Our lawyers have extensive experience with state unclaimed property/escheat laws, and we are prepared to assist clients with analysis of complex legal issues (including issuance of legal opinions), multistate/multi-entity unclaimed property internal compliance reviews, voluntary disclosure agreements, defense of single-state and multistate audits, and litigation of unclaimed property issues.
We have worked with corporate professionals in the General Counsel's Office, Treasury Department, and Tax and Accounting Departments on unclaimed property engagements, and we have assisted in the identification of "control groups" for such engagements for purposes of ensuring quality control, providing effective internal communication, and extending applicable legal privileges to communications and work product.
Unclaimed property matters in which Sutherland and our unclaimed property professionals have been involved include:
- Legal Analysis and Business/Compliance Policy Design: Conducting legal review of client facts and policies, to determine whether unique types of accounts and balances constitute property subject to state unclaimed property laws; whether federal law preempts state jurisdiction to escheat particular types of property; whether proposed client policies or terms/conditions could mitigate or eliminate unclaimed property exposure; and whether client has exposure to multiple liability (or can eliminate such exposure) with respect to property types, based on its manner of reporting.
- Internal Compliance Review and Amnesty Reporting: Advising and representing numerous Fortune 100 corporations with respect to internal compliance review, and negotiating multistate voluntary disclosures in context of multistate amnesty program; directing work of accounting firm consultants in connection with records review and liability quantification/mitigation processes, to ensure preservation of legal privileges and quality of analysis and work product.
- Multistate Voluntary Disclosure Agreements: Advising and representing major corporations with respect to internal compliance review and negotiation of multistate voluntary disclosure agreements, in absence of amnesty programs; similarly direct work of unclaimed property consultants.
- Merger and Acquisition Exposure Review: Overseeing internal compliance review of several major corporations that had experienced significant merger and acquisition activity over the prior 20 years, which entailed successor holder liability issues (particularly where acquired entities had no prior unclaimed property compliance program), and which created significant challenges to the identification of outstanding unclaimed property, as well as management of non-centralized quantification processes.
- Single-State Audit Defense: Representing client in audit of affiliated group by State of New Jersey (state of client's incorporation), where no prior unclaimed property filing had been conducted by client.
- Multistate Contractor Audit Defense: Advising and representing clients with respect to multistate unclaimed property audits, including audits conducted by contract auditing entities; negotiating terms of client's initial self-assessment process, and overseeing accounting firm's records review; conducting legal assessment of proper reporting of unclaimed property to first-priority states and to state of incorporation issues; and representing client before contract auditor during auditor's review of proposed self-assessment.
- Complex Legal Opinions: Preparing and providing legal opinions for corporate clients, for purposes of reserves documentation and return filing positions, with respect to service contracts, insurance policies, and other types of property interests; and for several accounting firm clients with respect to validity and defensibility of different unclaimed property planning ideas, especially relating to stored-value cards; suggesting improvements to structuring and implementation approaches, based on legal analysis and application of Supreme Court precedent, common and statutory law, Uniform Commercial Code, etc.
- Planning-Driven Corporate Restructuring: Advising and representing clients with respect to unclaimed property restructuring projects, designed to implement stored-value card issuing entities.
- Qui Tam Litigation: Providing expert legal counsel to telecommunications company with respect to qui tam litigation of alleged unclaimed property liabilities arising with respect to "breakage" on pre-paid telephone cards and pre-paid mobile telephone accounts.
- Model Unclaimed Property Legislation: Working with several state Treasurers and Unclaimed Property Administrators – including representatives from Delaware and New York – to draft model "Holder's Bill of Rights." Model explains to state unclaimed property personnel, third party auditors and holders the procedures that are reasonable and fair in the performance of a multistate unclaimed property audit, including disclosure and verification of participating states and application of state confidentiality and conflict of interest rules to third party contract.
- Model COST Legislation: Drafting the Council On State Taxation's "Model Unclaimed Property Act," which proposes alternative and enhanced provisions to the 1995 Uniform Unclaimed Property Act, including early escheat options and holder indemnification; appropriate treatment of gift certificates/stored value cards; and a recommendation that most business-to-business unclaimed property be exempt from the state unclaimed property laws.
- State Legislative Activism: Providing education to interested parties and support for state legislation in numerous states that limits or prevents the transfer or escheat of funds associated with unused gift certificates and unclaimed checks/credits from business-to-business transactions; opposing legislation, regulations and state administrative practice requiring unclaimed property with no identifiable last known address to be claimed by a state other than the state of incorporation of the holder.
© 2008 Sutherland