Wisconsin enacts unclaimed property reform and limited VDA program

Wisconsin Gov. Tony Evers recently signed Assembly Bill 325, adopting the 2016 Revised Uniform Unclaimed Property Act (RUUPA). The amendments provide more specificity regarding escheatment procedures for various types of unclaimed property and account for changes in relevance for certain provisions based on evolving technology since the prior version of the uniform act was adopted. The legislation also includes a limited voluntary disclosure program, offering an opportunity for businesses to come into compliance with the state’s unclaimed property law.

Selected changes to Wisconsin’s unclaimed property law include the following:

• Retaining the business-to-business exemption for credits, while expanding the definition to also include the term “payment”
• Lowering the dormancy period for money orders from seven to five years
• Lowering the dormancy period for certain insurance-related property from five to three years
• Explicitly including virtual currency as a property type covered under RUUPA, while creating an exemption for game-related digital content
• Adding RUUPAs exemption provisions for gift cards, loyalty cards, and promotional cards
• Creating a statute of limitations of five years after a holder files a non-fraudulent report for the property included and a 10-year statute of limitations for non-reporting or deficient property reporting
• Extending the record retention requirement from five to ten years after a report has or should have been filed
• Eliminating interest assessments and revising the relevant penalties for non-compliance with RUUPA

Voluntary disclosure program

A new voluntary disclosure program will allow unclaimed property holders doing business in Wisconsin to report and remit past due property without the imposition of penalties. Participation in the program is available through Feb. 28, 2023. To be eligible to participate in the program, the business must not:

• Be under audit or have been audited for unclaimed property by the state since July 1, 2016
• Have received a notice of the state’s intent to audit
• Have a balance owing on the business’s unclaimed property holder account
• Currently, be subject to a civil or criminal prosecution related to unclaimed property

A business has 60 days within which to report and remit the property owed to the state once accepted into the program. Within 30 days of execution of the program agreement, the business must send due diligence letters to the owners of the property, as required under RUUPA for annual compliance. The state has indicated that holders may request an automatic 60-day extension for reporting to ensure that they have adequate time to perform the due diligence and determine the final amount due. Once a business completes participation in the program, it is required to maintain compliance in the state for the next four report years or risk having its voluntary disclosure being deemed null and void. The business must also agree to waive its right to appeal for the periods included.

The program’s lookback period includes property due from the prior five report periods. What is considered past due is determined by the property type in question. Under RUUPA, the lookback period is identical to the period of limitation for audits where companies have filed non-fraudulent reports to the extent that property type is included; however, RUUPA creates a longer 10-year statute of limitations for non or deficient reporting. Therefore, the reduced lookback period is advantageous to businesses that have never reported property or have failed to report a specific property type in Wisconsin.

As a condition of participation in the program, the business must maintain compliance with Wisconsin’s unclaimed property law for the next four report years. In addition to the waiver of penalties and interest, Wisconsin also agrees to waive its right to audit for the periods included in the voluntary disclosure unless:

• The Wisconsin Department of Revenue determines there was fraud or misrepresentation by the holder
• It has been determined that the holder underreported property by at least 75% of the value of what should have been reported
• The holder fails to maintain its compliance with RUUPA for the next four report periods after the final period included in the agreement

Wisconsin did not previously provide an unclaimed property voluntary disclosure program.

Takeaways

Businesses should take notice of some of the key changes in Wisconsin’s unclaimed property law, including the reduced dormancy periods and the expanded definition of its business-to-business exemption, which may offer reduced escheatment obligations. Furthermore, the expansion of the statute of limitations and record retention requirement should be noted as this will impact Wisconsin’s look back in the event of an audit.

The voluntary disclosure program has a limited participation window for businesses that may have unclaimed property due to Wisconsin. The waiver of the penalties and the reduced lookback period could be extremely advantageous for companies domiciled in Wisconsin or that have substantial employees, vendors, and/or customers in the state.

However, some components of the legislation remain ambiguous. For example, the state does not specify any required methodologies for sampling and estimation for Wisconsin-domiciled businesses that may have incomplete records for the entire lookback period. Additionally, due to the limited time for completion upon entering the program, businesses interested in participation should conduct some of their review and liability determination before officially entering the program to ensure timely completion before the deadline.

Businesses that participate must maintain compliance for at least four years. Unclaimed property holders or businesses that have never filed reports should speak to an unclaimed property specialist about entering the program. For more information and insights on unclaimed property, please visit RSM’s Unclaimed Property Portal.