Kellie Lanford; Marshal Kline
All fifty states in addition to the District of Columbia, Puerto Rico, and the U.S. Virgin Islands have unclaimed property laws. These laws require holders of unclaimed property to report and remit such property to the state (after a prescribed period of time has elapsed) until the owner of such property can be located. Unclaimed property is generally remitted to a state based upon the “first” and “second” priority rules that were established under Texas v. New Jersey. Pursuant to these rules, the state of the last known address of the owner, as shown by the holder’s books and records, has a first priority right to the unclaimed property. If the holder has no record of the owner’s last known address, or if the last known address is in a state that does not provide for the escheatment of the abandoned property, then the holder’s state of incorporation has a second priority right to that unclaimed property.
If these rules are as simple and straightforward as they seem, why is there always controversy in this area? Do states have the authority to escheat unclaimed property under other priority schemes? If so, should holders be concerned?
Find out these answers and more by reading the full newsletter here.
Showing posts with label unclaimed property. Show all posts
Showing posts with label unclaimed property. Show all posts
Tuesday, January 24, 2012
Friday, January 20, 2012
State Tax Alerts - This Week's Stories Worth a Second Look
Rusty Little
In case you missed them, the following is a summary of a few key state tax developments, news articles, and observations during the past week:
U.S. Court of Appeals for the Third Circuit Affirms District Court of New Jersey's Orders - On January 5, 2012, the U.S. Court of Appeals for the Third Circuit (“Third Circuit”) affirmed the District Court of New Jersey’s (“District Court”) grant of preliminary injunction with respect to the retroactive enforcement of Chapter 25 (as it relates to stored value cards) and the prospective enforcement of the place-of-purchase presumption and the accompanying Treasury Guidance. Read more HERE
A few more states have introduced online sales tax/click-through nexus legislation:
Two more states have recently addressed the sales tax ramifications of Groupon-type deals:
(Note - both Kentucky and Maine treat these deals correctly, unlike the other states discussed HERE)
It has been relatively quiet in the area federal online sales tax legislation, but here is the text of each piece of the currently proposed online sales tax legislation for your reference in the meantime.
Many states have various tax proposals in front of their Legislatures right now, so stay tuned . . .
In case you missed them, the following is a summary of a few key state tax developments, news articles, and observations during the past week:
U.S. Court of Appeals for the Third Circuit Affirms District Court of New Jersey's Orders - On January 5, 2012, the U.S. Court of Appeals for the Third Circuit (“Third Circuit”) affirmed the District Court of New Jersey’s (“District Court”) grant of preliminary injunction with respect to the retroactive enforcement of Chapter 25 (as it relates to stored value cards) and the prospective enforcement of the place-of-purchase presumption and the accompanying Treasury Guidance. Read more HERE
A few more states have introduced online sales tax/click-through nexus legislation:
Two more states have recently addressed the sales tax ramifications of Groupon-type deals:
(Note - both Kentucky and Maine treat these deals correctly, unlike the other states discussed HERE)
It has been relatively quiet in the area federal online sales tax legislation, but here is the text of each piece of the currently proposed online sales tax legislation for your reference in the meantime.
Many states have various tax proposals in front of their Legislatures right now, so stay tuned . . .
Wednesday, January 18, 2012
U.S. Court of Appeals for the Third Circuit Affirms District Court of New Jersey's Orders
Regarding 2010 N.J. Amendments to its Unclaimed Property Law
by Kellie Lanford
On January 5, 2012, the U.S. Court of Appeals for the Third Circuit (“Third Circuit”) affirmed the District Court of New Jersey’s (“District Court”) grant of preliminary injunction with respect to the retroactive enforcement of Chapter 25 1 (as it relates to stored value cards) and the prospective enforcement of the place-of-purchase presumption and the accompanying Treasury Guidance. The Third Circuit also affirmed the District Court’s denial of preliminary injunction as to the data collection provision and the two-year abandonment period.
Keep in mind that this decision was issued in response to a preliminary injunction motion and that further litigation is likely.
Retroactive Enforcement of Chapter 25
Prior to the enactment of Chapter 25, New Jersey unclaimed property law did not provide for the escheatment of gift certificates. Chapter 25 now provides for the escheatment of stored value cards (“SVCs”) which include gift certificates, gift cards, rebate cards, and other similar instruments.
The Third Circuit held that SVC issuers “showed a reasonable likelihood of success on the merits of their Contract Clause claim with respect to SVCs that are redeemable for merchandise and services” for the following reasons:
Chapter 25 §5(c) provides that “[i]f the issuer of a stored value card does not have the name and address of the purchaser or owner of the stored value card, the address of the owner or purchaser of the stored value card shall assume the address of the place where the stored value card was purchased or issued and shall be reported to New Jersey if the place of business where the stored value card was sold or issued is located in New Jersey.”
The Third Circuit held that “SVC Issuers demonstrated a reasonable likelihood of success on their claim that Chapter 25’s place-of-purchase presumption as well as the Treasury Guidance are preempted under federal common law.” The Court stated that the place-of-purchase presumption language directly contradicts the second priority rule as provided in Texas v. New Jersey,2 and the presumption, if executed in accordance with the Treasury Guidance, allows New Jersey to infringe on the sovereign authority of other states.
Watch for our upcoming SALT To Taste for further information about this New Jersey development and discussion of “third” priority rules.
Data Collection Provision
Chapter 25 §5(c) further provides that SVC issuers “shall obtain the name and address of the purchaser or owner of each stored value card issued or sold and shall, at a minimum, maintain a record of the zip code of the owner or purchaser.”
The Third Circuit held that “the District Court did not abuse its discretion in denying a preliminary injunction of the data collection provision.” The Court stated that the data collection provision furthers the purpose of reuniting customers with their property by making it more likely that the State will be able to reunite the owner with the abandoned SVC funds. Additionally, the Court stated that the “State Legislature’s intent suggests that Chapter 25’s data collection provision is severable from the place-of-purchase presumption.”
Two-Year Abandonment Period
Chapter 25 presumes SVCs to be abandoned after two years of inactivity and requires issuer to transfer to the State the remaining value of the SVCs at the end of the two-year abandonment period.
The Third Circuit held that “SVC Issuers failed to show a reasonable likelihood of success on the merits of their claim that Chapter 25’s two-year abandonment period is expressly preempted by the federal Credit CARD Act of 2009.” In reaching this conclusion, the Court stated that “the CARD Act only requires the funds to be available for five years whereas Chapter 25 protects the funds in perpetuity. Second, even with respect to non-expiring gift cards, Chapter 25 still provides greater protection because the consumer is able to reclaim the full cash value of the SVC under Chapter 25 after two years, whereas he would have been able to redeem only merchandise or services using the SVC.”
1. 2010 N.J. Laws Chapter 25 which amended New Jersey's unclaimed property statute.
2.Texas v. New Jersey, 379 U.S. 674 (1965).
by Kellie Lanford
On January 5, 2012, the U.S. Court of Appeals for the Third Circuit (“Third Circuit”) affirmed the District Court of New Jersey’s (“District Court”) grant of preliminary injunction with respect to the retroactive enforcement of Chapter 25 1 (as it relates to stored value cards) and the prospective enforcement of the place-of-purchase presumption and the accompanying Treasury Guidance. The Third Circuit also affirmed the District Court’s denial of preliminary injunction as to the data collection provision and the two-year abandonment period.
Keep in mind that this decision was issued in response to a preliminary injunction motion and that further litigation is likely.
Retroactive Enforcement of Chapter 25
Prior to the enactment of Chapter 25, New Jersey unclaimed property law did not provide for the escheatment of gift certificates. Chapter 25 now provides for the escheatment of stored value cards (“SVCs”) which include gift certificates, gift cards, rebate cards, and other similar instruments.
The Third Circuit held that SVC issuers “showed a reasonable likelihood of success on the merits of their Contract Clause claim with respect to SVCs that are redeemable for merchandise and services” for the following reasons:
(1) The change in New Jersey law substantially impaired the contractual relationship by requiring SVC issuers to submit the value of the SVC in cash at the end of the dormancy period (even though the SVCs are not redeemable for cash) as this expected profit was vital to the issuer’s contractual relationship. The retroactive obligations imposed by Chapter 25 also impaired the contractual relationship as this was an unexpected obligation since New Jersey had never before provided for the escheatment of SVCs.
(2) Although it was determined that the law change had a “legitimate and important public purpose” because its goal was to reunite abandoned property with its owners, the “adjustment of the rights of the parties to the contractual relationship was [not] reasonable and appropriate in light of that purpose,” given that it failed to allow SVC issuers to collect their expected profits.Place-of-Purchase Presumption
Chapter 25 §5(c) provides that “[i]f the issuer of a stored value card does not have the name and address of the purchaser or owner of the stored value card, the address of the owner or purchaser of the stored value card shall assume the address of the place where the stored value card was purchased or issued and shall be reported to New Jersey if the place of business where the stored value card was sold or issued is located in New Jersey.”
The Third Circuit held that “SVC Issuers demonstrated a reasonable likelihood of success on their claim that Chapter 25’s place-of-purchase presumption as well as the Treasury Guidance are preempted under federal common law.” The Court stated that the place-of-purchase presumption language directly contradicts the second priority rule as provided in Texas v. New Jersey,2 and the presumption, if executed in accordance with the Treasury Guidance, allows New Jersey to infringe on the sovereign authority of other states.
Watch for our upcoming SALT To Taste for further information about this New Jersey development and discussion of “third” priority rules.
Data Collection Provision
Chapter 25 §5(c) further provides that SVC issuers “shall obtain the name and address of the purchaser or owner of each stored value card issued or sold and shall, at a minimum, maintain a record of the zip code of the owner or purchaser.”
The Third Circuit held that “the District Court did not abuse its discretion in denying a preliminary injunction of the data collection provision.” The Court stated that the data collection provision furthers the purpose of reuniting customers with their property by making it more likely that the State will be able to reunite the owner with the abandoned SVC funds. Additionally, the Court stated that the “State Legislature’s intent suggests that Chapter 25’s data collection provision is severable from the place-of-purchase presumption.”
Two-Year Abandonment Period
Chapter 25 presumes SVCs to be abandoned after two years of inactivity and requires issuer to transfer to the State the remaining value of the SVCs at the end of the two-year abandonment period.
The Third Circuit held that “SVC Issuers failed to show a reasonable likelihood of success on the merits of their claim that Chapter 25’s two-year abandonment period is expressly preempted by the federal Credit CARD Act of 2009.” In reaching this conclusion, the Court stated that “the CARD Act only requires the funds to be available for five years whereas Chapter 25 protects the funds in perpetuity. Second, even with respect to non-expiring gift cards, Chapter 25 still provides greater protection because the consumer is able to reclaim the full cash value of the SVC under Chapter 25 after two years, whereas he would have been able to redeem only merchandise or services using the SVC.”
1. 2010 N.J. Laws Chapter 25 which amended New Jersey's unclaimed property statute.
2.Texas v. New Jersey, 379 U.S. 674 (1965).
Tuesday, August 16, 2011
An Introduction to the Basics of Unclaimed Property Audio Teleconference
Thursday, September 8, 2011
2:00 p.m. - 3:00 p.m. EST
Unclaimed property reporting is perpetually under intense scrutiny in many states. Dow Lohnes Price speakers Kellie A. Lanford, CPA and Marshal T. Kline, CPA will provide a “basic overview” of important terminology, priority rules, due diligence requirements and other unclaimed property considerations. Participants will learn the requirements for identifying and reporting unclaimed property so they can maintain compliance or take the necessary steps to become compliant.
Course Details:
CPE Credit: 1.0 CPE credit (based on a 50 minute credit hour)
Location: Virtual via teleconference
Delivery Method: Group-Live
Field of Study: Specialized Skills and Applications
Program Level: Basic
Prerequisites: None
Advance Preparation: None
The cost of the teleconference is $45 for the first attendee and $25 for each additional attendee on the same connection. Please use the following link to register for the course. Registration Form
Information regarding course speakers can be accessed below:
Kellie A. Lanford - Biography
Marshal T. Kline - Biography
Dow Lohnes Price Tax Consulting Group LLC 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 37219-2417. Web site: http://www.nasba.org/.
Course Details:
CPE Credit: 1.0 CPE credit (based on a 50 minute credit hour)
Location: Virtual via teleconference
Delivery Method: Group-Live
Field of Study: Specialized Skills and Applications
Program Level: Basic
Prerequisites: None
Advance Preparation: None
The cost of the teleconference is $45 for the first attendee and $25 for each additional attendee on the same connection. Please use the following link to register for the course. Registration Form
Information regarding course speakers can be accessed below:
Kellie A. Lanford - Biography
Marshal T. Kline - Biography
Dow Lohnes Price Tax Consulting Group LLC 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 37219-2417. Web site: http://www.nasba.org/.
Thursday, April 28, 2011
Are You Being Diligent with Your Due Diligence? A Look at Unclaimed Property
In the January/February issue of Journal of State Taxation, see how you can avoid unnecessary scrutiny from both states and rightful property owners by staying on top of your due diligence reporting responsibilities. Diligent efforts now will lessen your risk of costly lawsuits and damages stemming from claims of property owners.
Click to view full article here.
Reprinted with permission by Journal of State Taxation.
Click to view full article here.
Reprinted with permission by Journal of State Taxation.
Tuesday, April 26, 2011
SALT To Taste: Are You Being Diligent with Your Due Diligence? A Look at Unclaimed Property
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