Recent changes to abandonment periods in Arizona mean that property holders can expect to file unclaimed property reports twice in 2010. Meanwhile, new due diligence requirements in California may help better reunite owners with their property.

According to Arizona Senate Bill 1003, beginning on Nov. 23, 2009, abandonment periods for all types of unclaimed property were reduced, some significantly. For example, the abandonment period on traveler’s checks was reduced from 15 years to three.

Not all reductions are that extreme. The abandonment periods for two types of property relevant to business-to-business transactions – business checks and customer credits – have both been reduced from 5 years to three, meaning uncashed checks become unclaimed property in Arizona after three years.

This change in abandonment periods means that, for 2010, organizations have two reporting deadlines instead of one. For all property that was reportable as of June 30, 2009, organizations should report that to the state on or before June 1, 2010. The June report should be listed as “2009 Supplemental Report.”

For the June supplemental report, holders must perform due diligence prior to 90 days before the report is filed.

On Nov. 1, 2010, organizations are required to report unclaimed property in Arizona that is presumed abandoned as of June 30, 2010. Going forward, only the Nov. 1 reporting deadline will apply. While organizations report in both in June and November 2010, they will only be required to report in November in 2011 and onward.

The change does not directly impact life insurance companies, whose May 1 reporting deadline remains unchanged. However, if additional time is needed to include property under the amended abandonment periods, life insurance companies may postpone filing until no later than June 1, 2010.

Visit Arizona Unclaimed Property for a full listing of amended abandonment periods.

California Due Diligence Changes

Beginning Jan. 1, 2010, changes to California’s due diligence process take effect that put more emphasis on property holders to locate owners. According to California Assembly Bill 1291, organizations that fail to perform adequate due diligence remain liable for unclaimed property even once it is remitted to the state.

Previously, once a holder remitted unclaimed property to the State Controller’s Office, the state assumed sole liability for any claim against that property. However, the bill states that if holders fail to determine whether the owner’s address is accurate – typically through sending out due diligence letters – then they retain all liability.

The new bill also makes other due diligence changes including:

• Due diligence letters can now be sent to owners electronically. Holders can charge owners a $2 administrative fee for this service.
• Due diligence letters must include a centered headline stating that the owner’s property may be transferred to the state.
• Letters must be sent between six to 12 months before the property becomes reportable.

Visit the California Controller’s Office for a complete listing of the new due diligence requirements.