Legislature(2003 - 2004)
04/16/2004 09:09 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 231(STA)
"An Act relating to unclaimed property; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
TOM BOUTIN, Deputy Commissioner, Department of Revenue, testified
this bill would change the Alaska Uniform Unclaimed Property Act to
generally comply with other regulations in the nation governing
unclaimed property. He specified that this bill would shorten time
periods after which ownership of unclaimed property would be
transferred to the State.
RACHEL LEWIS, Unclaimed Property Administrator, Treasury Division,
Department of Revenue, testified this bill would reduce the
"dormancy periods" of unclaimed property. She overviewed that the
amount of time before which unclaimed property would transfer to
State ownership would change from either five years to three years
or seven years to five years. She surmised this legislation would
improve chances of locating the owners of unclaimed property, would
permit businesses to remove the liabilities from accounts, and
would transfer unclaimed property to the State general fund sooner
"where it could be used for everyone in the state of Alaska." She
qualified this legislation does not specifically address
demutualization, which is a new practice began the release of the
Uniform Law Commissioners Draft of 1995, which this legislation is
based upon.
Senator Bunde asked for further definition of the demutualization
matter.
Ms. Lewis deferred to industry representatives.
Senator Olson asked the percentage of property currently claimed
after the third year and before five to seven years.
Ms. Lewis replied the incidence of claims is greatly reduced over
time. She predicted an increase of claimed property in the first
two years due to the compressed timeframe.
Senator Hoffman asked what additional measures would be undertaken
to identify, locate and notify owners of unclaimed property.
Ms. Lewis replied that currently the Division is required to
advertise in newspapers unclaimed property notices annually. She
stated this is expensive, and that the Division has found other
more cost-effective methods, including maintaining an Internet
website, national television programs and commercials, and booths
at conferences and fairs. She stressed that funding for these
efforts is limited to the $30,000 budget and that this legislation
would allow the Division to identify and implement the most
efficient and successful methods.
Senator Hoffman asked if the Internet is the most effective method
for Alaska.
Ms. Lewis reiterated that currently, the Division is required to
advertise through newspapers, although more effective methods have
been identified. This legislation would allow the Division to
evaluate different methods. She listed 300 claims resulting from a
$30,000 newspaper advertising campaign the previous year, compared
to 1,600 claims resulting from an Internet posting at no cost to
the State.
Senator Olson challenged that many rural residents are not
"property minded" and unlikely to surf the Internet.
Ms. Lewis replied that many people tend to surf the Internet, and
notify neighbors, friends and relatives if information is found.
Senator Olson countered that rural areas have limited computer
access and therefore Internet surfing is not possible.
Ms. Lewis responded that this legislation would permit the Division
to determine the best way to address the issue of notifying owners
of unclaimed property. She surmised that if the newspaper
advertising were not required, the funds could be utilized in a
more effective manner.
Amendment #1: This amendment replaces the language in Section 5 on
page 3 of the committee substitute to 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. Property distributable in the course
of a demutualization or related reorganization of an insurance
company shall be deemed abandoned as follows:
(A) any funds, two years after the date of the
demutualization or reorganization, if the funds remain
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;
(B) any stock or other equity interest, two years after
the date of the demutualization or reorganization if
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 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.
(C) property not subject to (A) or (B) above within two
years of the distribution shall remain reportable under other
sections of this chapter.
Senator Bunde moved for adoption and objected for discussion
purposes.
Mr. Boutin indicated he has read the amendment and agreed with the
concept. He deferred to Ms. Lewis and the Department of Law to
explain the provisions.
Ms. Lewis remarked that the Division agrees "wholeheartedly" with
the amendment, which was suggested by industry and she noted that
the National Association of Unclaimed Property Administrators also
supports the amendment.
MARY ELLEN BEARDSLEY, Assistant Attorney General, Commercial/Fair
Business Section, Civil Division, Department of Law, testified via
teleconference from Anchorage that she has not had an opportunity
to adequately review the amendment. She indicated the Department
agrees with the concept of the proposed changes.
Senator Bunde directed attention to a memorandum from the
legislative Division of Legal and Research Services [copy on file],
which also raises concerns with the amendment.
No further action was taken on the amendment or the bill.
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