What are Unclaimed Property Laws all about?
Unclaimed property involves intangible property, normally cash, checks or securities. The only tangible property involved would be safe deposit box contents that goes unclaimed if the holder/bank may have lost contact with the owner.
Once the dormancy period has been met, normally 3 or 5 years, the state laws require the property to be reported and remitted to the appropriate state in a timely manner. The state where the property should be reported was decided by the 1965 Supreme Court case, Texas vs New Jersey which was:
~ (Priority Rule # 1) Unclaimed intangible property is reported to the state of the owner’s/payee’s last known address as reflected on the holder’s/entity’s books and records;
~ (Priority Rule #2) However, if the address is unknown (or where mail cannot be delivered) or a foreign address, the unclaimed property defaults to the holder’s state of incorporation/domicile.
The above-mentioned Priority Rules were tested by two additional court cases and upheld in Pennsylvania vs New York and Delaware vs New York. Once the statutory dormancy period has been met, the holder is obligated to report/remit the property to the appropriate state as prescribed in the Priority Rulings. It is worth noting that unclaimed property reporting is NOT a tax, therefore Nexus does not apply.
Please note that every state has adopted unclaimed property laws, some more robust than others, but all states have similar requirements and are governed by the Priority Rules.
It can be daunting trying to keep up with dormancy periods, reporting requirements and templates and current events happening in your state or across all of the states.
For further information on your unclaimed property reporting obligations or to discuss the laws, feel free to reach out to the professionals at PEACC.com by calling 410.303.5510 or email us at info@peacc.com.
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