GEC S.B. 700 75(R) BILL ANALYSIS
BUSINESS & INDUSTRY
S.B. 700
By: Armbrister (Rhodes)
4-23-97
Committee Report (Amended)
BACKGROUND
On September 1, 1996 the office of the State Treasurer was abolished and
all powers, duties, obligations, rights, and contracts transferred to the
Comptroller of Public Accounts ("Comptroller").
The Comptroller became the administrator for unclaimed property reported
and remitted under Chapters 71 through 75, Property Code and is authorized
to collect all unclaimed property due citizens of the State under the
unclaimed property laws, and to locate rightful owners and return their
property.
PURPOSE
The purpose of this bill is primarily intended to clarify provisions of
the Property Code as they related to unclaimed property. Although the
legislation includes some substantive changes it is primarily a
restructuring of the language to clarify the original wording and make it
easier to follow.
In addition, the bill allows the separation of civil and criminal
violations into one section pertaining to civil violations and one section
pertaining to criminal violations. These sections currently overlap, and
as a result a showing of criminal intent may be needed before civil
penalties can be granted. The statute as written makes the assessment of
penalties under the statute difficult.
In addition, the affected statutes will be amended to change all
references from "treasurer" to "comptroller".
RULEMAKING AUTHORITY
Rulemaking authority is granted to the comptroller in SECTIONS 1, 18, 22,
23 and 32 (Sections 4 and 15, Article 4.08, Insurance Code; and Sections
74.103(c), 74.3011(e), 74.3012(e) and 74.701, Property Code) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. This section amends Sections 4-12 and 14-16, Article 4.08,
Insurance Code, to provide uniformity by requiring that the publication
and enforcement provisions of Chapter 74, Property Code that apply to all
other holders of unclaimed property apply to life insurance companies. In
addition, language is added to Sec. 8(b), Insurance Code, to reflect the
legislative changes made concerning funds consolidation which was passed
during the 74th Legislature. This section also changes the references
from Treasurer to Comptroller.
SECTION 2. This section amends Section 117.002, Local Government Code, to
change the reference from Treasurer to Comptroller only.
SECTION 3. This section amends Section 381.004, Local Government Code, to
eliminate any funding issues (resulting from funds consolidation) with
respect to the rural or urban scholarship funds.
SECTION 4. This section amends Section 71.101(a), Property Code, to
change the reference from Treasurer to Comptroller only.
SECTION 5. This section amends Section 71.103(c), Property Code, to
change the reference from Treasurer to Comptroller only.
SECTION 6. This section amends Section 71.301(c), Property Code, to
change the reference from Treasurer to Comptroller only.
SECTION 7. This section amends Section 71.304(a), Property Code, to
change the reference from Treasurer to Comptroller only.
SECTION 8. This section amends Section 72.102(b) and (c), Property Code,
to remove the requirement that communication on travelers checks and money
orders be in written form.
SECTION 9. This section amends Section 72.103, Property Code, to clarify
the holder's responsibility to preserve property in its possession.
SECTION 10. This section amends the title of Chapter 73, Property Code,
from "Inactive Accounts Held by Banking Organizations" to "Property Held
by Financial Institutions".
SECTION 11. This section amends Section 73.001(a), Property Code, to
clarify the definition of account as including savings accounts, other
interest bearing accounts and checking accounts. This section also amends
the definition of check to be consistent with the Uniform Commercial Code
definition.
SECTION 12. This section amends Section 73.001(c) and (d) to clarify that
"checks" are subject to the abandonment provisions of Chapter 72 and the
reporting requirements of Chapter 74.
SECTION 13. This section amends Section 73.002, Property Code, to add
credit union to the definition of a depository, and Section 73.003,
Property Code, to clarify the language and structure of preservation of
property requirements.
SECTION 14. This section amends Section 73.101, Property Code, to clarify
when the period of inactivity begins for inactive accounts or safe deposit
boxes. This section also deletes the reference to how long a safe deposit
box or account must remain inactive.
SECTION 15. This section amends Chapter 73, Property Code, to include a
new Section 73.102 which defines the abandonment period for checks. These
provisions are moved from Sec. 73.004 which is repealed to move
presumption of abandonment of checks into subchapter B "Presumption of
Abandonment".
SECTION 16. This section amends Section 74.101(a) and (c), Property Code,
by adding a requirement that social security numbers, if known by holders,
must be included in a property report submitted by a holder. In addition,
this section allows the Comptroller discretion to require that property
reports be submitted in a computer-readable form as an option.
SECTION 17. This section amends Section 74.102, Property Code, to require
that the verification provided with the property report to be attached
anywhere to report.
SECTION 18. This section amends Section 74.103, Property Code, to include
social security numbers, if known by holders, to the list of information
that a holder needs to maintain for the last known owner of record of any
abandoned property.
SECTION 19. This section amends Section 74.104, Property Code, by
changing the reference from Treasurer to Comptroller.
SECTION 20. This section amends Section 74.201, Property Code, by
deleting the specific requirement to publish in newspapers the name and
address of each individual with abandoned property to provide the
Comptroller with a wider range of notice options.
In addition this section amends Section 74.202, Property Code, increasing
the tolerance for items that must be published from $50 to $100.
This section also amends Section 74.203, Property Code, to clarify that a
notice mailed to each person reported with a Texas address that appears to
be entitled to the reported property must conform to the general notice
requirements of Sec. 74.201(b), Property Code.
SECTION 21. This section amends Sections 74.205 and 74.301, Property
Code, by changing the reference from Treasurer to Comptroller only. This
section also amends Section 74.031 to allow the Comptroller to establish a
schedule for the systematic receipt of abandoned personal property
contained in safe deposit boxes delivered by financial institutions.
SECTION 22. This section amends Section 74.3011, Property Code, by
changing the reference from Treasurer to Comptroller only.
SECTION 23. This section amends Section 74.3012, Property Code, by
changing the reference from Treasurer to Comptroller only.
SECTION 24. This section amends Section 74.304, Property Code, by
changing the reference from Treasurer to Comptroller and by changing the
reference from "person" to "holder". In addition, language is added to
reflect the legislative changes made concerning funds consolidation which
was passed during the 74th Legislature.
This section also amends Section 74.306, Property Code, to add language
reflecting the legislative changes made concerning funds consolidation
which was passed during the 74th Legislature.
In addition, this section adds a new Section 74.3061 to enhance the
possibility of obtaining unclaimed tax refunds in the possession of the
federal government by creating a state property interest in the funds.
The funds can then be noticed as with other unclaimed property and title
transferred back to the missing taxpayer/owner when claimed.
Finally, this section amends Section 74.308, Property Code, by changing
the reference from Treasurer to Comptroller only.
SECTION 25. This section amends Section 74. 401 and Section 74.402,
Property Code, by changing the reference from Treasurer to Comptroller
only.
SECTION 26. This section amends Section 74.403, Property Code, by
changing the reference from Treasurer to Comptroller only.
SECTION 27. This section amends Section 74.501, Property Code, by
clarifying the process of filing a claim for recovery of unclaimed
property. Certain provisions are moved to this section from Sections
74.503 and 74.505 which are repealed.
In addition, this section amends Section 74.502, Property Code, to clarify
that the unclaimed property holder reimbursement process applies to all
property and not just inactive accounts.
SECTION 28. This section amends Section 74.504, Property Code, by
changing the reference from Treasurer to Comptroller only.
SECTION 29. This section amends Section 74.506(c), Property Code, by
removing the venue clause allowing suit where the funds were deposited.
All suits would have to be brought in Travis County.
SECTION 30. This section amends Sections 74.507 and 74.508, Property
Code, by changing the reference from Treasurer to Comptroller and by
providing that an heirfinder cannot act for a claimant.
This section also amends Section 74.509, Property Code, by increasing the
tolerance for charging a handling fee from $50 to $100. In addition, by
changing the term "shall" to "may" allows flexibility in charging a fee
depending on the specific situation.
SECTION 31. This section amends Subchapter G of Chapter 74, Property Code
by amending the heading of Subchapter G of Chapter 74, Property Code, and
Section 74.601 to reflect the legislative changes made concerning funds
consolidation which was passed during the 74th Legislature.
This section also amends Section 74.602, Property Code, by changing the
reference from Treasurer to Comptroller and to reflect the legislative
changes made concerning funds consolidation which was passed during the
74th Legislature.
In addition, this section amends 74.603, Property Code, to add language
reflecting the legislative changes made concerning funds consolidation
which was passed during the 74th Legislature.
SECTION 32. This section amends Section 74.701 and Section 74.702,
Property Code, by changing the reference from Treasurer to Comptroller
only.
SECTION 33. This section amends Section 74.703(a), Property Code, by
changing the reference from Treasurer to Comptroller only.
SECTION 34. This section amends Section 74.704, Property Code, by
changing the reference from Treasurer to Comptroller only.
In addition, this section also amends Section 74.705, Property Code, by
clarifying that interest for delinquent unclaimed property is 10% and is
not compounded and changes "person" to "holder" to clarify that the holder
is liable for the interest.
SECTION 35. This section amends Subchapter H, Property Code, by adding
new Sections 74.706 74.710.
Section 74.706 which imposes a penalty of five percent of the property due
if a holder fails to deliver property within the time prescribed with an
additional five percent penalty if a holder fails to deliver property more
than 30 days after time prescribed.
This section also adds a new Section 74.707 to provide for the Comptroller
to waive penalties and interest with holders who make a good faith effort
to comply with statute. In addition, this section amends Subchapter H,
Property Code, by adding a new 74.711 to allow the Comptroller to abate
penalties and interest for holders of delinquent unclaimed property who
are delinquent in their reporting and remittances for specified periods of
time.
In addition, this section adds a new Section 74.708 to contain
constructive trust language, in which holders hold unclaimed property in
constructive trust for the benefit of the owners. This amendment is for
the sole purpose of preventing unclaimed property from becoming property
of the bankruptcy estate when a holder files bankruptcy. The insertion of
"on June 30" is intended to make clear that the trust established by new
Section 74.708 regarding unclaimed property presumed abandoned would not
arise prior to June 30th of each year. It is on June 30th that holders of
unclaimed property determine which property is to be reported and remitted
to the Comptroller on or before November 1st. In addition, language was
added to new Section 74.708 to assure that segregation of abandoned
property into trust accounts is not required if property is timely
reported and remitted to the Comptroller.
Further this section adds a new Section 74.709 which transferred the
civil enforcement language from Section 74.705, Property Code, and the
suit to compel language from Section 74.305, Property Code, to form a new
section.
Finally, this section adds a new Section 74.710 to move the existing
criminal violations in Section 74.705 to this new section.
SECTION 36. This section amends Subchapter A, Property Code, by adding a
new Section 75.002 allowing the Comptroller to seek documents and
information regarding the grantor from the grantee of an unclaimed mineral
interest or mineral proceeds.
SECTION 37. This section amends Section 91.403, Natural Resources Code,
by changing the reference from Treasurer to Comptroller only.
SECTION 38. This section repeals:
Section 571.030, Government Code, to delete the state ethics fund. Funds
consolidation eliminated dedicated funds and revenue streams unless the
legislature specifically exempted.
Section 73.004, Property Code regarding the presumption of abandonment of
drafts and checks. These provisions are moved to new Sec. 73.102.
Section 74.204, Property Code. The notice required by this provision is
included in the notice required under Sec. 74.201.
Section 74.305, Property Code. The Suit to Compel Delivery provisions of
this section are moved to new Sec. 74.709.
Section 74.503, Property Code. This Validity of Claims provision is moved
to Sec. 74.501(c).
Section 74.505, Property Code. This Payment of Claims provision is moved
to Sec. 74.501(e) and (f).
SECTION 39. This section specifies the change in law for offenses and
rates of interest on the effective date of this bill. This section also
inserts transitional language to clarify the application of the
publication requirements to property reported prior to September 1, 1997.
SECTION 40. This section specifies the bill's effective date as September
1, 1997.
SECTION 41. This section declares an emergency and suspends the rule
requiring bills to be read on three several days in each house.
EXPLANATION OF AMENDMENTS
Committee Amendment #1 amends S.B. 700 as follows:
Parts (1) and (2) of the amendment to SB 700 would allow the Comptroller
to establish a schedule for the systematic receipt of abandoned personal
property contained in safe deposit boxes delivered by financial
institutions in order to more efficiently manage the large volume of
abandoned property received by the comptroller by leveraging available
staff and state floor space.
Part (3) strikes language contained in the engrossed version of the bill
which would delete the requirement that the list of owners be in
alphabetical order. This amendment would leave current law in place,
requiring the Comptroller to continue to list owners of unclaimed property
in alphabetical order.
Part (4) would insert transitional language to SECTION 39 to clarify the
application of the publication requirements to property reported prior to
September 1, 1997.
Part (5) adds a provision to enhance the possibility of obtaining
unclaimed tax refunds in the possession of the federal government by
creating a state property interest in the funds. Unclaimed federal tax
refunds are currently kept by the federal government even though the money
belongs to the taxpayer -- not the federal government. Little effort is
made to return this money after a tax refund goes unclaimed. In contrast,
Texas attempts to return unclaimed property to its rightful owner. Once
the funds are obtained by the state from the federal government, the funds
can be noticed as with other unclaimed property and title transferred back
to the taxpayer when claimed.