Legislature(2003 - 2004)
05/05/2004 09:03 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 231-DECREASE TIME TO CLAIM UNCLAIMED PROPERTY Number 1433 CHAIR WEYHRAUCH announced that the next order of business was CS FOR SENATE BILL NO. 231(FIN), "An Act relating to unclaimed property; and providing for an effective date." CHAIR WEYHRAUCH moved to adopt CSSB 231(FIN). REPRESENTATIVE HOLM objected. Number 1449 MARY ELLEN BEARDSLEY, Assistant Attorney General, simply noted that she had assisted the department in drafting the legislation, and she offered to answer questions. Number 1463 TODD THAKAR, testifying on behalf of Prudential Financial, stated that company's support of [SB 231]. He offered to answer questions. Number 1515 REPRESENTATIVE GRUENBERG mentioned there would be a need to update the bill to the new "Unclaimed Property Act." [SB 231 was heard and held until later in the meeting.] SB 231-DECREASE TIME TO CLAIM UNCLAIMED PROPERTY Number 1718 CHAIR WEYHRAUCH announced that the committee would return to CS FOR SENATE BILL NO. 231(FIN), "An Act relating to unclaimed property; and providing for an effective date." The committee took a brief at-ease [due to technical difficulties]. Number 1673 TOMAS H. BOUTIN, Deputy Commissioner, Office of the Commissioner, Department of Revenue, said SB 231 was "worked on last May." The committee took a brief at-ease [due to technical difficulties]. MR. BOUTIN stated that SB 231 benefits all Alaskans. He deferred further remarks to Ms. Lewis. RACHEL LEWIS, Unclaimed Property Section, Treasury Division, Department of Revenue, emphasized that SB 231 is in line with the Revised Uniform Unclaimed Property Act of 1995 ("1995 Act"), which was the commissioner's update of the Uniform Act of 1981. She indicated that Alaska [enacted its Unclaimed Property Act] in 1986. She said every portion of the bill, with the exception of four sections, is "straight from the 1995 Act." Any question regarding the shortening of the dormancy periods, she indicated relates to the 1995 Act. She said she would address the sections of the bill that are not in line with the 1995 Act. MS. LEWIS directed attention to Section 5, on page 3, which read as follows: *Sec.5. AS 34.45 is amended by adding a new section to read: Sec. 34.45.175. Certain property distributed in insurance company reorganizations. (a) The following property distributable in the course of a demutualization or related reorganization of an insurance company is considered abandoned two years after the date of demutualization or reorganization as follows: (1) money that remains unclaimed and the owner has not otherwise communicated with the holder or its agent regarding the property as evidenced by a memorandum or other record on file with the holder or its agent; (2) stock or other equity interest if (A) the instruments or statements reflecting the distribution are either mailed to the owner and returned by the post office as undeliverable, or not mailed to the owner because of an address on the books and records of the holder that is known to be incorrect; and (B) the owner has not otherwise communicated with the holder or its agent regarding the property as evidenced by a memorandum or other record on file with the holder or agent. (b) Property that is not subject to (a) of this section is reportable as otherwise provided in AS 34.45.110-34.45.780. MS. LEWIS explained that the 1995 Act did not address this section, because "it's a relatively new area of unclaimed property." She deferred to Mr. Thakar to address questions regarding the industry side of "demutualization." Number 1574 MR. THAKAR, stated that Prudential Financial supports the addition of Section 5, with regard to demutualization. He noted that there are quite a few insurance companies that were mutual companies that have "demutualized." The committee took a brief at-ease [due to technical difficulties]. Number 1528 MR. THAKAR explained that the companies that have demutualized have become stock companies. He offered his understanding that 25-26 other states have passed virtually identical legislation. He mentioned that Prudential Financial demutualized in 1991 and there were "known bad addresses." He said, "And so, those are the people that would be covered by this bill and would immediately be issued into the state." He noted that several states had asked if "we" had uncashed checks, why weren't "we" also issuing those, thus there has been an amendment that several states have included that would allow "if there's any uncashed checks from our demutualization, that those two would immediately escheat to the state." He said Prudential Financial supports this because it's consistent with what's being done across the country. He stated his belief that [the legislation] would generate a revenue of approximately $100,000 to Alaska. Number 1468 REPRESENTATIVE GRUENBERG noted that the attorney liability protection service (ALP) - his malpractice carrier - has gone through the demutualization. He said Prudential Financial obviously not an Alaska corporation; the assets presumably, in a demutualization, would not be held in Alaska; therefore, he presumed that state of the home office "would be the applicable law in demutualization." He asked if that was correct. MR. THAKAR offered his understanding that "if we know that our last known address, et cetera, is an Alaskan, than Alaska law would dictate on the escheatment timing." In response to a follow-up question from Representative Gruenberg, he confirmed that the law would apply to the home state of the individual, rather than to the company. REPRESENTATIVE GRUENBERG asked if one of the upcoming amendments addresses the issue of the uncashed checks. MR. THAKAR responded that "it was part of the amendment which we all supported in the Senate version, so it would be incorporated in the bill as is, right now." Number 1379 MS. LEWIS, in response to a follow-up question from Representative Gruenberg, noted that the amendment incorporated by the Senate is located on [page 3, beginning on] line 19, which read as follows: (1) money that remains unclaimed and the owner has not otherwise communicated with the holder or its agent regarding the property as evidenced by a memorandum or other record on file with the holder or its agent; REPRESENTATIVE GRUENBERG mentioned the Uniform [Unclaimed Property Act of 1995] and asked if the addition of Section 5 will destroy the uniformity of [Alaska's Unclaimed Property Act]. MS. LEWIS replied that she doesn't think it will affect the uniformity of the Act, because so many states have realized that "they have already added this to their current laws." REPRESENTATIVE GRUENBERG suggested, "If they're going to revise this Act again, maybe this is a provision they ought to put in the new addition." Number 1318 DEBORAH BEHR, Assistant Attorney General, Legislation & Regulations Section, Office of the Attorney General, Department Of Law, said she is also a Uniform Law commissioner. She noted that the act was adopted in 1995, and she stated that it's not unusual for "events in society to pass it by." She noted that laws are routinely updated, especially for electronic commerce or new trends in industry. She stated her assumption that "with 28 states going in a particular direction, we'll be looking at it." She continued as follows: When I look at things being not uniform, I look that they trump or do something different. If the Uniform Act is silent on it, we're extremely comfortable with the changes that are (indisc. - voice trailed off). Number 1280 MS. LEWIS directed attention to Section 10, [on page 5, lines 20-26], which she said is different from what is in the Uniform Law Commission has in its '95 Act. Section 10 read as follows: *Sec.10. AS 34.45.280(f) is repealed and reenacted to read: (f) The requirements of this section apply to the holder of intangible property with a total aggregate value greater than $750 that is presumed abandoned under AS 34.45.110 - 34.45.780 during the year preceding June 30 of each year. For purposes of determining total aggregate value under this subsection, the holder shall include all intangible property from prior years that was not reported under AS 34.45.110 - 34.45.780. MS. LEWIS noted, "Alaska is the only state that has this unique language, and it was put in by the legislators in 1986, because they did not want companies to have too much paperwork to report unclaimed property." She said unclaimed property is an uncashed check. For example, if there is a "Mom and Pop" store in Alaska that wrote a 16-cent check to the U.S. Post Office that didn't get cashed, the language adopted in 1986 would allow the owners of that store to wait until they had $750-worth of property before they would be required to report it. REPRESENTATIVE GRUENBERG stated his assumption that since "this provision" is simply a clarification, it wouldn't "make it not uniform." He asked Ms. Behr if that is correct. Number 1212 MS. BEHR answered, "We would not have a problem with it. We now are credited with our '85 Act; this makes no real substantive difference in the '85 Act." MS. LEWIS directed attention to Section 13, [regarding notice and publication of lists of unclaimed property]. She continued as follows: Our law requires that we publish the names of people every single year in a newspaper. That cost $30,000 last year. We had 300 claims that were generated from that. The Internet, which costs us nothing, generated 1,600 claims. MS. LEWIS said [Section 13] asks the department to evaluate the best way to promote unclaimed property, without always having to advertise. Number 1170 CHAIR WEYHRAUCH expressed his appreciation of the stated providing an analytical basis for "doing ... a common sense thing." REPRESENTATIVE GRUENBERG asked, "Does this destroy uniformity?" Number 1142 MS. BEHR responded, "It's one of these where the events of society have ... passed the '95 Act; in '95 the average person didn't have ... [the] access to computers that they do now. And the nice thing about the way this is written, it allows her to evaluate what is the best way to notify somebody ...." Number 1125 MS. LEWIS noted that the last section that differs from the Uniform Law Commission's 1995 Act is Section 17, which read as follows: *Sec.17. AS 34.45.760 is amended by adding new paragraphs to read: (18) "gift certificate" means an obligation of a business association arising from a transaction between the business association and a consumer to provide goods or services at a future date; "gift certificate" includes a gift certificate, stored value card, gift card, on-line gift account, or other representation or evidence of the obligation of a business association; MS. LEWIS indicated that the term "gift certificate" is being expanded because of all the different types of electronic variations of a gift certificate, which are listed in Section 17. MS. BEHR, in response to a question from Chair Weyhrauch, stated that [Section 17] would not put Alaska out of conformity with the Uniform Act, because it's just a clarification to deal with electronic commerce that wasn't envisioned in 1995. Number 1088 REPRESENTATIVE GRUENBERG said he likes all of the provisions that have been added that are not in the Uniform Act and recommended that other states add them. MS. BEHR responded that she would be happy to "formerly send this to them ...." Number 1048 REPRESENTATIVE SEATON moved to report CSSB 231(FIN) out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE GRUENBERG asked Ms. Lewis if there were any other amendments that she wanted the committee to consider. [Any response from Ms. Lewis was inaudible.] CHAIR WEYHRAUCH complimented Ms. Lewis on a "good job." Number 0999 CHAIR WEYHRAUCH announced that [CSSB 231(FIN)] was reported out of the House State Affairs Standing Committee.
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