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In that case, New Jersey had codified the so-called place-of-purchase presumption, under which stored-value cards purchased in New Jersey would escheat to New Jersey even if the primary state exempted that property from escheatment. The Third Circuit struck down the place-of-purchase presumption and noted that one state cannot infringe on the sovereignty of another state:
If the balance of the unredeemed cards is subject to full escheatment, the company is precluded from recording any breakage income.
The common-law concept of escheatment has its origins in feudal England, where its application was limited to real property.
2519 (1983) (repealed 2000) (providing for the immediate escheatment of highly fractionated interest regardless of a valid will).
According to an NAUPA survey in 2006, states controlled roughly $33 billion of various unclaimed property, managed more than 117 million accounts, and returned more than $1.7 billion in property But obtaining accurate figures on how much of these amounts are attributable to gift card escheatment is difficult because reporting requirements in most states lump unclaimed gift cards with other categories of abandoned property, such as dividends, payroll checks and utility refunds.
The Claims Payment Analytics Tool automatically identifies duplicate payments, detects "failure to review terms" errors, provides notification to avoid escheatment, and prevents compliance errors.
In cases where no address is found, AP will forward the payment details to the appropriate area where funds will be held until escheatment is required.
Escheatment to states: Some taxpayers are arguing that they do not have to recognize income on unredeemed gift cards until the earlier of redeeming the gift card/certificate or turning over the balances to a state.
Automatically identifies duplicate payments, detects failure to review term errors, provides notification to avoid escheatment, and prevents compliance errors.
Understand how to leverage the tools in the credit department to reunite property with your customer before escheatment is required, what an effective policy and procedure looks like for the credit department to minimize risk, and effectively handle unclaimed property.
Part B issues, for which no examination planning or procedural guidance is provided, include separate gift card companies, gift card versus gift certificate, reloadable gift cards, deposits, gift cards as refunds, dormancy fees, escheatment to states, bulk sales discounts, promotional gift cards (advertising), charitable contribution of gift cards, estimated cost of goods sold, franchise/franchisor gift cards, expiration date, and Rev.