do not qualify for CPE credits. For more information regarding administrative policies such as complaint and refund, please contact our offices at C4CM (2426).

4 Center for Competitive Management (C4CM) Unclaimed Property Reporting and Compliance Your Presenter: Karen Anderson Senior Vice President - Compliance Unclaimed Property Recovery & Reporting, LLC 1 Disclaimer This presentation is provided for educational purposes only. Unclaimed Property Recovery and Reporting, LLC, is not rendering accounting, business, financial, investment, legal, tax, or other professional advice or services with this presentation. Further, this presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Unclaimed Property Recovery and Reporting, LLC, their affiliates and related entities are not responsible for any loss sustained by any person who relies on this presentation. 2 1

5 Presentation Objectives Define and Identify Reportable Unclaimed Property Explain the Basic Holder Obligations State due diligence requirements State reporting requirements Consider Risk Minimization Tools Practices, Policies and Procedures!!! Discuss Unclaimed Property Audits Review the Important Trends and Changes in Unclaimed Property Laws and Procedures 3 Unclaimed Property Basics: Key Terms Intangible personal property: Property held, issued or owing in the ordinary course of business that has remained unclaimed by the apparent owner for a specified period of time after it became payable or distributable is presumed abandoned. Accounting errors are NOT unclaimed property. Holder: An individual or legal entity (public or private) in possession of property belonging to another. Owner: An individual or legal entity (public or private), government or governmental subdivision who has a legal or equitable interest in property. End or As of Date: The date through which a Holder must search its records to determine if it is in possession of unclaimed property. Dormancy Period: The number of years (generally 1,3, or 5) from the date of last contact with the Owner property must be unclaimed before it is considered abandoned. Reporting Deadline: Date report and property due to state. A very few states have different dates to report and deliver property. 9/16/

6 The Basics: What is Unclaimed property? Definition: Any intangible personal property that is held, issued or owing in the ordinary course of business and has remained unclaimed by the apparent owner for a specified period of time after it became payable or distributable is presumed abandoned. Accounting errors are NOT unclaimed property. Due and Owing / Payable and Distributable Fixed and Certain No Owner-Generated Act 5 The Basics: What is Unclaimed Property? COMMON PROPERTY TYPES FOR FINANCIAL INSTITUTIONS, INSURANCE COMPANIES AND CORPORATIONS A/R (credit memos & balances, unapplied cash, rebates) A/P (vendor checks and credit balances) Payroll (wages, commissions, expense payments) Suspense Accounts TPA disbursements and insurance payments Checking and savings accounts Timed deposits Escrow balances IRA / Coverdell distributions Insurance claim checks Annuity distributions Worker s compensation 6 3

7 The Basics: What is Unclaimed Property? Equity Securities Uncashed dividend and interest checks Stock certificates returned by the post office ( RPO ) Stock or debt underlying uncashed dividend and interest checks Unexchanged Accounts Mergers Debt Redemptions Mutual Funds Book entry shares (RPO statements) 7 Identifying Unclaimed Property Applicable Law Priority Rules Texas v. New Jersey (US Supreme Court-1965) and later cases Priority rules: 1. Last known address of the owner/payee/creditor controls 2. When no address sufficient for mailing or owner is unknown, the business state of incorporation controls 1981 Uniform Act (adopted by some states): State of incorporation if address of apparent owner is in a foreign country and if holder is incorporated in the U.S. Some states have transaction laws for certain property. Fed law for money orders = where money orders sold. 8 4

8 Identifying Unclaimed Property: Which law applies? Example 1: Goodguy Corporation, with an address in Indiana and incorporation in Delaware, hires Greatwork, Inc. to perform facilities management services at its Indiana headquarters. Goodguy pays Greatwork monthly for these services and in one month, Goodguy misinterprets the Greatwork invoice and overpays by $200. The address in Greatwork s records for Goodguy is in Kentucky. Greatwork issues Goodguy a credit for $200 but Goodguy keeps paying the accurate amount each month and never makes use of the credit. Then Goodguy changes service providers. Which state s unclaimed property law would apply if the credit is not used? Answer: Kentucky. This is the classic first rule of Texas v. New Jersey. 9 Identifying Unclaimed Property: Which law applies? Example 2: Goodguy Corporation issues a check for $300 to Happy Products, Inc. in payment for supplies. Happy Product s address in Goodguy s records is in New York. The headquarters of Goodguy Co. is in Connecticut. Happy Product has not cashed the check. Which state s unclaimed property law would apply if the account remains stagnant? Answer: New York. This is the classic first rule of Texas v. New Jersey. 10 5

9 Identifying Unclaimed Property: When Do the Obligations Begin? The applicable state statute will determine the following which are important to determining the when : 1. Dormancy period for the property type 2. As of, Cut-off or End date 3. Reporting deadline 11 State Examples of Dormancy Periods & Cut-off Dates For Business Associations (non-financial / non-insurance) Accounts Payable (MS08) Vendor Checks (CK13) Payroll Checks (MS01) Credit Memos (MS09) Dividends (SC01) Annual Reporting Deadline California 3 yrs 3 yrs 1 yr 3 yrs 3 yrs 10/31 (Notice Report) As of / End Date 06/30 Delaware 5 yrs 5 yrs 5 yrs 5 yrs 3 yrs 3/1 12/31 Illinois 5 yrs 5 yrs** 1 yr* 5 yrs** 5 yrs 11/1*** 6/30*** Indiana 3 yrs 3 yrs 1 yr 3 yrs 3 yrs 11/1 6/30 Kentucky 3 yrs 3 yrs 3 yrs# 3 yrs 3 yrs 11/1 6/30 Michigan 3 yrs 3 yrs 1 yr# 3 yrs 3 yrs 7/1 3/31 New York 3 yrs 3 yrs 3 yrs 3 yrs 3 yrs 3/10+ 12/31+ Texas 3 yrs 3 yrs 1 yr 3 yrs 3 yrs 11/1^ 6/30^ *HB 1560 enacted 8/8/11 reduced this to 1 yr from 5 yrs. **May be exempt under certain circumstances. ***Business Association & Life Insurance Companies report 5/1 with 12/31 end date. +NY deadlines vary by industry, i.e., banks- 11/1 w/ 6/1 end date and ins cos- 9/10 w/ 6/30 end date. # Under $50 exempt. ^In 2013 the Texas reporting deadline changes to 7/1 and the end date to 3/1 12 6

10 Identifying Unclaimed Property: When Example Under a product discount agreement, RestaurantsRUs, Inc. (RUs) rebated $300 to a customer called WonderfulEats, LLC (WE) in the form of a credit on WonderfulEat s account. The credit was issued on Feb. 14, WE did not use the credit. WE s address in RU s records is in Indiana (where MS09 credit memos have a 3-year dormancy period). Would the value of the credit be reportable on the 11/1/12 Indiana reporting deadline? 13 Ide Identifying Unclaimed Property: When Example Calculation for Example: IN Fall 12 End Date = 6/30/2012 LAD or Issue Date = 2/14/2009 Dormancy Time = 3 yrs, 4 mos, 16 days IN Dormancy Period = 3 yrs Answer: This value of the credit would be due for reporting to IN on the Fall 2012 deadline. 14 7

11 Identifying Unclaimed Property: When Example 2 RestaurantsRUs, Inc. (RUs) purchased products from WonderfulEats Co. (WE) and issued/sent WE a check for $150 in payment which was dated on July 1, WE did not cash the check. WE s address in RU s records is in New Jersey (where CK13 vendor checks a 3-year dormancy period). Would the value of the check be reportable on the 11/1/12 New Jersey reporting deadline? 15 Identifying Unclaimed Property: When Example (2) Calculation for Example: NJ Fall 12 End Date = 6/30/2012 LAD or Issue Date = 7/01/2008 Approx. Dorm. Time = 3 yrs, 6 mos, 1 day NJ Dormancy = 3 yrs Answer: This value of the check would be due for reporting to NJ on the Fall 2012 deadline. 16 8

12 The Basic Compliance Obligations The basic compliance obligations* are: Record Review / Internal Due Diligence Due Diligence/Owner Contact Reporting and Remitting Record Retention *All of the above must be done within the time frames and in the formats required by the various applicable state laws. 17 Minimizing Exposure: Slaying the Dragon! Record Review Use it to your advantage! This is your opportunity to minimize liability. Common Items to review: Vendor Items Payroll Items Credit Memos / Balances Outstanding check/payment lists (including payments made by 3 rd parties) Industry specific items (checking and savings accounts, insurance claims payments, etc.) Timing: Records should be reviewed at least once a year but preferably every days to stay current Materiality Limit: Set a materiality limit for your review. 18 9

13 Compliance Obligations: Record Review 1. First, determine if the owner is really lost: For A/P items, check vendor master list for a second address or for the address of a parent co or for a related subsidiary. For payroll-related UP, determine if the employee has been terminated or transferred, access retirement info. For customer accounts: Search internal data pertaining to other types of accounts that the individual or business has with your organization (if found, look for a change of address or activity by the owner on the other account) Review all types of communications sent to or that are possible from the customer, i.e., documented telephone calls or internet (verifiable access) regarding the account, proxy responses, increases or decreases in the account value caused by the owner, etc. 19 Compliance Obligations: Record Review 1. First, determine if the owner is really lost (cont.): Use free internet sources to find a new address (i.e. anywho.com, free-people-searchengines.com, switchboard.com) If practical, use a tracing firm or government or commercial database searches (i.e., credit bureaus, Social Security Administration Death Index, etc.) or other services designed to locate the customer/owner or next of kin 20 10

14 Compliance Obligations: Record Review 2. Review the data for accounting errors A/P: Re-issues without voiding original. Duplicate payments. Incorrect payee. Inter-company payments. Periodic/recurring vendor payments (utilities, landlords, etc.) Reconciliation error (i.e., Bank rec has checks w/ sequential numbers outstanding/bad check run). Large dollar checks with familiar payee names. Check represents payment for an invoice for which a credit was issued. EFT s issued simultaneously. 21 Compliance Obligations: Record Review 2. Review the data for accounting errors A/R Validity of the credit: Was the credit applied to an invoice but not deleted from the account record? Was the credit recorded twice? Is the credit really unclaimed property? (i.e. promotional?) Offset: Does the customer have a past due invoice outstanding? Have past invoices been written off to which the credit can apply? Is the customer with the credit also a vendor with a debit balance in AP to which the credit can be applied? 22 11

15 Compliance Obligations: Record Review 2. Review the data for accounting errors Industry Specific Mistaken postings to account Computer application errors? Misapplied funds Insurance of settlement (unclaimed property?) Unperfected rebate? (unclaimed property?) Claim disavowed or incomplete? (sitting in agent s drawer?) Other types of items in a pending status 23 Compliance Obligations: Record Review 3. Is the property exempt from reporting? Examples: Business to Business Exemption (tricky-generally, for MS09 Credit Memos, some CK13 vendor checks) AZ, IL, IN, IA, KS, MD, MA, MI, NC, NY?-administrative, OH, TN, VA, WI (WY-only for gift certificate merchandise credits) Colorado 2% of property remitted or $25 exemption Florida - $10 exemption for credit balances, customer overpayments, security deposits and refunds Kentucky, Michigan, Ohio Wages less than $50 Idaho intangible property $50 or less Gift Certificate / Card Exemptions (tricky) 24 12

16 Record Review: Suggested Minimization Practices 1. Review / research outstanding credits on a regular basis (60 90 days) for accounting errors, familiar payee names, offsets, or exemptions. Set a materiality limit Reverse identified accounting errors, make appropriate offsets, with journal/entry descriptions 2. Review supplemental information that may lead to the address of a customer, employee or former employee, or vendor 3. Establish contact with the owner through correspondence and telephone calls to resolve outstanding checks or credits, etc. If appropriate, perform database/location searches. 25 Record Review: Suggested Minimization Practices (2) 4. Retain documentation of reversals resulting from research or contact. 5. Maintain written procedures for record review and make them a part of your company s policy or manual. Add to internal audit review. 6. Assign one person at the company who is responsible for escheat compliance, and insert this responsibility in their job description to insure continuity

17 Basic Obligations: Due Diligence Important Considerations Methods First Class Mail, Certified Mail or Publication Letter Content Timing 60 to 120 days? 6 months? Limitations/Exceptions DE, PA no letter requirement, Due Diligence Minimums Special Requirements (i.e., OH-return envelope) Allowable Deductions 27 CA Notice/Letter Example: From CA Holder Handbook 14

18 Important Content Elements in Due Diligence Letter Stated time period within which the owner/heir must contact the holder Form to correct address Clear direction / instructions to the owner for claiming the property Property identification Statement that the property will be delivered to the state as required by state law if the owner / heir does not act and do so timely Basic Obligations: Annual Reporting and Remittance Important Considerations: Type of Report Diskette, CD, On-line? Minimum thresholds, On-line (i.e., IN) Report Format NAUPA II format? / Holder #? Negative Reporting About 30 states/some on-line Michigan Attestation Report Aggregate Limits A good idea? Remittance Type Check payable to? or EFT? Report & Remittance Delivery On time, verifiable Filing Extensions Reason? Timing? Estimated liability? State form? 30 15

19 Example: UP Report Cover Sheet - New York Verification and Checklist 31 Basic Obligations: Reporting Red Flags! Tips - Preventing Reporting Red Flags by: Using the state prescribed cover sheets and/or holder numbers when filing reports Making sure your reports/cover sheets are completed and signed (and notarized if required) Insuring that the report reflects the same dollar amount that is reflected by your remittance Requesting filing extensions within the states prescribed periods prior to the filing deadline (you may have to request in writing and/or on a state form) Filing all property types: securities and general ledgerrelated and filing them accurately (not disproportionately) 32 16

20 Basic Obligations: Record Retention 1. Retention Time Period 1995 Uniform Act (Section 21) a holder required to file a report must maintain the records containing the information required to be included in the report for 10 years after the report is filed. (Ten (10) years from date property was first reportable.) Consider state audit reach back periods! 2. Records to Retain 1995 Uniform Act (Section 21) Silent on this issue. Practical Considerations: Audit Protection Verification of reversals - accounting and data errors Evidence of reporting and timely reporting Evidence of due diligence (incldg certified mailing if it is required.) 33 Risk Management: Policies and Procedures Outline Your Policies and Procedures Should Include: Periodic Generation of Reports of Outstanding Items Research Methods to for Identify Potentially Unclaimed Items A Description of the Measures for Resolving Items Notification of Owners/Vendors re Outstanding Items (Sample Letter in Procedures?) The Procedure for Reporting & Remitting property to the Appropriate State(s) and for Recording same Record Maintenance Standards and Steps/Procedures A Method for Maintaining and Updating Compliance Requirements A Time Table for All of the Above 34 17

21 Risk Management: Audits TRIGGERS A few examples: Holder has presence in or is incorporated in state but no reports filed Holder is big enough to warrant scrutiny by state of incorporation Amounts reported appear too small for size of the holder Unlawful deductions or large aggregate amounts in previously filed reports Gaps in reporting history No reach back on initial reporting Inadequate due diligence (e.g., high rate of claims) 35 More Audit Triggers They like your coffee! History of mergers, acquisitions, reorganizations, liquidations, dissolutions, incorporations A specific period of time has passed since a previous audit High volume of financial transactions (e.g., Retailers or Distributors) Unique property types (e.g., IRAs, Gift Cards) Reporting some property types but not all that are common to your Industry Holder name recognition 36 18

22 The UP Audit: Chronological Components 1. Notice 2. Schedule 3. Document Requests 4. Sampling and Extrapolation 5. Initial Findings Report 6. Negotiation 7. Final Report 8. Appeal? 37 The Audit Notice The States First Move A Holder s Preliminary Questions 1. Who is performing the audit? (State or third party auditors?) 2. Which states are involved? State of incorporation? 3. What is the time period covered ( scope ) of the audit? REACH BACK PERIOD? 4. What audit procedures will be used? (What extrapolation procedures will be used when records are incomplete or nonexistent?) 5. What are the auditors schedules and site requirements? 6. Will the state(s) or their agent sign a confidentiality and scope limitation agreement? 7. Should legal counsel and outside expertise be obtained to handle audit issues in a privileged context? 38 19

23 Audit Preparation The Holder s First Move Internal Review ( Self Audit ) Prior to Audit Commencement Document internal controls Review chart of accounts and trial balances Consider all company policies and procedures related to unclaimed property compliance and reporting Consider document availability and depth (system conversions?) Review previously filed unclaimed property reports Compile supporting documentation, including due diligence records Review voided and outstanding check lists Obtain non-erisa benefit plan info /evaluate potential liability Understand your company s write-off history Involve legal counsel in the internal review and in correspondence with the auditors 39 Audits Current Trends Extended reach back periods for non-filers Sampling and extrapolations Drawn-out audits State audit costs charged to the holder Third-Party Administrators 40 20

24 Penalties and Interest Under most state UP laws, penalties and/or interest can be imposed for failure to perform any duties required by law, including failing to report and remit or to do so timely. (1981 Act includes criminal AND civil penalties) 1995 Act Penalties: 1. Interest : 2% above the annual Treasury bill discount rate in effect on the date the property should have been paid or delivered 2. Not Willful Failure: $200 for each day the report, payment, or delivery is withheld, or the duty is not performed, up to $5, Willful Failure: $1,000 per day from the report due date up to $25,000, + 25% of the property value that should have been reported 4. Fraud: $1,000 per day from the date a report due date up to $25,000, + 25% of the property value that should have been but was not reported. (#1 plus #2 or #3 or #4 can be applied under 1995 Act) Latest Trends/Developments Delaware Trigger Interpretation Life Insurance Industry Audits Recently Enacted Legislation Pending Legislative Changes 42 21

25 Delaware Trigger Interpretation Delaware s Third Party Auditor recently began interpreting the DE statutes and regulations to require that property of shareholders for whom there was no return of mail was eligible for escheatment if the dormancy period had run. This was problematic for Dividend Reinvestment Plans and accounts with automatic deposit of dividends in bank accounts where the owner expects dividends to be reinvested or deposited with no act on the owner s part and for foreignaddress property. Securities Transfer Association (STA) and the Securities Industry and Financial Markets Association (SIFMA) wrote to the DE Governor in March and April The DE State Escheator s Office in May refined owner interest and control to include the mailing and non-return of a 1099 Life Insurance Industry Audits Begun by a third party auditor, Verus Financial LLC of Waterbury, CT, on behalf of 37 states (state unclaimed property divisions and/or insurance departments) of 21 insurance companies. At issue was the handling of death benefits. Resulted in: 1. In July 2011, New York s Dept. of Financial Services requiring 172 insurance companies to provide data regarding their handling of unclaimed insurance policies and annuities (the 308 letter). Reports are due in March. The NYDFS advised the companies to cross check all life insurance policies, annuity contracts and retained asset accounts using the latest version of the Social Security Administration s Death Master File. The NY comptroller and attorney general have launched a separate probe, subpoenaing the records of the state s nine largest insurers. 2. Settlements by large life insurance companies with states John Hancock settled with 22 states and the District of Columbia in April,

26 Life Insurance Industry Audits (2) 3. More Settlements: For California alone, Hancock had to restore the value of over 6,400 accounts, paying out over $20 million in death benefits. Prudential settled with at least 20 states for $17 million and an agreement to revise systems to do inexact Death Index matches and identification of beneficiaries and when necessary report amount due to state unclaimed property officials. 4. November, The National Conference of Insurance Legislators (NCOIL) issued a model act, called the Unclaimed Life Insurance Benefits Act which among other things mandates use of the Social Security Death Master File in determining policy holder matches and provides short time frames for reaching out to beneficiaries and for beneficiaries to file claims. 5. February 2012 US Congressional Representative Sam Johnson (R- Texas) initiates legislation to halt the use of the Death Master File - H.R. 3475, the Keeping IDs Safe Act of A hearing on the bill was held on February 2, 2012 in the Subcommittee on Social Security of the House Ways and Means Committee. 6. Spring 2012 Several state legislatures (i.e., AL, KY, MD, NY, TN) reviewed legislation similar to the NCOIL Unclaimed Life Insurance Benefits Act. AL, MD and KY enacted laws, NY invoked emergency regulations. Key Life Insurance DMI Audits Interesting Settlement Issues Some of the Key Issues in John Hancock, Prudential and MetLife Settlements: Interest Rate on Past Due: 3% interest penalty from maturity date or 1/1/1995 whichever is later Reach Back Period: to 1992 ERISA: States and Life Insurers reached a compromise. 23

27 Latest Developments: Recently Enacted Legislation / Regulation Alabama H.B. 126 Eff. 1/1/ Creates the Unclaimed Life Insurance Benefits Act which requires insurers to search the death master file at no fee plus other provisions including remitting unclaimed benefits/retained assets with interest to the State Treasurer. Searches required every 3 years after initial search. Kentucky H.B. 135 Eff. 1/1/ Requires life insurers to perform SSDMI searches quarterly on in-force policies and retained asset accounts and if benefits due, locate and notify beneficiaries. Effective 1/1/2013. Maryland S.B. 77 Eff. 10/1/ Requires Life insurers to compare, on a semi-annual basis, in-force life insurance policies against a Death Master File to determine potential matches and to make good faith efforts to locate beneficiaries; require escheat of policy proceeds if can't find bens, etc. NY Emergency Regulation - Requires life insurers to implement reasonable procedures to identify unclaimed death benefits, locate beneficiaries including cross checking their policies at least every three months with recent deaths using the Social Security Master File of deaths or another acceptable database Latest Developments: Recently Enacted Legislation Delaware S.B. 258 Eff. 7/11/2012. Creates a new VDA program under the DE Secretary of State The SOS program uses a shorter look back period ending either in 1996 or 1993 transaction year depending whether the VDA was completed by 6/30/2014 or 6/30/2015 (program sunset date). Businesses not currently under a DE UP audit and that have never reported UP or that have not reported all property would be eligible for the SOS program. Michigan H.B New B2B exemption. Effective 5/24/2012 but for items that would be reportable 7/1/2013. New law: UP law does not apply to any credit balances, overpayments, deposits, refunds, discounts, rebates, credit memos, or unidentified remittances created on or after April 1, 2009 and issued, held, due, or owing in any transactions between 2 or more associations. This exemption does not apply to outstanding checks, drafts, or other similar instruments. 9/16/

28 Latest Developments: Recently Enacted Legislation Michigan HB 5577 Eff. 8/1/2012. Reduces the time period within which the UP administrator may commence an action/proceeding with respect to any duty of a holder; 5 years after the duty arose. Reduces record retention requirement for any property to which the holder has the owner s last known address; 5 years after the property becomes reportable. North Carolina S.B. 810 Eff. 7/16/2012. The record retention period for holders required to file UP reports is decreased from 10 to 5 years after the holder files a report unless a shorter period is provided by rule. North Carolina H.B. 462 Eff. 7/12/2012. Prohibits the NC Treasurer from contracting for UP audits with third party auditors on a contingency fee basis or other method that may compromise the auditors independence. North Carolina S.B. 847 Eff. 7/17/2012. Prohibits the NC Treasurer from shall assigning further audits on a contingency fee basis to an auditing firm under a contract that would have been prohibited had the contract been entered into after October 1, Latest Developments: More Recently Enacted Legislation Idaho S.B Eff. 7/1/2012. Exempts the UP audit methodology and selection criteria from disclosure under the Public Records Act. New Jersey S.B Dormancy Period Increase. Eff. 6/29/2012. Stored value cards issued on or after 7/1/2010 would have a 5 yr dormancy period and only 60% of the card value must be reported. The zip code/address collection requirement stays but it begins 49 months after the bill s effective date, card expiration dates are prohibited. South Dakota H.B Dormancy Period Reduction. Eff. 7/1/2012. Generally reduces most dormancy periods from 5 to 3 years. State officials have informally advised new dormancy provisions will be enforced for 2013 reports. Texas H.B. 257 & S.B. 1A - Makes numerous changes: 1. Eff. 1/1/2013, annual report is due July 1, and (ii) owner notification mailings must be sent by May For 2012 reports, dormancy for utility deposits reduced to 1 yr; checking/savings accounts, matured CDs and money orders to 3 yrs

29 Latest Developments: Recently Enacted Regulation Delaware Emergency Regulation Eff. 3/31/2012. For securities or securities-related property $250 or greater, requires attempt to contact owners, via prepaid first class mail, between 120 and 60 days prior to reporting. Includes suggested letter language. Illinois Administrative Rule Section Effective 7/12/2012. Amendment now bases the sale date of remitted the securities from of the publication date as opposed to the date of receipt. Allows for a claimant a better chance to reclaim the property in the same form remitted by requiring that securities not by sold by until at least 1 year after the publication. Latest Developments: Pending Legislation / Regulation Illinois Administrative Rule - Rule Section Comment deadline 10/15/2012. Adds section b which specifies information that must be included in reports (i.e.owner social security #, address, zip code, date property became payable and last contact date, etc.). For life insurance companies, the amended regulation also requires the full name of the insured and any beneficiary /annuitant and the last known address in the life insurance corporation's records. Tennessee HB 2283 Would enact NCOIL model "Unclaimed Life Insurance Benefits Act. (Action deferred.) 9/16/

30 Resources 1. Unclaimed Property Professionals Organization (UPPO) (Annual Conference: March 24th 27th, 2013 in San Diego, CA) 2. National Association of Unclaimed Property Administrators (NAUPA) 3. NAUPA II Standard Reporting Format: (click on new reporting standard ) Uniform Unclaimed Property Act ty/uupa95.pdf 53 Questions? Your Presenter Today: Karen Anderson Senior Vice President Compliance / kanderson@uprrinc.com Unclaimed Property Recovery and Reporting, LLC 54 27