Legislature(2003 - 2004)

03/26/2004 03:26 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                                                               
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                                                               
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                                                               
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                                                               
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.                                                                                                

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