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"Recent decisions could fuel escheatment audits" (Law360)


The centuries-old, common-law principles by which sovereign entities take unclaimed or abandoned property are coming under renewed scrutiny in the United States, as states pursue different policies that threaten to trigger legal disputes. Companies whose businesses give rise to these types of property — including issuers of prepaid, gift and stored-value cards — may find themselves caught up in these disputes.

Most recently, two legal decisions by the U.S. Court of Appeals for the Third Circuit left a path open for states to look for unclaimed property on the books of subsidiaries operating in another state. In both cases, Marathon Petroleum Corp. v. Secretary of Finance for Delaware and Office Depot v. Secretary of Finance for Delaware, companies unsuccessfully sought to block Delaware from performing escheatment audits — decisions that could inspire more vigorous and expansive audits where unclaimed property may primarily be out of state.

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Originally published in Law360; reprinted with permission.