Colorado Adopts The Revised Uniform Unclaimed Property Act of 2016 (RUUPA)

On April 16, 2019 Colorado joined the growing group of states that has adopted RUUPA, when the governor signed S.B. 19-088, the Revised Uniform Unclaimed Property Act (“Act”) into law.  The Act is effective July 1, 2020 and while it contains many of RUUPA’s provisions it also includes certain provisions that are not contained in RUUPA. 

The legislation makes many changes to the existing statute, the highlights of which include repealing the existing reporting deduction, stipulating record retention requirements, allowing use of estimation methods for the failure to retain records, imposing interest and penalties for failure to act in a timely manner and providing a transitional provision.

Reporting deduction eliminated

Colorado’s current unclaimed property statute provides that “A holder may voluntarily, prior to payment or delivery of said abandoned property, deduct and retain [2%] of the value of the property or [$25] whichever is more per item…”. The Act does not include a similar provision.

Retention of records

The Act provides that “a holder required to file a[n unclaimed property] report … shall retain records for ten years after the later of the date the report was filed or the last date a timely report was due to be filed, unless a shorter period is provided by rule of the administrator”.

Use of estimation methods allowable if records are not retained

The Act provides that “If a person subject to examination … does not retain the records required … , the administrator may determine the value of property due using a reasonable method of estimation based on all information available to the administrator, including extrapolation and use of statistical sampling when appropriate and necessary… “.

Interest and penalties for failure to act in a timely manner

Interest is imposed on “a holder that fails to report, pay, or deliver property within the time prescribed [by the Act] … on the property or value of the property from the date the property should have been reported, paid, or delivered to the administrator until the date reported, paid, or delivered ..”. In addition, the administrator may require such a holder to pay “a civil penalty of $200 for each day the duty is not performed, up to a cumulative maximum amount of $5,000”.  Penalties may be waived if the administrator determines that “the holder acted in good faith and without negligence”.

The Act also includes civil penalties for “evading an obligation”, “making a fraudulent report”, or “otherwise willfully failing to perform a duty imposed on the holder”.

Transitional provisions

The Act states that “an initial report filed … for property that was not required to be reported before July 1, 2020, but that is required to be reported under this [Act], must include all items of property that would have been presumed abandoned during the five-year period preceding July 1, 2020 …”. Additionally, “a holder that did not comply with the law governing unclaimed property before July 1, 2020 is subject to applicable provisions for enforcement and penalties in effect before July 1, 2020”.

The most important aspect of the Act is the elimination of the reporting deduction.  As a consequence of this elimination, holders should review their procedures to ensure they are appropriately reporting unclaimed property in their Colorado annual filings.

In addition, the transitional provision requiring the filing of items that would have been presumed abandoned during the five years preceding July 1, 2020, makes it vital that holders understand how this provision affects their future reporting.

Seeking professional guidance can assist organizations understand changes and regulations in all jurisdictions and avoid non-compliance risks.

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