SB-0538, As Passed Senate, October 28, 2015

SUBSTITUTE FOR

SENATE BILL NO. 538

A bill to amend 1995 PA 29, entitled

"Uniform unclaimed property act,"

by amending sections 2, 30, and 31 (MCL 567.222, 567.250, and

567.251), section 2 as amended by 2008 PA 208, section 30 as

amended by 2012 PA 292, and section 31 as amended by 2013 PA 148,

and by adding sections 4a and 31b.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 2. As used in this act, unless the context otherwise

requires:

(a) "Administrator" means the state treasurer.

(b) "Apparent owner" means the person whose name appears on

the records of the holder as the person entitled to property held,

issued, or owing by the holder.

general.

(d) "Banking organization" means a bank, trust company,

savings bank, industrial bank, land bank, safe deposit company,

private banker, or any organization defined by law as a bank or

banking organization.

(e) "Business association" means a nonpublic corporation,

joint stock company, investment company, business trust,

partnership, or association for business purposes of 2 or more

individuals, whether or not for profit, including a banking

organization, financial organization, insurance company, or

utility.

(f) "Domicile" means the state of incorporation of a

corporation and the state of the principal place of business of an

unincorporated person.

(g) "Eligible holder" means a holder that meets 1 or more of

the following:

(i) Is a corporation whose parent corporation is incorporated

in this state.

(ii) Is a corporation that has a subsidiary incorporated in

this state.

(iii) Is a corporation that is not incorporated in this state

but is wholly owned by a corporation that is incorporated in this

state.

(h) ~~(g)~~ "Financial organization" means a savings and loan

association, cooperative bank, building and loan association,

savings bank, or credit union.

(i) ~~(h)~~ "Holder" means a person, wherever organized or

domiciled, who is 1 or more of the following:

(i) In possession of property belonging to another.

(ii) A trustee.

(iii) Indebted to another on an obligation.

(j) ~~(i)~~ "Insurance company" means an individual, association,

corporation, fraternal or mutual benefit organization, or any other

legal entity, whether or not for profit, that is engaged or

attempting to engage in the business of making insurance or surety

contracts.

(k) ~~(j)~~ "Intangible property" includes all of the following:

(i) Money, checks, drafts, deposits, interest, dividends, and

income.

(ii) Credit balances, customer overpayments, security

deposits, refunds, credit memos, unpaid wages, unused airline

tickets, and unidentified remittances.

(iii) Except as provided in sections 15(4) and 30(1), gift

certificates and gift cards.

(iv) Stocks and other intangible ownership interests in

business associations.

(v) Money deposited to redeem stocks, bonds, coupons, and

other securities, or to make distributions.

(vi) Amounts due and payable under the terms of insurance

policies.

(vii) Amounts distributable from a trust or custodial fund

established under a plan to provide health, welfare, pension,

vacation, severance, retirement, death, stock purchase, profit

sharing, employee savings, supplemental unemployment insurance, or

similar benefits.

(l) ~~(k)~~ "Last known address" means a description of the

location of the apparent owner sufficient for the purpose of the

delivery of mail.

(m) (l) "Owner" means a depositor, in the case of a deposit; a

beneficiary, in case of a trust other than a deposit in trust; a

creditor, claimant, or payee, in the case of other intangible

property; or a person having a legal or equitable interest in

property subject to this act. Owner includes the legal

representative of the person defined as an owner in this

subdivision.

(n) ~~(m)~~ "Person" means an individual, business association,

state or other government, governmental subdivision or agency,

public corporation, public authority, estate, trust, 2 or more

persons having a joint or common interest, or any other legal or

commercial entity.

(o) ~~(n)~~ "Property" means tangible or intangible personal

property owned by a person.

(p) ~~(o)~~ "State" means any state, district, commonwealth,

territory, insular possession, or any other area subject to the

legislative authority of the United States.

(q) ~~(p)~~ "Utility" means a person who owns or operates for

public use any plant, equipment, property, franchise, or license

for the transmission of communications or the production, storage,

transmission, sale, delivery, or furnishing of electricity, water,

steam, or gas.

Sec. 4a. (1) Except as provided in subsection (2), property is

not subject to the custody of this state as unclaimed property if

its value is $50.00 or less.

(2) Subsection (1) does not apply to property described in

section 11a or dividends.

Sec. 30. (1) The expiration, before or after the effective

date of this act, of any period of time specified by contract,

statute, or court order, during which a claim for money or property

can be made or during which an action or proceeding may be

commenced or enforced to obtain payment of a claim for money or to

recover property, does not prevent the money or property from being

presumed abandoned or affect any duty to file a report or to pay or

deliver abandoned property to the administrator as required by this

act. This subsection does not apply to gift cards or gift

certificates.

(2) An Except as otherwise provided in subsection (3), an

action or proceeding shall not be commenced by the administrator

with respect to any duty of a holder under this act more than 10

years, or, for the holder of records of transactions between 2 or

more associations as defined under section 37(a)(2), more than 5

years, after the duty arose.

(3) For eligible holders electing to participate in the

streamlined audit process described in section 31b, an action or

proceeding shall not be commenced by the administrator with respect

to any duty of a holder under this act more than 4 years after the

duty arose.

Sec. 31. (1) The administrator may require a person who has

not filed a report under this act or a person who the administrator

believes has filed an inactive, incomplete, or false report, to

file a verified report in a form specified by the administrator.

The report shall state whether the person is holding any unclaimed

property reportable or deliverable under this act, describe

unclaimed property not previously reported or as to which the

administrator has made inquiry, and specifically identify and state

the amounts of property that may be in issue.

(2) The administrator, at reasonable times and upon reasonable

notice, may examine the records of a person to determine whether

the person has complied with this act. The administrator may

conduct the examination even if the person believes he or she is

not in possession of any property reportable or deliverable under

this act. The administrator may contract with any other person to

conduct the examination on behalf of the administrator.

(3) If a person is treated under section 13 as the holder of

the property only insofar as the interest of the business

association in the property is concerned, the administrator,

pursuant to subsection (2), may examine the records of the person

if the administrator has given the notice required by subsection

(2) to both the person and the business association at least 90

days before the examination.

(4) Any examination performed by the administrator or his or

her duly authorized agents must be performed in accordance with the

generally accepted auditing standards to the extent applicable to

unclaimed property examinations. A person who has been audited by

the administrator or his or her duly authorized agents or a person

whose books, records, and papers have been examined by the

administrator or his or her duly authorized agents shall be

provided a complete copy in printed or electronic format of the

audit report, which shall identify in detail the work performed,

the property types reviewed, any estimation techniques employed,

calculations showing the potential amount of property due, and a

statement of findings as well as all other correspondence and

documentation which formed a basis for the findings. Not later than

6 months after the effective date of the amendatory act that added

this subsection, the administrator shall electronically file a

request for rule-making with the office of regulatory reinvention

pursuant to the administrative procedures act of 1969, 1969 PA 306,

MCL 24.201 to 24.328, to initiate rules on auditing standards.

(5) When the person being examined does not have substantially

complete records, the administrator or his or her duly authorized

agents may determine the amount of any abandoned or unclaimed

property due and owing based upon a reasonable method of estimation

consistent with the standards described in subsection (4). If the

person being examined has filed all the required reports and has

maintained substantially complete records, then all of the

following apply to the examination:

(a) The examination shall include a review of the person's

books and records.

(b) The examination shall not be based on an estimate.

shall consider all evidence presented by the holder to remediate

the findings.

(6) If an examination of the records of a person results in

the disclosure of property reportable and deliverable under this

act, the administrator may assess the cost of the examination

against the holder at the rate of $50.00 a day for each examiner;

however, the charges shall not exceed the value of the property

actually found to be reportable and deliverable. The cost of

examination made pursuant to subsection (3) shall be imposed only

against the business association.

(7) If a holder fails after the effective date of this act to

maintain the records required by section 32 and the records of the

holder available for the periods subject to this act are

insufficient to permit the preparation of a report, the

administrator may require the holder to report and pay an amount as

may reasonably be estimated from any available records.

(8) For an eligible holder that has elected to follow the

streamlined process described in section 31b, examinations shall

not include checks voided within 180 days from the date of issuance

of the check.

(9) ~~(8)~~ As used in this section, "substantially complete

records" means at least 90% of the records necessary for unclaimed

property examination purposes as defined under the principles of

internal controls. The determination of substantially complete

records shall not be made solely as a percentage of the total

overall individual records to be examined, but also on a

materiality level of value of the records. The lack of greater than

10% of records in 1 particular property class to be examined does

not result in the extrapolation of error in those areas in which a

person has filed all the required reports and has maintained at

least 90% of the overall records for that particular property

class. Substantially complete records are not meant to be an

absolute measurement of all available records.

Sec. 31b. (1) Eligible holders being examined by the

administrator under section 31(2) may elect to follow the

streamlined audit process described in this section. Eligible

holders may elect the streamlined audit process by executing a

nondisclosure agreement acceptable to the administrator within 30

days from the receipt of the audit notice.

(2) An audit conducted under the streamlined audit process

described in this section shall meet both of the following:

(a) Be completed within a time frame jointly developed by the

holder and the administrator, with the goal of completing the audit

within 18 months from the receipt of the audit notice.

(b) Be conducted according to standards set forth in rules and

regulations promulgated in accordance with section 31(4).

Enacting section 1. This amendatory act is retroactive and

applies to audits in progress as of August 15, 2015, but does not

retroactively apply to contested determinations in litigation

before the date of enactment of this amendatory act.