California Unclaimed Property Update

An injunction was recently issued against the state of
California forbidding it to collect any unclaimed property funds until
stronger controls and due diligence procedures are implemented. A
preliminary injunction was ordered on June 1st and has since sent major
waves through the world of unclaimed property.

California
had fallen far behind in putting data into the system and is failing to
perform statutory requirements like actively seeking out owners
entitled to unclaimed property. As a result, a group of citizens filed
a class action suit against the state for failing to perform its
responsibilities as a custodian to their unclaimed funds. After winning
the case, the U.S. District Court ordered the state to put a halt on
collecting unclaimed property until the problem was resolved. Companies
should, however, be aware that just because the state isn’t collecting
the property, doesn’t mean that a business can be lackadaisical about
reporting any unclaimed property. For most states, including
California, the deadline for filing unclaimed property is on or before
November 1st.

While the state is still in the process of
formalizing next steps and procedures, the following guidance has been
provided to the holder community. This is not the final plan but it
gives an idea of what to expect so that companies can develop new
processes.

The new policy has received partial approval
and the budget committee is reviewing the dollar impact. The change
doesn’t apply to life insurance companies as they are on a different
reporting cycle.

  • All holders will be required to submit the October 31st preliminary report    on remittances only
  • State will send out a due diligence mailing within 165 days (tentative date set for January)
  • Stop date for inquires will be April 14th
  • Owners are referred to as Holders
  • Final reports due between June 1-15.

Stay tuned to eNews and Business Credit for more updates.
Source: Jacob Barron, NACM staff writer

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