Legislation that would change the laws regarding unclaimed property in the state was presented this week in the House General Laws Committee. House Bill 1075, sponsored by Rep. Rocky Miller, R-Tuscumbia, would put money back into the hands of Missouri companies and improve the atmosphere for new business development.
“All too often, the unclaimed property that is being reported to the state isn’t truly unclaimed property,” said Tracy King, vice president of governmental affairs for the Missouri Chamber of Commerce and Industry. “This is not the state’s money, and requiring businesses to write a check for the value of the accounting transactions so that I can be deposited into the general revenue fund is just wrong.”
Unclaimed property has become a revenue source for states because if the state can’t find the rightful owner of the property, it keeps the property. This has made states aggressive in their audit practices.
The Council on State Taxation, a national tax association, began ranking states based on their unclaimed property laws in 2008. While most of the states have made improvements over the years, Missouri has remained in the bottom-ranked states in the country with only Delaware, Mississippi and New York with lower rankings.
The three main provisions of the bill would:
- Create a business-to-business exemption for unclaimed property: Currently, if a business has outstanding credits or other transactions with another business, the state Treasurer can audit the company and require them to pay into the state unclaimed property fund. This legislation exempts these transactions as long as the holder and the business have an ongoing relationship.
- Establish a 3 year period of limitations: There are statutes of limitations in both federal and state tax laws. If a business files a report in good faith, they would be assured that they will not be subject to audit, resulting in penalties and interest. The penalties and interest could be significant and the uncertainty would create considerable business planning risks. The statute of limitations defined in this bill is similar to the one for tax law. The state would have three years after the filing of the report to audit the businesses’ records and to assess any addition property.
- Create an independent administrative appeals process: The opportunity to resolve disputes before an independent tribunal is a key to ensuring fair and equitable unclaimed property administration. To be truly independent, the tribunal must not be located within or report to the department charged with administering the state’s unclaimed property laws. Independent tribunals are less likely to be driven by concerns over revenue collection or upholding department policies.
The Missouri Chamber of Commerce and Industry will continue to advocate for the adoption of this legislation to protect businesses from the unfair taking of money.
“Compliance with Missouri’s unclaimed property laws is a huge, hidden cost of doing business in this state and amending this law would remove an impediment to doing business in Missouri,” King testified. “To maintain our economic competitiveness, Missouri must continue to improve its business climate in a variety of ways, including the administration of unclaimed property.”
For more information on unclaimed property, please contact Tracy King, vice president of governmental affairs for the Missouri Chamber of Commerce and Industry, at 573-634-3511 or email@example.com.