State of california
Undertake a review of its books and records for “at least” the past 10 report years (typically, 13 transaction years).Note that AB 2280 does not specify whether this requirement only applies to first-time filers of unclaimed property or to all holders. Enroll and participate in an “educational training program” provided by the SCO within three months of the SCO notifying the holder of the holder’s enrollment in the VCP.In order for an eligible holder to enter into the VCP and qualify for the interest waiver, a holder must: It is possible that such guidelines could address the ability of holders with pending interest abatement requests to enter the VCP. That said, the new Section 1577.5 allows the SCO “discretion” to enroll “eligible holders in the program,” and AB 2280 authorizes the SCO to adopt guidelines that establish specific procedures of the VCP. AB 2280 would appear to preclude a holder from resolving ongoing interest assessment issues with the SCO via the VCP program, which is an unfortunate restriction. The Assembly’s amendment did not address this particular concern. AB 2280 does allow a holder that currently has an unpaid interest assessment to either refile or reenroll in the VCP after resolving the interest assessment.ĪB 2280 also provides that if a holder acquired or merged with another entity within a five-year period, the holder may request to enroll in the VCP to resolve unclaimed property issues relating to the acquired entity, even if the holder (or such acquired entity) had interest waived by the SCO within the previous five years.Īs we indicated in our original advisory reviewing AB 2280 when it was introduced, the bill is overly restrictive in that it prohibits participation in the VCP by holders that have an outstanding interest assessment, including one subject to ongoing SCO review of the holder’s abatement request. Under the VCP, a holder would be ineligible to participate in the program if the holder (1) is the subject of an examination of records (or has received notification of an impending examination) (2) is the subject of a civil or criminal prosecution involving compliance with the UPL (3) has been notified of an interest assessment under Section 1577 in the past five years that has remained unpaid or (4) has had interest waived by the SCO within the previous five years via participation in the VCP (AB 2280 was amended by the Assembly to clarify that only VCP-related waivers within the last five years would render a holder ineligible). A $10,000 interest cap is provided if a holder timely delivers the unclaimed property but the report is not in substantial compliance (this would not apply to most reports containing past-due property). Under the current California Unclaimed Property Law (UPL), holders are subject to 12% interest on late reported and delivered property, unless the failure to timely report and deliver is due to “reasonable cause.” The State Controller’s Office (SCO) automatically generates interest assessments on past-due property, and holders must plead their cases for a waiver, citing “reasonable cause” grounds for the SCO’s withdrawal of an interest assessment (e.g., the failure to report was due to circumstances beyond the holder’s control).
#STATE OF CALIFORNIA CODE#
Under AB 2280, current Section 1577.5 of the California Code of Civil Procedure would be repealed, and provisions creating the VCP would be added as a new Section 1577.5 with the significant benefit that the controller would be required to waive interest if the holder complies with the program’s provisions. Notably (or infamously), California is one of the only states where there is no voluntary compliance or similar program for holders to report past-due unclaimed property. On August 17, 2022, the California legislature passed Assembly Bill 2280 (AB 2280) that, if signed into law by Governor Gavin Newsom as expected, would establish the California Voluntary Compliance Program (VCP) for unclaimed property holders.