Yesterday the Illinois House of Representatives voted to override Governor Bruce Rauner’s veto of Senate Bill (SB) 9, the revenue bill supporting the State’s Fiscal Year (FY) 2017-2018 Budget. Just days before the vote, SB 9 was amended to include a revised version of the Illinois Unclaimed Property Bill (House Bill (HB) 2603) on which we’ve previously reported. The new law (part of Public Act 100-0022) is known as the Revised Uniform Unclaimed Property Act (RUUPA). The RUUPA becomes effective January 1, 2018. Below is a brief summary of a few of the highlights of which holders should be aware.
Gift Cards, Loyalty Cards and Game-Related Digital Content Exempt
Unlike HB 2603, the Illinois RUUPA expressly excludes “gift cards” from the definition of “property” subject to escheat. Pulling (in-part) from the Uniform Law Commission (ULC) definition, “gift card” is defined in the Illinois RUUPA as “a stored-value card: (i) issued on a prepaid basis in a specified amount; (ii) the value of which does not expire; (iii) that is not subject to a dormancy, inactivity, or service fee; (iv) that may be decreased in value only by redemption for merchandise, goods, or services upon presentation at a single merchant or an affiliated group of merchants; and (v) that, unless required by law, may not be redeemed for or converted into money or otherwise monetized by the issuer.”
Unfortunately, however, RUUPA does not amend the definition of “stored-value card” to exclude a gift card, resulting in a direct conflict in the law. This is because stored-value cards are “property” subject to escheat and are still defined to include a gift card. Given this ambiguity, holders would benefit from a technical correction (or at least guidance) clarifying that “gift cards” are in-fact not subject to escheat under the new Illinois RUUPA. Legislatively, this could be accomplished by amending the definition of “stored-value cards” to provide that the term does not include gift cards.
Consistent with the ULC RUUPA and HB 2603, the Illinois RUUPA also expressly excludes “loyalty cards” and “game-related digital content” from the definition of “property” subject to escheat.
Stored-Value Cards, Virtual Currency, and B2B Property Subject to Escheat; Retroactive Reporting Required
Broadly defined “stored-value cards” are subject to escheat under the new Illinois RUUPA. This is significant because the existing unclaimed property statute only applies to gift certificates or gift cards if they expire or have a post-sale charge or fee. See 765 ILCS 1025/10.6(a)(i). Under the RUUPA, any stored-value card that is not a “gift card” (as defined above) or “loyalty card” would become subject to escheat. This is particularly problematic for holders due to the “transitional provision” at the end of the enacted unclaimed property legislation that requires holders to “include all items of property that would have been presumed abandoned during the 5-year period preceding the effective date of this Act as if this Act had been in effect during that period” on their initial report. See Section 15-1503. Due to the five year dormancy period in Illinois, stored-value card holders will be required to report unclaimed cards with last contact dates up to ten years ago on their 2018 report. We plan to publish a blog in the near future outlining possible challenges to the RUUPA transitional provision, so stay tuned.
“Virtual currency” (defined the same as the ULC RUUPA) also becomes subject to escheat under the new Illinois RUUPA.
Unfortunately, the business-to-business (B2B) exemption that exists under current law was not retained. See 765 ILCS 1025/2a. As a result, property due or owed between business associations resulting from a transaction occurring in the normal and ordinary course of business will become subject to an Illinois reporting obligation. Again, this change becomes even more impactful to holders based on the transitional provision that requires retroactive reporting of all property types that would have been presumed abandoned during the five years prior to 2018 on their report. Due to varying dormancy periods, this means that B2B property with last contact dates up to 10 years ago must be included on the 2018 report. This change likely impacts nearly all Illinois unclaimed property holders.