Changes to Illinois Statutes
On July 6, 2017, Illinois Senate Bill 9 (SB 9) was enacted, rewriting the state’s unclaimed property statutes. Originally SB 9 was focused on funding the state’s 2017-2018 Fiscal Year Budget. However, several days before it was up for a vote, Illinois House Amendment No. 3 expanded the bill by adding Illinois’ Revised Uniform Unclaimed Property Act (RUUPA) and repealing Illinois’ existing Uniform Disposition of Unclaimed Property Act. The language in RUUPA that was included in SB 9 is similar to an earlier bill, HB 2603, which never gained traction in the House and failed to pass.
The timeline for these events is also worth noting. House Amendment No. 3, which added RUUPA to SB 9, was filed and passed by the Illinois House on July 2, passed by the Illinois Senate on July 4 and vetoed by the Governor on the same day. However, on July 6, both houses overrode the Governor’s veto and the bill became Public Act 100-0022. This timeline did not allow for detailed hearings on RUUPA nor allow for industry input. While parts of SB 9 took effect upon becoming law, RUUPA becomes effective on January 1, 2018.
However, the enactment of SB 9 may not be the final word on the matter. On July 3, Illinois House Bill 4078 (HB 4078) was introduced by opponents of SB 9 to overturn it. As HB 4078 was introduced before the enactment of SB 9, and HB 4078 provides that SB 9 will be repealed “if and only if Senate Bill 9 of the 100th General Assembly becomes law in the form in which it was amended by House Amendment No. 3,” HB 4078 will need to be considered by the House after it returns from its recess. In addition, on July 21, 2017, Illinois Senate Bill 2224 (SB 2224) was introduced with the intent of repealing SB 9.
It appears that many of the provisions in SB 9, including the addition of RUUPA, were attempts to address Illinois’ budget shortfalls. Illinois has been plagued by fiscal problems for years, and the enactment of SB 9 has apparently ended a two-year budget stalemate that had gone on so long that the state had fallen behind on its bills and risked further damage to its credit rating. Given its budget shortfalls and mounting debts, the state has apparently begun looking to any area that it can to increase its revenues, including unclaimed property.
Among some of the most significant changes in Illinois’ RUUPA are the following:
Many Unanswered Questions
In addition to some of the unwelcome changes that it makes, RUUPA also leaves unanswered many questions that should be of concern to every holder, such as:
Because of all of these, and many more, unanswered questions, many organizations have already been discussing the need for a repeal of RUUPA, or at the very least amending several key areas of RUPPA to include additional guidance to holders. True Partners is actively involved, and we will be providing periodic updates as developments occur.
What This Means to Holders
The new Illinois unclaimed property laws will require every holder with a reporting obligation in the state to carefully review the impact of RUUPA on its unclaimed property compliance process. The reduced dormancy periods means that for many property types, holders will be including three years of property on their initial report under RUUPA. Fortunately, for these items it is “just” a matter of remitting early.
More difficult, and more troubling to holders, is the application of the RUUPA’s transitional provision. The repeal of a reporting exemption is never good news for a company. However, RUUPA’s requirement that holders report property that would have been presumed abandoned during the five year period preceding the effective date of the act as if the act had been in effect during that earlier period seems particularly harsh to many holders.
However, RUUPA does not become effective until January 1, 2018, and there seems to be opposition to it as evidenced by HB 4078 and SB 2224calling for its repeal. While it is unclear if the call for the repeal will gain traction, many in the business and holder community will be closely watching the Illinois legislature for additional developments. On the other hand, if the legislation remains unchanged and all the extra years of reporting in the first year of enactment as described above occurs, it is clear that most companies will have a much larger compliance burden than they ordinarily experienced. Planning for this should be considered.
True Partners will continue to monitor this and other legislation impacting your company as it arises, and will release relevant updates as additional information is available.
About Unclaimed Property…
Unclaimed property is any intangible property that is owed by a company and has gone unclaimed for a specific period of time by the rightful owner. Every company is likely to generate unclaimed property and has a legal responsibility to report and remit that property to the appropriate jurisdiction. Generally, there is no statute of limitations on a Holder’s unclaimed property liability, and a holder’s state of incorporation can estimate a holder’s potential liability for periods where actual records are not available. Companies not in full compliance with the states’ unclaimed property laws often have many concerns about getting into compliance, including the likelihood of triggering interest and penalty assessments or being selected for an examination. However, once aware of the various rules and processes, every holder should consider taking advantage of the various opportunities available to get into compliance for any past-due property.
True Partners Consulting’s Unclaimed Property Management Solutions Team is comprised of a national group of professionals with a wealth of experience and knowledge and diverse backgrounds, including industry and government. Our team can offer your company the best combination of experience, expertise, and resources to assist your company, regardless of your company’s industry. Our team stands ready to assist your company with its (likely) increased compliance burden in Illinois or to consult with you on the best way to address all of these law changes. We encourage you to contact one of our professionals to discuss any questions or concerns that you may have regarding unclaimed property.
Cathleen A. Bucholtz
Robert M. Tucci