Legislature(2003 - 2004)
03/26/2004 03:26 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 330-DECREASE TIME TO CLAIM UNCLAIMED PROPERTY CHAIR ANDERSON announced that the final order of business would be HOUSE BILL NO. 330, "An Act shortening the time periods after which certain unclaimed property is presumed to be abandoned; and providing for an effective date." Number 2003 RACHEL LEWIS, Unclaimed Property Section, Treasury Division, Department of Revenue (DOR), reported that HB 330 was introduced late into last year's legislative session, [sponsored by the House Rules committee by request of the governor] and reworked over the interim, and as a result, DOR and the Department of Law arrived at suggested amendments. Number 1980 REPRESENTATIVE LYNN moved to adopt the proposed committee substitute (CS) for HB 330, Version 773-04-0035 Hbil.doc, 12/5/2003, as the working document. There being no objection, Version 773-04-0035 was before the committee. MS. LEWIS explained the differences between the previous and current versions of the bill. She said that the first version of the bill addressed specifically dormancy periods with unclaimed property. It lowered dormancy or abandonment periods when a check has gone uncashed for a period of time. "The proposed CS addresses other parts of the Uniform Law Commissioner's Model Punitive Damages Act of 1995, which also had things to do with cleaning up some definitions and adding a burden of proof section, which the State of Alaska statute did not," she related. It also eliminates, in Section 6, the seven distributions for stock before it becomes unclaimed property. Number 1892 MS. LEWIS explained that in Section 10 the language is cleaned up regarding unclaimed property below $100. Unclaimed property need not be reported unless it totals $750, she added. Section 11 is an addition about uniform law commission and talks about examining reports of people who have unclaimed property. MS. LEWIS said that in the past DOR was required to publish in the paper every year the new unclaimed property reported with value over $100, which cost about $30,000. Last year there were 348 claims from the newspaper publication notice and 1,806 claims from the DOR web site, which bears no cost, and which generated $390,000 being returned to unclaimed property owners, she said. Section 13 leaves it up to DOR to determine how to give notice of unclaimed property, she pointed out. MS. LEWIS reported that all of the dormancy periods are directly in line with the uniform law commission. She said that DOR is trying to narrow it down for people who are reporting unclaimed property to make it easier for them. There is a better chance of finding the owner of unclaimed property when the dormancy period is shorter, she said, and it is a benefit to the state because the money is put in DOR's trust fund. Number 1773 REPRESENTATIVE DAHLSTROM thanked Ms. Lewis for the great job in testifying for the first time. She asked for the numbers regarding publication costs to be repeated. MS. LEWIS repeated the numbers. REPRESENTATIVE DAHLSTROM asked if the reason so much more money was generated from the web site is because it had a national audience. MS. LEWIS said yes. Number 1730 REPRESENTATIVE ROKEBERG asked about the definition of gift certificate as defined in Sections 16 and 14, whether it is the gift certificate itself or the unused balance held by the corporation. MS. LEWIS said it is supposed to come to unclaimed property as the gift certificate number and the person's name. The full amount of the gift certificate is reimbursed, she said. If there is a balance on the gift certificate, then it would only be the remaining balance, she added. She said gift certificates are already mentioned in the law, but what is not included are electronically stored gift cards. REPRESENTATIVE ROKEBERG asked if DOR is asking companies to report their unclaimed balances. MS. LEWIS said yes. REPRESENTATIVE ROKEBERG asked if retailers typically report to the state this unclaimed money. MS. LEWIS replied that there is low compliance from gift certificates. REPRESENTATIVE ROKEBERG asked about the time period for unclaimed stocks. MS. LEWIS explained that any activity on a stock certificate like a stock split, a dividend, a merger, or an acquisition will take "seven of those pieces of activity that's generated by a company before it's considered unclaimed." The Uniform Law Commissioner's Model Punitive Damages Act eliminates that completely. "After five years, when you send a dividend check and it's not cashed, and you send a last-known letter to that address, if they still haven't responded, it's unclaimed. Five years is long enough. You don't have to wait for that other activity," she said. CHAIR ANDERSON asked if anyone has strong opposition to [the proposed CS to HB 330]. Number 1530 MS. LEWIS explained the demutualization section of the bill was not listed in the Uniform Law Commissioner's Model Punitive Damages Act in 1995, which most states are using now. It is a relatively new type of property that was generated because mutual companies, in order to create revenue, decided to take what were know as policyholders for life insurance and turn them into stockholders so that they could generate revenue. Ms. Lewis continued to explain: Between the time when you are a policyholder with an insurance company and when that policy pays out, there is usually no activity. It's only upon the death of someone that that would happen. You know your premium's paid; 25 to 30 years later when you die, your estate is going to get the life insurance money. By making it a stock form of ownership, they have not tried to contact any of these lost policyholders, so now we have a lot, and it's estimated that between $100 billion to $200 billion worth of stock and stock proceeds generated from these demutualizations that are being held by companies - as their lost stockholders now, but they were originally policyholders - they've been lost for years. So demutualization is saying those companies have no way of knowing if those policyholders are lost and not to wait until the date of demutualization happened to start the countdown for making it unclaimed property, but to make the countdown start when they know that the policyholder became abandoned from their property. There are 13 states that have adopted this language. It's just because we know right now that there are people who are lost and their property is not getting turned over because the companies are holding it as active accounts because nothing has given them the flag that it's inactive. Number 1437 REPRESENTATIVE GUTTENBERG related a story about a person he knows who had a stock investment for a long period of time. For many years that person made contributions and then stopped. They got a notice that their account had been lost and was found by a third party who tried to claim a reward of 25 percent for telling the person where their money was. He asked if this is the kind of situation Ms. Lewis is referring to. MS. LEWIS replied that there are two different issues in this case. Fee finders have access to those records before the state has an opportunity to try and locate the lost money, she reported. REPRESENTATIVE GUTTENBERG relayed that the person had been receiving notices all along but didn't respond and so their account was abandoned. In this case the person couldn't read, he said. CHAIR ANDERSON said it is a concern, but is probably best discussed in regulations rather than statute. Number 1334 REPRESENTATIVE LYNN said the proposed CS has been explained so well that he has no questions. REPRESENTATIVE DAHLSTROM moved to report CSHB 330, Version 773- 04-0035, Hbil.doc, 12/5/2003, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 330(L&C) was reported from the House Labor and Commerce Standing Committee.