1/27/12

On January 12, 2012, the State Bar issued a Member Advisory regarding a form letter sent by the Michigan Department of Treasury to an unknown number of Michigan lawyers and others pertaining to the Uniform Unclaimed Property Act, which directs the recipient either to report about and remit unclaimed property or to file Form 4305 PDF “attesting to compliance” with the Act, by affirmatively stating that the reporting entity has no unclaimed property. The deadline for response is January 31, 2012. View a copy of the form letter here PDF. View the January 3, 2012, letter from the State Bar seeking clarification here PDF. View the response from the Department of Treasury, received at 3:29 p.m. today, here PDF.

The officers of the State Bar Taxation Section Council have informed us that they interpret the following provision of MCL §567.251 as providing the Department of Treasury with general statutory authority to require reports of previous nonfilers:

The administrator may require a person who has not filed a report under this act or a person who the administrator believes has filed an inactive, incomplete, or false report, to file a verified report in a form specified by the administrator.

Other members question whether the language actually empowers the Treasury to mandate the filing of a report from every person who has not previously filed a report, without regard to any standard or reasonable belief on the part of Treasury that the person in fact has unclaimed property that must be declared or identified. If the Department has the broad statutory authority implied in the letter, they question why Treasury seeks execution of the voluntary disclosure agreement tendered with the form letter. Similar questions have been raised regarding the authority of Treasury to impose the January 31 deadline for filing Form 4305 and to impose property examinations covering the last 10 reportable years.

Because the officers of the Taxation Section Council believe that Treasury’s form letter constitutes a legitimate request for the filing of a report, they have voiced a concern that members who fail to timely respond risk penalties under MCL §567.255, which provides that failure to comply with a legitimate request for a filing can subject the holder to penalties of $100 per day, up to a maximum of $5,000 per report.

The questions presented by these differing views cannot be resolved by the State Bar on our members’ behalf. We are providing this updated Advisory so that members can determine for themselves what course of action makes sense in their individual circumstances.

Members can join in a discussion on this topic by visiting our Facebook page or joining the State Bar of Michigan Members Group in LinkedIn. To take part in the discussion on LinkedIn you will need to be a member of the group. To take part in the discussion on Facebook, simply follow us.