New Nevada laws will impact fall unclaimed property reporting

Last year, Nevada Senate Bill 55 was enacted with an effective date of July 1, 2023. While the bill became effective last year, this year’s fall Nevada unclaimed property reports will be the first reports impacted by the new legislation.

Dormancy triggers

Among the most significant changes to Nevada’s prior unclaimed property statutes are the changes made to dormancy triggers, i.e., the date on which a company with property owed to another (holder) begins its calculation to determine whether an item of property has become unclaimed. Changes to dormancy triggers include:

Stock and equity interests

• Three years after the last indication of interest by the owner. The former standard was the date on which a piece of mail sent to the owner was returned as undeliverable, known as the returned by the post office (RPO) standard.

Automatically renewable deposit

• Three years after the maturity date following the first automatic renewal.

Life insurance or annuity contract

• Three years after date of death, maturity date or limiting age has been reached. The former standard was the date the holder had knowledge of death of the owner.

Tax-deferred or tax-exempt accounts

• Three years after the date when a distribution is required to avoid a tax penalty, which removes the RPO standard.

Pre-need funeral contracts

• Three years after the knowledge of death (former standard was date of death), or the date the beneficiary becomes 105.
• If a beneficiary’s date of birth is not known, 40 years after the contract was created, or three years after the last indication of owner interest.

Gift certificates

• In addition to an expiration date, dormancy triggers now include the date on which a gift certificate is no longer honored by issuer.

The new Nevada laws now provide that a holder’s knowledge of the death of an owner is now a dormancy trigger for multiple property types, including:

• Stocks and equity interests
• Debt of business association
• Demand, savings and time deposits
• Individual Retirement Accounts (IRAs)
• Any property not otherwise specifically addressed by the Nevada laws (the catch-all provision)

Due diligence

Nevada’s due diligence requirement still requires that notice be sent to the owners of property with a value of $50 or more not more than 120 days or less than 60 days before filing a report. However, Nevada’s new law adds an additional requirement providing that holders must send due diligence notifications by certified mail for stocks, equity, IRAs or virtual currency valued at $1,000 or more.

The new Nevada law also made minor changes to what counts as an indication of interest in their property by an owner by including a signed return receipt from due diligence mailing and an owner executed IRS W-8BEN form from a securities owner with a foreign address.

Preparing for fall

As a general reminder, fall reporting is fast approaching, and now is the time for companies to review their records for potential unclaimed property in order to prepare letters notifying vendors and customers of potential unclaimed funds held by the company. Many states require that notice letters be sent to owners no more than 120 days and no less than 60 days before the report is filed. As fall reports are due Oct. 31 / Nov. 1, the notice mailing for most states should be completed no later than August.

Companies wanting to learn more about the new Nevada laws will impact their 2024 unclaimed property reports, the unclaimed property compliance process or any other unclaimed property related questions should reach out to a member of the Baker Tilly unclaimed property management team.

Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.