|
|  |
 |
|
Claiming
Unclaimed Funds
DECEMBER 2007
- This is in response to The CPA Journal article “Unclaimed
Funds in Search of Their Owners” (August 2007). The article
tends to downplay newspaper advertising by reporting organizations,
as well as the New York State Comptroller’s Office efforts
to return these unclaimed funds to the rightful owners.
Although
advertising may not be as effective as it once was, it is still
a useful means of contacting account owners. Moreover, advertising
is required of many reporting organizations by the New York State
Abandoned Property Law. The law was enacted in 1943 and has been
amended over the years. It requires different notification procedures
based on the type of reporting organizations (e.g., banks, brokers,
corporations, insurance). Some are required to advertise in newspapers
that funds will be turned over to the state. Some are required
to advertise the names and addresses of account owners, and send
them mailings. Others are not required to advertise or send mailings.
Since May
2003, the Abandoned Property Law has required all organizations
to send notices to the last known addresses of all account owners
90 days prior to reporting the funds to the state. If the organizations
do not receive responses to the initial mailing, when the value
of the account exceeds $1,000 they must send a certified mailing.
These rules requiring reporting organizations to exercise due
diligence in notifying account owners have been effective.
We currently
have more than $8 billion in unclaimed funds representing more
than 22 million accounts. Over the last three state fiscal years,
the Office of the State Comptroller’s Office has issued
$450 million in refunds involving 680,000 accounts. Approximately
70% of the claims were initiated through the State Comptroller’s
website (www.osc.state
.ny.us). The website has been a tremendous outreach tool.
In fact, during last fiscal year, more than eight million searches
were conducted.
In addition,
we conduct outreach events throughout the state to increase public
awareness. We visit county fairs, malls, various festivals, conferences,
and conventions. For state fiscal year 2006–07, we conducted
123 outreach events. One of the most prominent events is the New
York State Fair. This year we performed 34,000 searches at the
fair and 5,700 claim forms were printed. We also cooperate with
the media on feature stories concerning unclaimed funds.
The idea
proposed in the article, of developing a computer cross-referencing
of names and addresses, appears to be sound. Unfortunately, many
of the unclaimed funds have incomplete name and address information.
However, we may explore this further for accounts in which the
information is complete.
I should
also note that we have identified approximately $3,000 that The
CPA Journal may be entitled to claim. The funds are listed
on our website and I have enclosed a claim package that can be
completed by the appropriate person in your organization and returned
to us for payment.
I hope this
has been helpful.
Lawrence
M. Schantz
Director, Office of Unclaimed Funds
Office of the State Comptroller
State of New York
Albany, N.Y.
Editors’
Note: The NYSSCPA is following through on filing this
claim, and we encourage readers to avail themselves of the resources
described in this letter and the referenced article to research
their own, and their clients’, possible unclaimed funds.
Update
on States’ Tax Credits for Research
The
article “States’ Tax Credits for Company-Financed
Research: A Current Comparison” (The CPA Journal,
February, 2007), by B. Anthony Billings, contains a wealth of
information involving the use of tax incentives by state governments.
However, we disagree with the article’s portrayal of Hawaii’s
research and experimentation (R&E) credit under current law.
In our opinion, the article understated the effectiveness of Hawaii’s
R&E credit.
The article
summarizes the R&E (also known as research and development—R&D)
credit for each of the 40 or so states that offer it. Then, using
data from a sample company’s publicly available financial
statements, the article develops a simulated “average effective
rate” of R&E credit for each of these states for calendar
years 2002–2004.
The article
contains the following summary of Hawaii’s tax credit for
research activities:
Hawaii’s
credit mirrors the IRC section 41 federal credit and has a statutory
rate of 20% of incremental spending, but it does not have the
restrictions and limitations imposed by Arizona and California.
Moreover,
the Hawaiian credit is refundable and can be used against corporate
or personal income taxes. As of July 1, 2004, only certain qualified
high-technology businesses are eligible for the research activities
credit.
The first
sentence of this quote is somewhat at odds with current Hawaii
law. While it’s true that the federal R&E credit under
IRC section 41 is based upon incremental research expenditures,
Hawaii’s research credit applies to all qualifying R&D
expenditures. (See HRS section 235-110.91 at www.capitol.hawaii.gov/session2004/bills/HB2396_cd1_.htm
). Furthermore, this aspect of Hawaii law was in effect during
the period in which the simulation was based (calendar years 2002–2004).
The article
also contains an exhibit that sheds some light upon its computation
of Hawaii’s simulated “average effective rate”
of R&E credit. A footnote to this exhibit indicates that,
for calendar years 2002–2004, the total amount of Hawaii’s
R&E credit was capped at $7.5 million.
There is
a credit in Hawaii that is capped at $7.5 million per year. It’s
called the “Ko Olina Resort” credit. [See HRS section
235-110.46(b).] The “Ko Olina Resort” credit and the
R&E credit are different credits. The $7.5 million credit
cap applies to the former but not the latter.
In computing
Hawaii’s “average effective rate” of R&E
credit, the article should use actual—rather than incremental—R&E
expenditures. In addition, the article should not use a $7.5 million
R&E credit cap. As a result, the article appears to understate
Hawaii’s average effective rate of R&E credit. Stated
alternatively, Hawaii’s rate should be higher.
On a related
note, Hawaii has both a refundable R&E credit and a nonrefundable
investment tax credit. Under prior law, a company could qualify
for the R&E credit without being a qualified high-technology
business (QHTB). However, as of July 1, 2004, to claim the R&E
credit in Hawaii, the company must be a QHTB. A separate credit,
the investment tax credit, is available to certain investors in
a QHTB. While the details of this generous (and sometimes controversial)
credit are beyond the scope of this letter, a thorough explanation
of it can be found on the Hawaii Department of Taxation website
(www.state.hi.us/tax/a9_2trc_doc.htm).
Thus, under current Hawaii law, it is quite possible for company-financed
research in Hawaii to result in both a refundable R&E credit
(to the company) and a nonrefundable investment tax credit (to
certain of its investors).
Marcia
Sakai, PhD
Dean, College of Business and Economics
University of Hawaii at Hilo
Hilo, Hawaii
Bruce
M. Bird, JD, CPA
Richards College of Business
University of West Georgia
Carrollton, Ga.
The
author responds:
After reviewing
section HRS 235-110.91, I agree that the following changes should
be made to the article regarding the state of Hawaii:
-
Hawaii’s credit mirrors the IRC section 41 federal credit
and has a statutory rate of 20% of actual spending, but it does
not have the restrictions and limitations imposed by Arizona
and California. Moreover, the Hawaiian credit is refundable
and can be used against corporate or personal income taxes.
As of July 1, 2004, only certain qualified high-technology businesses
(QHTB) are eligible for the research activities credit.
- Footnote
7 in the Exhibit should be deleted, because there is not a $7.5
million limit on the credit, and the effective rate should be
changed to 20%.
B.
Anthony Billings, PhD
Wayne State University
Detroit, Mich.
|
|