2011 UPPO ANNUAL CONFERENCE MARCH 6-9, Due Diligence 101. Mary Kasch Wl Walgreen Co. Catherine Del Re UPPO. All rights reserved.

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Hilary Peters
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2 What is Due Diligence? Due diligence is the degree of effort required by statute that holders of unclaimed property use to locate the owner before remitting the property to a state s unclaimed property department 2011 UPPO. All rights reserved. 2

3 Why Perform Due Diligence? Required by most states Still good practice if not required Goodcustomer service Re establish communications May reveal something is NOT unclaimed May reveal something is NOT unclaimed property 2011 UPPO. All rights reserved. 3

4 Why Perform Due Diligence? Most states have penalties for failing to perform due diligence VA :1(B) a fine not to exceed $50 for each account upon which due diligence was not performed MA 960 CMR 4.03(10) shall be subject to a fine of $1.00 for each owner whose property is remitted to the Division by the holder, or $1,000, whichever is greater 2011 UPPO. All rights reserved. 4

5 Audit Concerns Maintain proper documentation to defend your company against an audit Review records retention policy Due diligence records Many states require a signature on annual y q g report cover or separate statement attesting that due diligence was performed 2011 UPPO. All rights reserved. 5

6 GettingStarted with Due Diligence Review records to determine what items will be reported in fall and spring filings Confirm that the records you have include full address detail Become familiar with the different requirements for certain states Create a timeline of when letters will be sent 2011 UPPO. All rights reserved. 6

7 Generally: Property Types & Dormancy Periods Wages, salaries, payroll 1 Year Accounts payable 3 to 5 Years Accounts receivable 3 to 5 Years Rf Refunds/rebates d/ bt due 3 to 5 Years 2011 UPPO. All rights reserved. 7

8 BasicMailing Requirements & General Timeframe for Mailing Dollar threshold varies by state Written notice required Mildbt Mailed between 60 and 120 days before bf report due date Some states have more stringent mailing requirements (first class or certified mail) Some states allow deductions for cost of mailings 2011 UPPO. All rights reserved. 8

9 DollarThresholds For Mailing Due Diligence Letters General rule: $50 Exception Examples: $250 Texas $100 Alaska, Kansas, Kentucky, Maryland, Massachusetts, Minnesota, Oregon, & Virginia $75 Washington 2011 UPPO. All rights reserved. 9

10 DollarThresholds For Mailing Due Diligence Letters Exception Examples (contd): (cont d): $20 New York, 2nd notice required > $1,000 $25 Nebraska $10 Illinois $0 Connecticut & Mississippi (i.e., must notify all) Michigan Threshold increases to $100 if large number of records over $50 Some states tt don t thave due diligence requirements (DE & PA) 2011 UPPO. All rights reserved. 10

11 Mailing Requirements General Rule: Written notice Exceptions: First Class Mail: Connecticut, Georgia, Illinois, Massachusetts, Maryland, North Carolina, New York, Ohio, Oklahoma Certified Mail Return Receipt Requested: New Jersey,New York, Ohio Electronic California (with prior permission) 2011 UPPO. All rights reserved. 11

12 Timeframe for Mailing Letters General Rule: days before report due date Exceptions: California: days before report Connecticut & Hawaii: Within 180 days of report Michigan: days before report Missouri: Within 1 year of report due date Ohio: At least 30 days before report Washington: days before report 2011 UPPO. All rights reserved. 12

13 General Rule: Deductions No deductions allowed Exceptions: Cost of postage Texas First class mailing costs (including postage, stationery & envelopes) Illinois Certified mail costs NewYork York, Ohio (up to $20) 2011 UPPO. All rights reserved. 13

14 California Requires the following language : THE STATE OF CALIFORNIA REQUIRES US TO NOTIFY YOU THAT YOUR UNCLAIMED PROPERTY MAY BE TRANSFERRED TO THE STATE IF YOU DO NOT CONTACT US ; Must be in BOLD or in a larger font Letter may be sent electronically Holder can impose $2 charge for mailing costs California has its own due diligence process 2011 UPPO. All rights reserved. 14

15 Ohio Items valued between $50 and $1,000 first class Over $1,000 certified mail, return receipt requested All letters should be sent with a self addressed, d stamped envelope If holder cannot verify owner last known address, no mailing required. Must document 2 of the following: 2011 UPPO. All rights reserved. 15

16 Ohio The owner did not respond to a first class mailing sent to the last known address; The first class mailing sent to the last known address was returned as undeliverable; dli Holder searched for a new address in available public records and failed to confirm that the last known address was accurate. If a search results in a more recent address, the holder should send a notice to the new address UPPO. All rights reserved. 16

17 New Michigan Requirements New Report Due Date July 1 Period ending March 31 Previously November 1 Year Annual Reporting Period Report Due Date to the State 2011 July 1, 2010 through March 31, 2011 July 1, and Beyond April 1 through March 31 July 1 of Each Year Most dormancy periods are now 3 years Exceptions: Wages, utility deposits 1 year Traveler s checks 15 years 2011 UPPO. All rights reserved. 17

18 Components of a Due Diligence Letter Description ofproperty (property type, amount, etc.) Statement that property will be reported to the State if no response is received Date by which the owner must respond back Space for updated downer contact information i Holder s contact information (name, address, phone number, etc.) 2011 UPPO. All rights reserved. 18

21 Best Practices Establish clear timeline for owners to receive reissued check Utilize a barcode Separate unclaimed property hotline to manage phone calls & voic Non generic mailing owners won t get confused that it s a scam or identity theft 2011 UPPO. All rights reserved. 21

22 Best Practices Perform internal due diligence prior to required due diligence Perform periodic reviews of data for linkage Ensure outgoing envelopes contain key words to increase response rate Provide various response options to owners Update owner contact information in database 2011 UPPO. All rights reserved. 22

23 Due Diligence Tic Tac Toe Tac Toe Definitions Mailing Requirements Audit Concerns Property Types Why Perform Due Diligence Dollar Thresholds Deductions Mailing Requirements Dormancy Periods 2011 UPPO. All rights reserved. 23

Manufactured Home Production by Product Mix ( )

Manufactured Home Production by Product Mix (1990-2016) Data Source: Institute for Building Technology and Safety (IBTS) States with less than three active manufacturers are indicated with asterisks (*).