Colorado Revised Uniform Unclaimed Property Act (RUUPA) Adoption Negatively Affects Retailers

| 5/2/2019
Unclaimed property statutes generally require a holder of property belonging to another person to report and remit the unclaimed property to the state after the expiration of a set period of time known as the dormancy period, which can vary by property type. With the enactment of Senate Bill 88 (SB 88), Colorado became the latest state to adopt the Revised Uniform Unclaimed Property Act (RUUPA), with certain modifications. Effective July 1, 2020, SB 88 includes several noteworthy changes to Colorado’s unclaimed property rules.

Elimination of the 2% or $25 deduction for gift cards

Prior to enactment of SB 88, Colorado law included a unique provision that generally allowed a holder to deduct and retain the greater of 2% of the value or $25 for each item of unclaimed property reported. This deduction minimized the dollar value of unredeemed gift cards that otherwise would be reportable to the state. 

SB 88 repeals this holder-friendly deduction. Now, the entire value of an unredeemed gift card is subject to reporting and remitting. The Colorado legislature chose not to include the optional gift card exemption included in the Uniform Law Commission’s Model RUUPA in SB 88. Paper gift certificates, which few retailers now issue, remain exempt.

Reduced dormancy periods

SB 88 shortens the state’s dormancy period from five years to three years for most property types. This change requires a “catch-up” report by Nov. 1, 2020. The catch-up report should include property dormant for three, four, and five years. Unclaimed wages will retain a one-year dormancy period.

Transitional provision 

According to SB 88, a holder’s report due in 2020 “must include all items of property that would have been presumed abandoned during the five-year period preceding July 1, 2020, as if this [act] had been in effect during that period.” Thus, unclaimed property that was not yet reportable under the prior law will become reportable retroactively.
 

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Shawn Kane
Shawn Kane
Partner, State and Local Tax Services Leader
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Zach Robbins
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Maggie Young