Connecticut Seal

General Assembly

File No. 584

    February Session, 2016

House Bill No. 5533

House of Representatives, April 12, 2016

The Committee on Judiciary reported through REP. TONG of the 147th Dist., Chairperson of the Committee on the part of the House, that the bill ought to pass.

AN ACT CONCERNING THE TIME PERIOD FOR FUNDS TO ESCHEAT TO THE STATE.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 3-57a of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):

(a) The following property held or owing by a banking or financial organization is presumed abandoned unless the owner thereof is known to be living by an officer of such organization:

(1) Any demand or savings deposit made in this state with a banking organization, together with any interest or dividend thereon, excluding any charges that lawfully may be withheld, unless the owner has, within [three] seven years: (A) Increased or decreased the amount of the deposit, or presented the passbook or other similar evidence of the deposit for the crediting of interest; or (B) corresponded in writing with the banking organization concerning the deposit; or (C) otherwise indicated an interest in the deposit as evidenced by (i) a memorandum on file with the banking organization or (ii) the fact that the Internal Revenue Service Form 1099 sent from the banking organization to the owner is not returned to the banking organization by the United States Postal Service.

(2) Any matured time deposit made in this state with a banking organization, together with any interest or dividend thereon, excluding any charges that lawfully may be withheld, unless, within [three] seven years or, if the terms of the deposit account contract provide that the time deposit will be renewed unless the banking institution receives instructions to the contrary from the owner, within [three] seven years plus such additional time as is necessary to allow the renewed time deposit to reach maturity, the owner has: (A) Increased or decreased the amount of the deposit, or presented the passbook or other similar evidence of the deposit for the crediting of interest, or (B) corresponded in writing with the banking organization concerning the deposit, or (C) otherwise indicated an interest in the deposit as evidenced by (i) a memorandum on file with the banking organization or (ii) the fact that the Internal Revenue Service Form 1099 sent from the banking organization to the owner is not returned to the banking organization by the United States Postal Service.

(3) Any funds paid in this state toward the purchase of shares or other interest in a financial organization or any deposit made therewith, and any interest or dividends thereon, excluding any charges that lawfully may be withheld, unless the owner has within [three] seven years: (A) Increased or decreased the amount of the investment or deposit, or presented an appropriate record for the crediting of interest or dividends thereon; or (B) corresponded in writing with the financial organization concerning the investment or deposit; or (C) otherwise indicated an interest in the funds as evidenced by (i) a memorandum on file with the financial organization or (ii) the fact that the Internal Revenue Service Form 1099 sent from the financial organization to the owner is not returned to the financial organization by the United States Postal Service.

(4) Any sum payable on checks certified in this state or on written instruments issued in this state on which a banking or financial organization is directly liable, including, but not limited to, money orders, drafts and traveler's checks, which has been outstanding for more than [three] seven years from the date payable, or from the date of its issuance if payable on demand, unless the owner has within such [three] seven years corresponded in writing with the banking or financial organization concerning it, or otherwise indicated an interest as evidenced by (i) a memorandum on file with the banking or financial organization or (ii) the fact that the Internal Revenue Service Form 1099 sent from the banking or financial organization to the owner is not returned to the banking or financial organization by the United States Postal Service.

(5) Any funds or other personal property reposing in or removed from a safe deposit box or any other safekeeping repository in this state on which the lease or rental period has expired owing to nonpayment of rent or other reason, which have been unclaimed by the owner for more than five years from the date on which the lease or rental period expired.

(b) With respect to any funds subject to the provisions of subdivisions (1), (2) and (3) of subsection (a) of this section which are held or owing for purposes of a self-employed retirement plan or an individual retirement account, established in accordance with the applicable provisions of the Internal Revenue Code and federal regulations related thereto, such funds shall be presumed abandoned in accordance with said subdivisions (1), (2) and (3), provided in no event shall such presumption of abandonment be applicable to such funds prior to the end of a period of six months immediately following the date on which distribution of funds under any such plan, to the person for whose benefit such funds have been contributed, is required to commence under said provisions of the Internal Revenue Code and related regulations.

This act shall take effect as follows and shall amend the following sections:

Section 1

July 1, 2016

3-57a

JUD

Joint Favorable

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 17 $

FY 18 $

Treasurer

GF - Revenue Impact

20.6 million

20.6 million

Treasurer

GF - Revenue Loss

Potential

Potential

Note: GF=General Fund

Municipal Impact: None

Explanation

The bill extends, from three years to seven years, the period of time before which certain assets are escheated to the state as unclaimed property. This shifts the timing of receipt of certain escheated assets to the General Fund from FY 17, FY 18, FY 19, and FY 20 to FY 21, FY 22, FY 23 and FY 24, respectively. It is estimated that the annualized revenue impact of this shift is approximately $20.6 million.1

To the extent that an extended dormancy period results in claims on property prior to it being escheated to the state, this could result in a General Fund revenue loss.

The Out Years

The shift of timing in the receipt of revenue is limited to FY 17 through FY 24.

Sources:

Core-CT Financial Accounting System Revenue Actuals

OLR Bill Analysis

HB 5533

AN ACT CONCERNING THE TIME PERIOD FOR FUNDS TO ESCHEAT TO THE STATE.

SUMMARY:

This bill extends, from three years to seven years, the dormancy period in which certain funds held by financial institutions are deemed abandoned and are escheated (i.e., ownership transfers) to the state as unclaimed property.

The bill applies to the following property:

If any of the above funds relate to a self-employed retirement plan or an individual retirement account, established in accordance with federal law, by law they must not be presumed abandoned any sooner than six months after the date on which distribution of the funds is required to begin under federal law.

The law, unchanged by the bill, allows a five-year period before funds or personal property held in a safety deposit box, or similar safekeeping repository, escheat to the state as unclaimed property.

EFFECTIVE DATE: July 1, 2016

FUNDS HELD OR OWED BY A BANKING OR FINANCIAL ORGANIZATION

By law, property held or owing by a banking or financial organization is generally presumed abandoned after a specified dormancy period, unless an officer of the organization knows that the owner is alive or during the specified period the owner:

COMMITTEE ACTION

Judiciary Committee

Joint Favorable

Yea

28

Nay

17

(03/30/2016)

TOP

1 The estimate is based on the average annual amount of revenue collected from escheated assets from banks or financial institutions using the current three-year dormancy period from FY 05 through FY 15.