With most unclaimed property transactions being wholly domestic, it’s relatively straight-forward to determine the reporting obligations for most properties. However, managing foreign transactions continues to be an, at times, confusing topic for U.S. holders of unclaimed property. We have previously addressed the considerations for handling foreign transactions, but how do more recent changes, such as the introduction of RUUPA, impact the reporting obligations for foreign transactions?
Revisiting the Types of Foreign Transactions:
- Domestic to Foreign: The holder is located in the United States and the payee is located in a foreign country.
- Foreign to Domestic: The holder is located in a foreign country and the payee is located in the United States.
- Foreign to Foreign: Both the holder and payee are located outside of the U.S.
Wholly foreign transactions tend not to be impacted by domestic escheat laws, so U.S. holders will be most focused on domestic to foreign transactions – those where the owner's last known address is in a foreign country, and to a lesser extent, foreign to domestic transactions.
Impacts of RUUPA on Escheatment of Foreign Transactions
The new Revised Uniform Unclaimed Property Act (RUUPA) , created in 2016, has already been passed by several states, and is currently being considered by others. In its original form, RUUPA provides some clarity for both foreign to domestic and domestic to foreign transactions. However, because there are varying degrees of adoption of RUUPA among the states, it is important to review the individual state statutes to determine the specific provisions that have been adopted.
Foreign to Domestic: RUUPA provides for escheat of foreign property if the last known address of the owner is in the state, thus providing a framework for some foreign to domestic transactions.
Domestic to Foreign: RUUPA provides further clarity around domestic to foreign transactions, providing that if the last known address of the owner is in a foreign country, and that foreign country does not provide for escheatment, then escheatment should be to the state of domicile.
Even with the clarity provided by RUUPA, it is again important to review the specific state statutes to confirm the provisions in place. Consult with an attorney or unclaimed property advisor where further clarity is required.