Hundreds of millions of dollars sit in state coffers still unclaimed

Spokane Mayor Dennis Hession just learned he may have up to $100 waiting for him in Washington state’s unclaimed money fund.

The sum may not be much. Hession, who was a practicing attorney before becoming mayor, is owed between $50 and $100 from a judgment entered in Spokane County District Court.

“I have absolutely no idea why that money is owed me,” said Hession.

He added jokingly, “Maybe I should donate it back to Spokane County, to help with their budget concerns.”

Washington’s unclaimed-money pile keeps growing, despite the efforts of an 18-person state department that tries to find the people to whom it’s owed. Currently, about $515 million is waiting to be claimed, up from $301 million in 2002, said Patti Wilson, operations manager for the Washington Department of Revenue’s unclaimed property group.

In the same five years, the state’s unclaimed property department returned more than $105 million to thousands of state and out-of-state owners.

The same upward growth is occurring in Idaho. Since 2002 the amount of unclaimed money in that state has swollen to $56.1 million from $33.5 million. Idaho has returned about $24 million to owners in that same period.

Those stockpiles of unclaimed money are fed by businesses across the country, which are required to report any money they owe a past customer, investor or worker. The amounts can vary from less than a dollar to as much as hundreds of thousands of dollars.

Various reasons explain the continuing rise in unclaimed dollars being held by state governments.

More companies are finding and reporting unpaid balances, especially in the cases of uncashed paychecks, dividends, insurance overpayments and interest.

At the same time, America’s changing demographics are contributing to the inability to track down or identify people who are owed money, said Wilson.

“We get a lot of people who we finally find and who tell us the address we last had for them was 10 years old,” she said. Many also report that they’ve moved sometimes three or four times in that span.

Washington’s single-largest unpaid sum is around $787,000, an amount turned over to the state in 2003, said Wilson.

The owner died before 2000 and was apparently homeless and lived in the northwest corner of the state. No heirs have been identified yet, Wilson said.

Idaho’s largest sum involves a still-living resident who hasn’t collected more than $1 million in stock certificates, dividends and equities turned over to the state in the past few years, said Ronald Crouch, administrator of the Idaho Tax Commission’s unclaimed property division in Boise.

“I know the name of this person,” Crouch said, adding attempts have been made to contact the owner. “He’s someone who apparently doesn’t want to be around people,” Crouch said.

The money in both Idaho’s and Washington’s unclaimed accounts doesn’t remain unused in state piggy banks. Instead, the millions go into the states’ general funds, with both states keeping track of the liability for total amounts owed, said Pat Tate, director of Washington’s unclaimed property audit division.

“We keep close track of the fund,” Tate explained. “This is not free money.”

As the pile keeps growing, Washington’s unclaimed property department has introduced several new measures to find people owed money, said Mike Gowrylow, a revenue department spokesman.

The unclaimed-money Web site, at claimyourcash.org, allows people to file claims online to simplify the process, instead of requiring mailed documents to prove identity and ownership.

A radio and bus campaign this spring tried to dangle the “one in seven” odds for Washington citizens — the rough proportion of names on the money registry compared with all state residents.

Idaho, by contrast, has roughly 431,000 claimants, according to the Idaho Tax Commission.

Washington’s Olympia-based unclaimed property group has a full-time department staffer tracking down people owed more than $1,000, working from old phone books, tax rolls and voting records.

Other department workers regularly mail notices, attempting to find people owed $75 or more, said Wilson.

That’s how Spokane resident Jim Plourde learned this spring that the state had $243 for him and his wife, Nancy.

The money comes from an overpayment to an insurance firm. After moving in the late 1990s, the insurance company lost track of the Plourdes’ address.

“I was surprised when I got that letter (in March) and found we had this money owed,” said Plourde. “We used it to knock down some bills,” he added.

Wilson, at the Washington Department of Revenue, said it’s unclear what percentage of the roughly 1 million people owed money in the state are no longer alive.

In Washington and 47 other states, unclaimed money remains owed in perpetuity to the original owner or any heir. Only two states — one of which is Idaho — have a provision to take over the money if not claimed within 10 years.

In Washington the vast majority of money owed falls in the $80 to $200 range, Wilson added.

Money can’t just be mailed to someone; a claim has to go through a proof-of-identity process before the check can be sent. For five years, for example, Microsoft Corp. Chairman Bill Gates has been owed between $50 and $100 from Qwest, the telephone company, according to the state money database. Gates presumably is too busy to go through the filing process to collect the cash.

The single-largest source of unpaid money comes from banks and financial institutions, said Gowrylow. The funds come from dormant bank accounts and safe-deposit boxes. Other sources are uncashed stocks, bonds, mutual funds, dividends, child-support payments, unclaimed paychecks and utility overpayments.

Insurance overpayments are another large source. Dr. Timothy Icenogle, the well-regarded Spokane heart surgeon, is owed more than $100 by Premera, according to the state Web site.

Wilson said an increased awareness of business obligations regarding property is another factor in the growth of unclaimed-money funds. In Washington, businesses must report money as unclaimed after three years of “abandonment” — the accounting term for the point at which a company loses track of a customer. Idaho’s requirement is a five-year period of abandonment.

Washington’s revenue department regularly contacts employers and banks across the state to ensure they know their obligations to report unpaid money, said Tate, head of the unclaimed property audit division.

Last year alone, the state conducted or helped companies conduct about 900 audits to find unclaimed money. Those firms, based in Washington or out of state, typically don’t know well all the requirements of reporting unclaimed holdings, Tate said.

For instance, instead of falling in the three-year period, the contents of safe deposit boxes and money order will be held for five years following abandonment before being reported to the state.

Another factor fueling more unclaimed dollars reported to the states is the sweeping federal Sarbanes-Oxley Act passed in 2002, said Tate. One provision of that law requires company managers to certify they’ve fully complied with all state laws.

As a result, companies that before didn’t bother with low-sum claims now are combing their records to spot every dollar not yet paid to former or current customers, said Tate.

In Washington, the largest dollar volume, by type of unpaid claim, are uncashed paychecks, workers’ compensation benefits, retail overcharges and unclaimed gift certificates.

In 2005 alone, uncashed paychecks, uncollected benefits and retail overcharges came to roughly $22 million reported to the state, said Gowrylow.

The next two largest categories in Washington are bank balances and uncashed cashiers’ checks and money orders, he said.

In 2004 the state changed the law that had required retailers to turn over the value of unredeemed gift cards or gift certificates. The law now allows retailers to hold the money themselves. In return, the retailers now cannot add fees for holding those unpaid cards. They must also hold the obligation indefinitely to anyone owning the cards, said Gowrylow.

Unclaimed-property funds are growing nationwide. Six years ago the aggregate sum among all states was roughly $20 billion, said Valerie Jundt, senior manager of the Deloitte and Touche unclaimed property practice.

This year that number is about $24 billion, she estimated.

“People don’t stay in touch with their community as much,” Jundt said.