2019 Unclaimed Property Compliance Updates By: Karen Anderson, Director – KPMG, LPP Quin Moore, Manager – KPMG, LLP
In 2019, state legislatures considered and enacted several unclaimed property measures that impact the oil and gas industry’s obligations to perform due diligence, and report and remit mineral interest proceeds. Further, these reforms affect state administrators’ abilities to enforce unclaimed property requirements, which may be especially important to companies currently undergoing unclaimed property audits. The changes to existing escheat laws and requirements include statute of limitations modifications, due diligence enhancements, and even specific provisions for mineral interest owners who die intestate. This article provides a summary of some of the more significant enacted legislative provisions. I. Unclaimed Property Act Revisions Seven state legislatures attempted sweeping re-writes of their unclaimed property statutes through introductions of statutes patterned after the 2016 Revised Uniform Unclaimed Property Act, however, only two of those measures were signed into law: Colorado SB 88 (effective 7-1-2020) and Maine SP 481 (effective 10-1-2019). The Colorado and Maine law changes include, among other things, the following: • Adds “current to pay” language; • Alters many dormancy periods from 5 years to 3 years; • Eliminates the $25 or 2% deduction; (“more or less” deduction) • Includes a “retroactive transition” provision; • Changes the “window” within which due diligence must be performed and changes the due diligence minimum threshold; • Requires specific language be placed on the top of due diligence notices; (Section 38-13-502 (1) and (2)(d)) • Provides that if an owner has “consented” to receiving Colorado (SB 88)
communications from the holder via email, that the holder can send the owner a due diligence notice via first class mail or email; and • Authorizes the administrator to issue administrative subpoenas requiring holders to produce records in an audit and seek subpoena enforcement.
Maine (SP 481)
• Changes the time period within which due diligence must be performed; • Requires specific language be placed on the top of due diligence notices; • Provides that if an owner has consented to receiving communications from the holder via email, that the holder must send the owner a due diligence notice via first class mail and email; Specifies that records must be retained for 10 years after the later of the date the report was filed or the last date a timely report was due to be filed; further dictates that those records must include not only records substantiating what was reported, but records relating to items that were not reported sufficient to allow an examination to determine whether the business has complied with the law; and • Authorizes the administrator to issue administrative subpoenas requiring holders to produce records in an audit and seek subpoena enforcement.
General Due Diligence, Reporting and Compliance- Related Changes
Some states enacted changes to, or amended regulations relating to, existing due diligence, reporting, and enforcement-related provisions within their statutes that holders should take note of, including:
1 Colorado SB 88, District of Columbia B 225, Maine SP 481, Minnesota HB 2209 and HB 2538, South Carolina HB 4200 and SB 524, Vermont HB 550, and Washington HB 1179
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G r o w t h T h r o u g h E d u c a t i o n - O c t o b e r / N o v e m b e r / D e c e m b e r 2 0 1 9
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