Nebraska has become the first state to introduce legislation that, if enacted, would incorporate the Revised Uniform Unclaimed Property Act (RUUPA) into the state’s law. The RUUPA was issued by the Uniform Law Commission last summer following three years of discussions among states, audit firms, unclaimed property practitioners, and holders. RUUPA is intended to bring state unclaimed property laws into the modern era by addressing types of transactions, business practices, and customer interactions that have evolved since the prior iteration of the uniform law was promulgated in 1995.
Nebraska Legislative Bill 141 was introduced by Senator Matt Williams on January 9, 2017. If enacted as proposed, Legislative Bill 141 would make the following changes:
- Audits: The bill would eliminate the current requirement that the State Treasurer must have a “reason to believe” that a business has failed to report property to conduct an exam. Further, it provides the State Treasurer with the authority to issue an administrative subpoena requiring a business or its agent to make records available for review.
- Statute of Limitations: The proposed legislation would increase the statute of limitations from seven years to 10 years for businesses that have not filed unclaimed property reports.
- Record Retention: The bill also increases the record retention period from seven years after the property was reportable to 10 years after the report was filed or was due to be filed.
- Non-Return of Mail Exclusion: Current law permits the non-return of a letter mailed to the last known address of an owner of certain accounts held with a banking or financial institution to be considered owner contact sufficient to prevent escheatment. Legislative Bill 141 would eliminate the non-return exclusion.
- IRA Dormancy Trigger: The bill would significantly change the trigger date for the running of the dormancy period for Individual Retirement Arrangements (“IRAs”) by requiring escheatment even if assets are not yet distributable. The proposed language calls for IRA property to be escheated three years after two consecutive mailings are returned as undeliverable by the post office. The IRA assets need not be qualified for mandatory distributions under the Internal Revenue Code, which is a departure from the analogous RUUPA provision. Current Nebraska law measures dormancy from the date of a failed distribution and makes the property escheatable 30 days after the date of that distribution if certain owner action did not occur in the 5-year period prior to the distribution.
- Penalties and Interest: Nebraska’s current unclaimed property law includes criminal penalties for non-compliance, as well as civil monetary penalties. The bill would eliminate criminal penalties. The proposed civil penalties and interest charges for failure to comply with the provisions of the bill are broader and greater than under current law.
- Reporting Deadline: The bill would change the reporting deadline for all insurance companies from October 31 to April 30. Currently, only life insurance companies are required to report by April 30.
For additional information on the proposed changes to Nebraska’s unclaimed property law, contact Karen Anderson at 317-523-5049 or Will King at 214-840-6107.