Various changes to unclaimed property law; agreements by the Department of Revenue to allow third-party tax audits; burden of proof for tax assessments based on third-party audits; and requiring the exercise of rule-making authority. (FE)

Unclaimed Property Holder Rights and Obligations This bill makes various changes to the rights and obligations of persons in possession of property belonging to others (holders) under this state's version of the Uniform Unclaimed Property Act (UUPA).

Under current law, a holder in possession of property that is presumed abandoned and subject to the custody of this state as unclaimed property under the UUPA must annually file a report with the secretary of revenue regarding the property. In addition to the other information a holder must report under current law, this bill requires a holder to also report the date of birth and social security number or other tax identification number of each person who appears to own the property if that information is known and readily available to the holder. This bill requires annual reports to be filed no later than November 1 of each year. Under current law, reports must be filed before November 1 of each year.

This bill also requires a holder to maintain a record of all information included in a report for three years after the property becomes reportable. Under current law, the holder is only required to maintain a record of the name and last-known address of any owner of abandoned property included in the report, and the information must be maintained for five years after the property is actually reported to the secretary.

Under current law, a holder must, concurrently with the filing of a report, pay or deliver to the secretary all abandoned property included in the report. This bill provides that, with respect to contents of safe deposit boxes, a holder must pay and deliver the contents no earlier than February 1 and no later than February 15 of the year following the year in which the holder was required to file a report with respect to the contents.

Under this bill, if a holder fails to timely pay or deliver abandoned property to the secretary, the holder must pay interest on the value of the property at the annual rate of 6 percent. Under current law, the annual interest rate is 18 percent.

The bill also provides that a holder may appeal any determination made by the secretary in the same manner as a person may appeal income and franchise tax assessment determinations made by DOR. The UUPA does not currently provide any express appeal rights to holders.

This bill provides that no person may commence a civil action with respect to any duty of a holder more than three years after that duty arose. Under current law, a civil action must be commenced within five years.

Claims for Return of Abandoned Property Under current law, any person claiming an interest in property paid or delivered to the secretary under the UUPA may file a claim for return of the property.

This bill provides that any information provided by a claimant is confidential, except that if more than one claimant files a claim for return of the same property, the secretary may divulge to each claimant certain details about the property and the other claimants.

This bill also provides that a claimant may appeal an adverse determination made by the secretary in the same manner as a person may appeal income and franchise tax assessment determinations made by DOR. Under current law, a claimant aggrieved by a decision of the secretary may appeal that decision in circuit court.

This bill also allows the secretary, if the secretary determines that a claim was paid in error, to undertake collection actions and commence suit to recover the incorrect payment.

Voluntary Compliance Program This bill directs the secretary to create a voluntary compliance program to encourage persons who are not in compliance with their obligations under the UUPA to voluntarily report and pay or deliver abandoned property to the secretary. The secretary must promulgate rules to implement and administer the program. Among other things, the rules must allow a participant in the program to conduct his or her own audit to determine the participant's liability under the UUPA. A participant who successfully completes the program must report and pay or deliver all abandoned property for no more than the prior three fiscal years, and the participant will receive a reduction in or complete waiver of all interest and penalties that would have been imposed on the participant for noncompliance. The rules also must provide that if a participant in the program makes false or misleading statements in connection with the program, the secretary may revoke any benefits conferred on the participant under the program.

Business-to-Business Obligations This bill amends the definition of intangible property to exclude certain obligations owed by one business to another business. Under this bill, those business-to-business obligations are not covered under the UUPA. As a result, those obligations will not be presumed abandoned and subject to the custody of this state under the UUPA, even if the obligations remain unclaimed by the owner, and the holders of those obligations will not be required to turn over those funds to the secretary.

Period of Time after which Money Orders are Presumed Abandoned This bill reduces the period of time required for an unclaimed money order to be presumed abandoned under the UUPA. Under current law, a money order or other similar instrument, other than a third-party check, that has been outstanding for more than seven years after its issuance is presumed abandoned, unless the owner has communicated in writing with the issuer concerning the money order within that period of time. This bill reduces the applicable period of time from seven years to five years.

Prohibiting Third-Party Audits This bill prohibits the administrator from entering into an agreement to allow a person to engage in an audit of another person's documents or records in order to administer the unclaimed property law or to purchase information arising from the audit, except for information received by the federal government.