October 1, 2015, Introduced by Senators BRANDENBURG, SMITH, PROOS, MACGREGOR, MARLEAU and BIEDA and referred to the Committee on Finance.
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.
(c) "Attorney general" means the department of attorney
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
or does business in this state.
(ii) Is a corporation that has a subsidiary incorporated or
does business in this state.
(iii) Is a corporation that is not incorporated in this state
but is wholly owned by a corporation that is incorporated or does
business 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.
(c) The administrator or his or her duly authorized agents
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.