In order to help close a nearly $1.4 billion budget deficit, Governor Corbett has proposed in his fiscal year 2014-2015 budget to shorten the dormancy period for most unclaimed property types from five years to three. If the dormancy period is reduced, companies will have to report and remit to Pennsylvania two years earlier than expected intangible property for which the company has lost contact with the rightful owner. The proposed change, which has garnered support from both Democrats and Republicans, is expected to provide a one-time “revenue enhancement” of approximately $150 million for the Commonwealth.
The Governor’s budget proposal also reflects an increased interest by the Pennsylvania legislature in the prospect of generating state revenue through unclaimed property administration. Specifically, State Senator Vincent Hughes, a Democrat from Philadelphia, explained to the Pennsylvania Independent: “If [unclaimed property has] been sitting around for an extremely long period of time, then we need to be in the business of going after these dollars and getting them.”
Pennsylvania is not the first state, nor will it be the last state, to reduce unclaimed property dormancy periods in order to receive one-time revenues. In other instances, changes to dormancy periods have led to increased audit activity, as well as lawsuits challenging the constitutionality of such a change.