FREQUENTLY ASKED QUESTIONS ABOUT OUR ESCHEAT STATE REPORTING SYSTEMS

Below are frequently asked questions about the state reports which escheat holders are required to file with a state when properties are escheated to the state, and frequently asked questions about our escheat state reporting systems.

Q. You mentioned escheat state reports. How does the state reporting process work for escheat?

When the items are escheated, the escheat holder is required to file a report with the State. We refer to these filings as being “state reports.” The state reports consist of a face sheet accompanied by backup scheduled on the escheated items. The escheat laws set deadlines for the filing of these state reports.

Q. What are your services regarding state reports?

We provide robust services regarding state reports. Our systems track each item and determine if it is required to be escheated. If so, the systems determine the timing and amount to be escheated. We provide analytic dashboards forecasting the future timing and amounts of escheat for all items in a portfolio giving clients visibility regarding the portfolio’s escheat footprint. With respect to the reporting process itself, we will either create the state reports for the client or support the client in doing so.

Q. Do the laws on state reports vary?

Yes. They are heavily variable per state on a number of topics including the content of the state report and the deadlines for filing.

Q. You mentioned variable deadlines for filing state reports. Can you explain?

The state reports are filed annually. Each state specifies the deadline for the filing. The deadline typically is a date following the close of the State’s fiscal year. For states with calendar fiscal years, the filing date usually is April 30 of the next year. For states with fiscal years ending on June 30, the filing date usually is October 31 or November 1 of that year. A group of states are outliers specifying various other dates. California requires two reports. When viewed as a whole, the state reports are filed in about six to eight different months.

Q. Do your systems manage the state reporting deadlines?

Yes. Our systems calculate the deadline of each state filing. We provide calendars to our clients on the timing of the filings along with dashboards providing analytics on the entire portfolio forecasting the future amounts to be escheated to each state.

Q. What items are included in each state report?

As explained above, the state reports are filed annually. All items or cards that become presumed abandoned during the applicable escheat year are included in the state report for the year. This process is not aligned across the states. Assume, for example, a state with a fiscal year ending on June 30 and an escheat reporting deadline of October 31. For that state, the items that became presumed abandoned from July 1 of the previous year to June 30 would be included in the report filed on October 31. Assume, however, a state with a calendar fiscal year and an escheat reporting deadline of April 30 of the following year. For that state, the items or cards that became presumed abandoned during the calendar year would be included in the report filed on April 30 of the next year.

Q. Do your reporting systems handle the items to be included in each state report?

Yes. Our proprietary systems select and sort the items by state. They include only the items that became presumed abandoned during the applicable state’s fiscal year in that state’s report. This process buckets the escheated items per each state’s fiscal year.

Q. In selecting the items for a state report, how do you decide when an item becomes presumed abandoned?

The state laws only require an escheat holder to escheat items that have aged to the point of becoming presumed abandoned. As explained above, our escheat tracking systems determine the applicable time periods per state and the triggering point for starting the escheat clock. If the time period has run for an item or card, it will be included in the state report.

Q. Is this where retriggering enters the picture?

Yes. As explained above, certain actions by the item owner may be retriggering events that reset the escheat clock. Our systems process retriggering events in deciding which cards are included in a state report. This can give rise to retriggering value.

Q. What is retriggering value?

The retriggering extends the time period for escheat. The extended period may have positive economic effects. The escheat holder retains its cash longer. Float on pooled accounts is extended. Additional time is created for back-end fees. Occasionally, added time allows for use of the instrument by the consumer

Q. How do you select the amounts to be escheated?

The state statutes specify the amount which must be escheated for a particular item. Sometimes that amount is the balance of the item. In other cases it might be the price paid for or face value of the item. And exemptions or deductions also may apply reducing the escheated amount. Our escheat tracking systems track and calculate the amount that must be escheated. In doing so, they apply the applicable exemptions and deductions. This process assures that the amounts escheated or limited to only that required by the laws providing direct cost savings.

Q. What is the cost savings from capturing escheat deductions and exemptions?

While the deductions and exemptions may appear to be small amounts per item they add up when applied across a portfolio of thousands to millions of instruments.

Q. You mentioned the content of the state reports vary. Can you provide more detail?

The requirements governing state reports usually require the completion of a face sheet accompanied by backup schedules. Each state’s statute specifies the content required for both.

Q. What is the backup information required for the state reports?

The face sheet of the state report provides summary numbers regarding the amounts escheated. The backup schedule usually consists of a per item list of the escheated items along with required information per item. The state laws specify requirements for the content of backup information. For prepaid cards programs, the list of items usually is long. Some states also require that this information be provided in electronic form arranged in specified column formats. Many micro rules govern the formats required by the states.

Q. Do your systems manage the state report content?

Yes. Our systems have robust capabilities on state report content. For those asking us to create the state reports, our systems automatically populate the face sheets and required backup schedules. For those desiring to create the state report themselves, our systems create the required backup up information and provide information needed for completing the face sheet. Our systems are also capable of managing distinctions between aggregate reporting and non-aggregate reports. And, they address the micro rules governing report formatting.

Q. You mentioned micro rules. What are micro rules?

State administrators often issue guidance, website instructions, handbooks, desk level rules and administrative processes governing the process for filing state reports or issuing due diligence notices. Such rules often address formatting, filing techniques, and payment methods.  We view this level of regulation as requiring micro compliance.

Q. Can you provide some examples of micro rules?

Yes. Some states set rules on who can file the state reports. Some require the report to be electronically filed. Some want the digital files to be split. Some cannot accept quotation marks in the backup data. Some cannot accept apostrophes. Some cannot accept the ___ character. Some cannot accept encrypted files. One requires funds to be wired if payment is above a specified amount. One requires wire confirmation to be submitted with the state report and related payment. And so forth. These micro rules are heavily variable.

Q. Do your systems manage the micro rules?

Yes. Our systems address this level of regulation.

Q. Do you provide services regarding mechanical tasks of filing reports and making payments?

Yes. We have an ala carte suite of series on both subjects which we will be happy to discuss.

Q. Can you summarize the variability of the state laws governing state escheat reporting?

Yes. They are heavily variable. They vary per state, per historical versions of a state’s laws, and per type of instrument or card. They also vary with respect to the items escheated, escheat timing, presumed abandonment periods, escheat timing triggers, retriggering, escheat amounts, exemptions, deductions, state fiscal years, state escheat years, state report deadlines, state report content, filing methods, and payment methods. Varying micro rules also apply.

Q. How do you manage the complexities of the varying rules governing state reporting?

We designed our proprietary systems to unravel the complexities on a per item basis.

Q. How do you apply the reporting variables to large volumes of instruments and cards?

We let the computers deal with the volumes.