BILL ANALYSIS Ó
AB 212
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 212 (Lowenthal)
As Amended June 24, 2013
Majority vote
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|ASSEMBLY: |54-22|(May 29, 2013) |SENATE: |39-0 |(September 9, |
| | | | | |2013) |
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Original Committee Reference: JUD.
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)Allows, as of July 1, 2014, unclaimed property items valued
under $25 each to be reported in aggregate, rather than
accompanied by individually identifying information.
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.
The Senate amendments decrease, from $50 to $25, the threshold
value of property that may be reported in aggregate, and delete
the condition that such property may be reported in aggregate
only if the name of the owner is unknown and there is no last
known address of the owner in the records of the holder.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)State Controller's Office (SCO) costs of approximately
$120,000 annually, beginning in 2014-15, to provide additional
notices to owners of lower-valued property escheated to the
state that was formerly included in the aggregate reporting
without owner contact information (General Fund).
2)The SCO estimates revenue losses of $12,544 in 2015-16,
$92,544 in 2016-17, and $143,744 in 2017-18, with moderate
ongoing growth, as a result of increased claims by owners of
lower-valued property escheated to the state that was formerly
included in the aggregate reporting without owner contact
information (General Fund). Actual losses could be higher,
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depending on how much of the current aggregate property
transferred to the state is valued over $25, and the claim
rate for lower valued property. For example, if half of the
aggregate property currently transferred to the state in a
year has a value of $25 to $50, and the claim rate is one
fourth of the overall first year claim rate for escheated
property, the first year impact would be $30,400 (based on
$12.8 million in aggregate property transferred to the state
in 2011-12, and average overall first year claim rate of
1.9%).
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.
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
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
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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
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.
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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 restrict aggregate
reporting of unclaimed property by permitting it only for items
valued under $25 each.
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. 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: 0002134