1. Steven T. Minor Disposition of Unclaimed Property Act Tisinger Vance PC

2. Disposition of Unclaimed Property Act Capital Credits are: Margins credited to EMC members based on relative purchases from the EMC. An EMC’s “primary equity base.” Reflect such patron’s ownership in the Cooperative. Funds owned by the member, but are controlled by the EMC and are subject to claims of EMC creditors until retired. Returned to patrons as conditions permit.

3. Disposition of Unclaimed Property Act – BACKGROUND All property that the owner fails to claim for more than five years after it is payable is presumed abandoned. ○ Very broad language ○ “Property” is both tangible and intangible, including deposits, refunds and capital credits. ○ No “bulletproof” avoidance practices Holding fees, voluntary assignments, contractual time limits on claims, etc. ○ However, the Act does permit reduction by “any lawful charges” See, O.C.G.A. §§ 44- 12-193, 199 & 201(a)(2).

4. Disposition of Unclaimed Property Act – BACKGROUND Holder of property that is presumed abandoned must file a report with, and turn over the property to, the Georgia Department of Revenue before November 1 of each year, for property presumed abandoned during the prior July 1 – June 30 fiscal year. 60-120 days before the report is filed, you must attempt to contact, by first class mail at the last known address, owners of all property valued at more than $50. O.C.G.A. §§ 44-12-214(e) and 44-12-192(6). The report must include all of the following, if known: ○ Name, social security number, last known address and zip code of each person owning property with a value of $50 or more. ○ Description of the property. Property valued at less than $50 may be reported in the aggregate. ○ Date the property became payable. ○ Date of the last transaction with the owner.

5. Disposition of Unclaimed Property Act – Application to Capital Credits 44-12-236 permits EMCs to avoid remitting unclaimed capital credit refunds to the state. But: Applies only to capital credits. Does not abolish the obligation to file the report listing all unclaimed property. Finally, there are 3 additional criteria to meet.

6. Disposition of Unclaimed Property Act 1. The List. EMC must post for 6 months a list of the “names and last known addresses” of all owners of property held by the EMC that is “presumed abandoned.” - Where?  Website or “public posting” at EMC’s main office. Not defined. - When?  Given filing deadline of October 31, list must go up by May 1 (unless you obtain an extension). - What?  “Last known address,” – i.e. address sufficient for first class mail. O.C.G.A. § 44-12-192(11). Statutory definition does not contemplate notices by phone, e- mail or text message.  No requirement to list amounts or otherwise identify property.  Provide instructions on how to make claims.

7. Disposition of Unclaimed Property Act 1.The List. (Continued)  Property is “presumed abandoned” when it is unclaimed by the owner “for more than five years after it became payable…” O.C.G.A. § 44-12-193. “Payable” means the “earliest date upon which the owner of the property could become entitled to the…distribution of such property from a holder.” O.C.G.A. § 44-12-192(13). EMC bylaws typically provide that members have no “entitlement” to distribution of capital credits until such distribution is authorized by the Board. See, also, O.C.G.A. § 46-3-340.  Thus, the “presumed abandoned” date is the 5 th anniversary of the effective date of the Board’s resolution authorizing retirement.  If the presumed abandoned date occurred during the prior July 1-June 30 fiscal year, the abandoned funds must be used in compliance with O.C.G.A. § 44-12-236 prior to the deadline for filing the Unclaimed Property Reports (October 31)

8. Disposition of Unclaimed Property Act 2. The Notice. - Where? Official newspaper of county where EMC’s main office is located. - What? Provide the last date owners may claim the property, and the location of the list of owners. - When? Three to six months prior to the last date to claim.

9. 2.The Notice (Continued) Timing is key. The “last date to claim: must be: -after the fifth anniversary of retirement, but -sufficiently before October 31 to permit the EMC to “use” the money for one of the three “appropriate uses.”

10. Disposition of Unclaimed Property Act 3. Spend It! Abandoned capital credits must be used for one of three “permitted uses”: Donated to a 501(c)(3) serving in the EMC’s service area: ○ Service area – all counties served by the EMC plus all adjoining counties. Used in support of education in the EMC’s service area. Used for economic development purposes in the EMC’s service area.

11. Disposition of Unclaimed Property Act Economic Development” is not defined in the statute, or anywhere in Title 44. However, the following may be instructive:  “‛Economic development’ means any economic activity to increase tax revenue, tax base, or employment or improve general economic health…” O.C.G.A. § 22-1- 1(4) (applicable to eminent domain).  “Attracting new business investment, encouraging the expansion of existing industry and small business, developing new domestic and international markets, attracting tourists and promoting the state as a location for film, video, music and digital entertainment projects.” Georgia Department of Economic Development, statement of purposes.

12. Disposition of Unclaimed Property Act  Risks of donating unclaimed capital credits: Possible backlash from members if public communication campaign is not effective. Possible liability to owner of account. Payment to the DOR absolves one of liability for any claims. O.C.G.A. §44-12-216(a) No similar provision applies when funds are donated pursuant to O.C.G.A. § 44-12-236. Statute of limitations on claims is likely to be 4 to 7 years. See, O.C.G.A §§ 9-3-32, 9-3-26, & 7-1-460(c). Make reasonable efforts to find lost members!

13. PROCESS OVERVIEW

14. DISCUSSION  Experience with claim process  Examples of how funds have been used  Questions

15. Resources  Corporate Entities: Report Forms and Instructions - https://etax.dor.ga.gov/ptd/ucp/pdf/LGS_Unclaimed_Property_Corporate_En tities_Report_Forms_and_Instructions_for_Holders_2013.pdf https://etax.dor.ga.gov/ptd/ucp/pdf/LGS_Unclaimed_Property_Corporate_En tities_Report_Forms_and_Instructions_for_Holders_2013.pdf  Instructions for Form UP-1N - https://etax.dor.ga.gov/ptd/ucp/pdf/LGS_Unclaimed_Property_Zero_Negativ e_Holder_Report_Form_2013.pdf https://etax.dor.ga.gov/ptd/ucp/pdf/LGS_Unclaimed_Property_Zero_Negativ e_Holder_Report_Form_2013.pdf  State of Georgia Unclaimed Property Annual Filing Report – https://etax.dor.ga.gov/ptd/ucp/pdf/LGS_Unclaimed_Property_Annual_Filing _Report_Intro_2013.pdf  To download a copy of this presentation – http://tisingervance.com/downloads