For many of us, receiving a gift card is like hitting the jackpot. However, it can be a frustrating experience when we realize that we have left them unused, and they have expired or become lost. What many people don’t know is that unclaimed gift cards are subject to escheat laws, which require the unused funds to be turned over to the government. In this article, we will delve into the details of escheat laws and how they affect unused gift cards, so you can avoid losing out on your treasure.
What are Escheat laws and how do they relate to gift cards?
How long does it take for a gift card to be considered unclaimed property?
What happens to unused gift cards that are considered unclaimed property?
Can you prevent your gift card from being turned over to the state?
What should you do if you think you have unclaimed gift card funds?
After understanding the escheat laws and your unused gift cards, you can take advantage of unclaimed treasures that have been waiting for you for years. By checking your state’s escheat website, you can claim your lost or unused gift cards, and put them to good use. Not only will you be able to save money, but you’ll also feel a sense of satisfaction knowing that you’ve taken control of your personal finances. So, don’t let your unused gift cards go to waste – claim them today and enjoy the benefits!
Chances are the shopping list will include a gift card or two. While gift cards have great utility for the issuer cash upfront, entices customers to patronize its business , they can be a trap for the unwary on the accounting side of the table. In a perfect world, gift cards are used in full and there are no remaining balances. In reality, gift cards are often lost, forgotten, or partially used, which begs the age-old question what happens to unused gift card balances? While there are a number of accounting issues that surround income related to unused gift cards, one often less glamourous area that must be explored is the possibility that they are potentially escheatable as unclaimed property. In order to determine whether a gift card must be reported as unclaimed property, understanding state escheatment priority rules is paramount. When the last known address is not known, the unclaimed property laws of the state of incorporation of the holder in this case, the gift card issuer will control. Most companies do not track detailed data on who purchased the gift card let alone track it to know who the actual owner is to understand where the gift card should be escheated. As a result, gift card escheatment will typically default to the state of incorporation of the holder. Once it is determined that gift card liabilities are reportable in a given state, the dormancy period of the gift card must also be considered. That is to say, how long the gift card must be held before it actually becomes escheatable. Of course, there is not a uniform rule on when gift cards should be escheated, so a state-by-state analysis must be performed to determine the proper holding period. For states that require escheatment of gift cards, the dormancy periods generally range between three and five years. If you discover that your company has a significant aged gift card liability, it may be time to review the balance details and determine whether a potential unclaimed property liability exists. Fortunately, a majority of the states offer voluntary disclosure programs to allow holders to report past liabilities. In exchange for holders coming forward, most states will waive penalties and in some cases interest on the funds remitted. Moreover, participating in a voluntary disclosure program will allow holders to start with a fresh slate and the risk of audit becomes remote. When going through the review process, it is important to understand the nature of the balances to ensure that only the amounts actually due are being remitted. This process will allow the issuer to properly track balances and avoid future unclaimed property exposure. GBQ and its dedicated team of restaurant industry experts standing ready to assist you. Toggle navigation Unclaimed Property Gift Cards. November 17, Share via email Print. Tags SALT. Jeffrey Monsman. Email Me.
Brenda Mayrack never intended to become an unclaimed-property czar. Even among legal specialties, the field is particularly obscure During law school at the University of Wisconsin, she remembers hearing only a minute lecture introducing the topic at the end of her trusts-and-estates class. Because that money belongs to the consumer, not the insurance company or the bank, state offices of unclaimed property step in. While in some regions, companies take it for themselves, an increasing number of state governments seize it as unclaimed property. Much of that money is then directed into government general funds, where states use it to patch up holes in their budgetsa strange and little-noticed chain of monetary custody in which cash intended for a Colorado Office Depot can wind up paying for infrastructure hundreds of miles away. Read The gift-card economy. No state has had more success with this approach than Delaware. Other states are following its lead. Earlier this year, Colorado tightened its rules regarding gift-card money as part of a broader law that also entitled the state, for the first time, to spend unclaimed property in its annual budget. Some lawyers have considered claiming unused money stored in video games and cryptocurrency. As the Trump administration continues to cut federal funding for state programs, legislators desperate to make up the shortfall are turning to a patchwork of forgotten microtransactions you meant to spend on lattes or in-game wardrobe upgrades to help. Unclaimed-property laws date back to feudal England, when the Crown was quick to seize control of land owned by citizens who had no heirs. But as the majority of unclaimed property shifted from physical objects such as cash and land to assets that lacked clear geographic originsand, therefore, a clear state to claim themthe law has become more complicated. In the case Texas v. New Jersey , the Supreme Court ruled that, if the address of the owner is known, all the unclaimed property should revert to the state of residence.