Brief Description: Modifying unclaimed property provisions.

Sponsors: Senators Pridemore and Zarelli; by request of Department of Revenue.

Senate Committee on Ways & Means
House Committee on Finance

Background: Under the state Unclaimed Property program, a business that holds unclaimed intangible property must transfer it to the Department of Revenue (DOR) after a holding period set by statute. The holding period varies by type of property, but for most unclaimed property the holding period is three years. After the holding period has passed, the business in possession of the property transfers the property to the DOR.

Under the program, the DOR's duty is to find the rightful owner of the property, if possible. One of the DOR's requirements is to place a notice by November 1 of each year in a newspaper of general circulation in each county which contains the last known address of an apparent owner of unclaimed property that is reported and turned over to the state in that year. If the DOR does not have any such address, then the notice must be published in the county in which the holder of the property has its principal place of business. The notice must contain the names and addresses of the persons whose last known address was within the county. The notice must also provide explanation of how persons possessing an interest in the property may contact the DOR for further information. The DOR is not required to publish notices when the property value is less than $75.

The DOR is required to mail notices by September 1 of each year to apparent owners of unclaimed property that has been reported and turned over to the state in that year. The notice must contain the name and last known address of the person holding the property.

In general, abandoned property turned over to the DOR is deposited directly, or else liquidated and then deposited, to the state general fund. Stocks and other securities presumed abandoned and turned over to the state are required to be sold no more than three years after the state has received the property. However, the DOR is prohibited from liquidating mutual funds and other plans that provide for the automatic reinvestment of dividends or other sums payable as the result of the investment.

After attempting to find the owner, the DOR is authorized to destroy any abandoned property that is deemed to have no or little commercial value. However, documents to be destroyed must be copied on film and held for ten years.
         
In the 2004 session, the Legislature enacted modifications to statutory requirements concerning county treasurers. One of the modifications provides that, after three years, any claim to excess proceeds from foreclosures pursuant to property tax delinquency enforcement is extinguished.

In 1992, the Legislature enacted a law that authorized the state to receive unclaimed intangible property held by out-of-state brokers when the issuer of the intangible property is located in Washington. However, a court ruled that the right to unclaimed intangible property is that of the state of the broker's incorporation and not that of the state of the principle place of business. The ruling made the Washington law moot.

Summary: The requirement that the DOR publish the names and addresses of apparent owners of unclaimed property in newspapers is replaced with a requirement to publish a summary explanation of how owners may obtain information about unclaimed property reported to the DOR.

The DOR is relieved of the requirement to publish in a newspaper of general circulation in each county for which the DOR has addresses of apparent owners or holders of unclaimed property, and must instead utilize the newspaper most likely to give notice to the apparent owner. The requirement that the DOR include the address of the property holder in its mailed notice to apparent owners is deleted and replaced with a requirement to include a description of the type of property.

Excess proceeds held by local governments from foreclosures pursuant to property tax delinquencies are exempt from the provisions of the Unclaimed Property program.

The prohibition against selling mutual funds and other reinvestment plans is removed. The requirement to copy on film any documents to be destroyed is also deleted.

The provision authorizing the state to receive unclaimed property held by out-of-state brokers but issued from within the state is repealed.

Votes on Final Passage:

Senate      44   0
House      66   31

Effective: July 24, 2005