The attached article titled “Importance of the Federal Preemption Doctrine for Unclaimed Property” was written by Kendall Houghton and Matthew Hedstrom of Alston & Bird’s State and Local Tax Group. This article was originally published in State Tax Notes, as part of Alston & Bird’s regular column “Audit & Beyond.” See 64 State Tax Notes 857 (September 24, 2012). Audit & Beyond, a column on state tax audits, the resolution of disagreements between business taxpayers and state revenue departments, and emerging nationwide state tax trends, is written by members of the Alston & Bird State and Local Tax Group. The article is reprinted with Tax Analysts’ permission.
Practitioners who advise clients on unclaimed property matters are, no doubt, familiar with issues associated with federal preemption and their often substantial effect on unclaimed property audit defense and compliance. Two recent developments are likely to add significantly to the ongoing discourse surrounding the scope of federal preemption of state unclaimed property laws, and practitioners and holders alike should be aware of their potential impact on this ever-developing area of unclaimed property jurisprudence. First, on August 16 the Consumer Financial Protection Bureau (CFPB) issued a notice of intent to make a determination whether the unclaimed property laws of Maine and Tennessee are preempted by the federal Credit Card Accountability Responsibility and Disclosure Act of 2009 (the CARD act) and amendments to Regulation E previously issued by the Federal Reserve Board to implement the CARD act.
Second, on June 27 the Third Circuit Court of Appeals issued its decision in New Jersey, et al. v. U.S. Dep’t. of the Treasury, in which the court held that states are barred from claiming unredeemed federally issued savings bonds from the U.S. Treasury under their respective unclaimed property laws. This advisory will examine those developments and place the doctrine of preemption in a well-deserved spotlight.
The advisory is provided in PDF on the Alston & Bird website: