Surprisingly, not all revenues are taxes. Indeed, there is one source of state revenue that is largely hidden from the public eye. It is an area referred to as unclaimed funds, that is, amounts never claimed by the true owner and still in the issuer’s hands. It is also variously referred to as abandoned property or the medieval phrase from whence it originated, escheat. After a period of dormancy, generally two years, the issuer is supposed to turn the funds over to the states for safe-keeping until the rightful owner files a claim.
An example: I purchase a gift card from the store but I or the person I gave it to has not redeemed it. The store that issued the card in the first place cannot keep the income, since it really belongs to the purchaser (or the person who received the gift). Thus it reverts to the state for safe-holding. This duty to turn over to the state is a fairly stringent requirement.
In fact, an issuer’s failure to locate the true owner and to make timely remittance results in inordinate penalties. This begs the question: why aren’t the states held to the same standard? Other than providing a list of unclaimed accounts on a non-publicized website, the states do not proactively re-patriate the funds with the true owners.
Consider that New York, as an illustrative state, is holding 58 accounts belonging to the New York Times. Can anyone credibly believe that New York State cannot locate the New York Times and reunite true owner with its funds? Want proof of the State’s investigative powers? Guess what would happen if the NY Times failed to file its tax return? Then the state would have no trouble finding the taxpayer.
By the way, this is not restricted to the Times. Look at the websites of New York or most any state and you will be surprised at the number of news organizations, public corporations and famous individuals who are entitled to funds but the states have been “unable” to locate. If the presidential candidates want to talk about inept or unjust government, the poster child is right here.
Kenneth T. Zemsky is the author of the recently published novel The Nation’s Hope, about the 1965 NYC mayoral campaign. He is also a managing director at AndersenTax and teaches constitutional law at Rutgers. You can follow him at KennethTZemsky.com.