Karen Kidd May 18, 2016, 9:18am


HARRISBURG – Legal and commercial entities that must file a report with the state Treasury Department if they have reportable unclaimed securities can follow certain steps, two attorneys who specialize in unclaimed property issues said in a recent interview.

"If a company identifies that they have unclaimed securities, the company should first reach out to the shareholder to confirm if the shares are truly unclaimed," Sara Lima and Jennifer Waryjas, attorneys with Reed Smith, said in a joint email interview with the Pennsylvania Record.

"If contact is unsuccessful, then the company should identify those shares for annual compliance filing, in order to make sure that the owner can claim any shares that are owed.

"But the company needs to be thorough in their outreach efforts in order to allow shareholders the maximum redemption potential for their shares, as states like Pennsylvania may sell the shares and provide the owners with the value at the time of the sale."

Lima is a partner in Reed Smith's Philadelphia office, and Waryjas is an associate in Reed Smith's Chicago office. Lima focuses her practice on advising companies on unclaimed property issues, while Waryjas’ specialty is state and local tax litigation with an emphasis on abandoned and unclaimed property audit defense.

Pennsylvania's most recent unclaimed property annual report, covering 2015, provides mailing instructions, in addition to report preparation, securities delivery instructions, how to report tangible property and other information.

The report also details resources available through the state's Treasury Department. That department provides a team of compliance specialists to answer questions about reporting unclaimed property, to help businesses or organizations determine if they have any unclaimed property and to assist with annual unclaimed property reports.

The Treasury's compliance team also is available to discuss voluntary compliance options and can present seminars about unclaimed property reporting.

The state also allows for online reporting. Holders of unclaimed property are financial institutions, insurers, utilities, business associations, medical facilities, sole proprietors, fiduciaries, courts, public officers, government entities, and all legal or commercial entities that must file a report with the Pennsylvania Treasury if they have reportable unclaimed property.

Legal and commercial entities that must file a report with the Pennsylvania Treasury if they have reportable unclaimed property include financial institutions, insurers, utilities, business associations, medical facilities, sole proprietors, fiduciaries, courts, public officers and government entities.

"The contingent fee auditors that conduct the audits have the incentive to categorize shares as lost," Lima and Waryjas said. "This has occurred in other audits, in which the auditors identify shares as escheatable because the owner has died, the concept of which ignores the deceased’s will or the state probate laws concerning the successor to those shares.

"There is also a greater likelihood of record-keeping gaps as the number of issued shares and trading volume increases, or as transfer agents consolidate."

The amount accumulated is often significant, Lima and Waryjas said.

 "Unclaimed property audits result in a significant amount of money remitted to the state," they said. "Pennsylvania’s unclaimed property website states that they are holding $2.3 billion in unclaimed property. There is always the balance between looking out for an owner who may not know they have shares, and balancing that with the significant amount of money that comes in the form of unclaimed property remittance.

"Pennsylvania allows shares to be liquidated without the state conducting outreach to holders, which allows the state to utilize the funds represented in the remitted shares.

The state of Pennsylvania estimates that one in 10 state residents have unclaimed property waiting for them. The simplest way for anyone to find out if some of that might be theirs is to visit the state's unclaimed property website here.

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State of Pennsylvania
Main Capitol Bldg
Harrisburg, PA 17120

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