BILL ANALYSIS Ó
AB 212
Page 1
ASSEMBLY THIRD READING
AB 212 (Lowenthal)
As Amended May 24, 2013
Majority vote
JUDICIARY 7-2 APPROPRIATIONS 12-5
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|Ayes:|Wieckowski, Alejo, Chau, |Ayes:|Gatto, Bocanegra, |
| |Dickinson, Garcia, | |Bradford, |
| |Muratsuchi, Stone | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Hall, |
| | | |Ammiano, Pan, Quirk, |
| | | |Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Wagner, Maienschein |Nays:|Harkey, Bigelow, |
| | | |Donnelly, Linder, Wagner |
| | | | |
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SUMMARY : Lowers the minimum threshold amount for aggregate
reporting of unclaimed property from $50 to $25, to take effect
July 1, 2014. Specifically, this bill :
1)Requires, as of July 1, 2014, aggregate reporting of unclaimed
property valued under $25 unless the name of the owner is
unknown and there is no last known address in the holder's
records.
2)Clarifies that the holder may impose a service charge of up to
$2 to send the notification, but only if the unclaimed
property has a value greater than $2.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, the State Controller's Office (SCO) indicates that,
over the last five years, an average of $13.6 million in
aggregate-reported property has escheated annually to the state.
Under this bill, each of the individual properties currently
aggregated, for which the holder has identifying information
about the owner, will be reported separately. To the extent
this leads to additional claims paid by the Controller to owners
of this unclaimed property, there will be a corresponding loss
of General Fund revenue that eventually could exceed $150,000
annually. Assembly Appropriations Committee estimates annual
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costs of around $120,000 for the SCO to notify owners of
unclaimed property valued between $25 and $50. (Unclaimed
Property Fund)
According to the SCO, there will not be any increase in claims
paid until one year after the bill's effective date. The
earliest this could occur would be for property report received
for 2015, thus there will not be any increase on claims paid
until 2016-17. The SCO asserts that, because its various
Unclaimed Property Law administrative processes are largely
automated or soon will be, the bill will not result in any
additional operating costs.
COMMENTS : Under existing law, holders of unclaimed property are
generally required to: 1) send due diligence notices to owners
identifying the property and notifying them that the property
may escheat to the state unless certain action is taken; and 2)
report to the State Controller the owner's name, address, and
other information appearing in the holder's records, if any. If
the unclaimed property is valued at less than $50, however, the
holder is not required to provide any due diligence notice to
the owner, nor to report identifying information about the
property and its owner to the Controller, even if such
information is contained in the holder's own records of the
property. Instead, many small properties valued at under $50
may be combined together into a single amount without
identifying information, and reported in aggregate to the
Controller as a single line item.
As recently amended, this bill would simply lower the threshold
amount for aggregate reporting of unclaimed property from the
amount of $50 to $25, to take effect July 1, 2014. In addition,
holders of unclaimed property valued at less than $50 would
continue to be exempt from the general requirement to send due
diligence notifications to owners prior to escheat for
properties valued $50 or more.
According to the author, this bill is needed to address certain
problematic aspects associated with aggregate reporting. The
author states:
Aggregate reporting presents many challenges for the
Unclaimed Property Program in achieving its mission to
reunite lost and abandoned property with the rightful
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owner. Since current statute does not require holders
to report owner information on accounts valued at less
than $50, aggregate properties are not itemized within
the unclaimed property database or displayed on the
website for owners to search the SCO public website
and claim their properties. If by chance, an owner
does learn that they have an aggregate property; many
complexities ensue for both holders and the SCO in
researching these properties and proving entitlement
when a claim is made. Oftentimes when a customer
calls to make an inquiry regarding an aggregate
property, the State will refer them back to the holder
and conversely, the holder will refer them back to the
State. This back and forth creates a great deal of
frustration for the property owner and inspires very
little public confidence of the Unclaimed Property
Program or the holder.
The Unclaimed Property Law (UPL), enacted in 1958, establishes
procedures for the escheat of unclaimed personal property. The
UPL establishes procedures to be followed when property goes
unclaimed, generally for a period of three years, and escheats
to the state. Under existing law, the holder must annually
report on unclaimed property and turn the property over to the
Controller. In turn, the Controller is required to mail a
notice to each person who appears to be entitled to unclaimed
property according to the report filed by a holder, in addition
to the requirement of publication of unclaimed property owners
in a newspaper of general circulation. A person with an
interest in escheated property may file a claim to recover the
property from the state. The Controller maintains a Web site
( http://www.sco.ca.gov ) where members of the public may search a
database to discover if the state is holding any of their
property, and may submit claims to recover the funds or
property.
Existing law expressly permits so-called "aggregate reporting"
for items of value under $50, even when an owner's contact
information, such as name, address, account number and social
security number, is known to the holder. Aggregate reporting of
unclaimed property occurs when many small properties are added
together and reported as a single amount to the Controller
without including information about the individual owners and
properties that are being aggregated together. In 2011-12, the
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State Controller reports that over $12.8 million was transferred
to the state in aggregate without any accompanying information
that could identify the individual property owners, and that
this figure totals approximately $68 million over the past five
years.
According to the Controller, the task of reuniting these
properties with their rightful owners is nearly impossible after
they have been reported in aggregate. Proponents contend that
aggregate reporting may unnecessarily prevent some owners from
being reunited with their property under $25, even when
identifying information is known to the holder, because that
information is essentially disregarded and wasted once the
property is reported in aggregate. Furthermore, this result
does not appear to further one of the main objectives of the
UPL-to restore property to its rightful owner-and may in fact
hinder it. Consequently, this bill seeks to eliminate aggregate
reporting of unclaimed property under $25 in value, permitting
it only in cases where the name of the owner is unknown and
there is no last known address in the records of the holder.
Existing law also requires holders of property to send due
diligence notices to property owners notifying them that their
property may escheat to the state, unless the property is valued
at less than $50. The notice is intended to prompt the owner to
take some action on the account that will make the owner's
presence apparent to the holder, often by recovering the
property or restoring communication between holder and owner,
but in either case preventing escheat of the property to the
state pursuant to the UPL. As recently amended, this bill
continues existing law requiring holders to send due diligence
notices unless the property is valued at less than $50.
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334
FN: 0000921