If you are a resident of New Jersey, you may have heard of escheat laws for unclaimed gift cards. These laws require businesses to turn over unclaimed gift card balances to the state after a certain period of time. This can be confusing and frustrating for both consumers and business owners. In this article, we’ll help you understand what these laws are, how they work, and what you need to know to stay compliant.
What are escheat laws in New Jersey?
Escheat laws in New Jersey refer to the transfer of unclaimed property to the state government.
How long does it take for a gift card to be considered unclaimed in New Jersey?
In New Jersey, a gift card is considered unclaimed if it remains unused for a period of two years.
What happens to unclaimed gift cards in New Jersey?
When a gift card is considered unclaimed in New Jersey, the state government takes possession of the funds associated with the card.
Can businesses avoid escheat laws by placing expiration dates on gift cards?
No.
How can individuals prevent their gift cards from becoming unclaimed in New Jersey?
To prevent their gift cards from becoming unclaimed in New Jersey, individuals should use them within the designated time period.
In conclusion, understanding New Jersey’s escheat laws for unclaimed gift cards is essential for both consumers and businesses. By complying with these laws, businesses can avoid penalties and legal issues, while consumers can protect their rights to their unclaimed funds. Additionally, the escheat process ensures that unclaimed funds are eventually returned to their rightful owners or the state, promoting fairness and transparency in financial transactions. Overall, being aware of escheat laws can help everyone involved in the gift card industry be more informed and responsible.
On Sept. The merchandise credits could not be redeemed for cash refunds and had no expiration date. The claim was denied by the unclaimed property administrator. The claim was also denied. However, the court had also determined that gift certificates were not intangible property because gift certificates could be redeemed for merchandise. The amendments also limited the escheatment on non-reloadable cards to 60 percent of the value at the time the property is presumed abandoned. However, the dormancy period had not yet elapsed because only three years had passed. Additionally, the merchandise credits were escheated at full value, rather than at 60 percent. Although stored value cards are now subject to escheat, it is important for companies to review their filings to ensure they have not remitted merchandise credits prior to July 1, In addition, companies should review their merchandise credits and stored value cards in order to ensure that the property is remitted at the correct value. The decision provides a number of potential refund opportunities for holders who have over remitted. Holders should consult their unclaimed property advisers with questions. Last year, a California superior court found that similar merchandise credits were not subject to escheatment. For more information on that decision, please read our alert, California court rules some merchandise credits not subject to escheatment. Retailers should assess gift card procedures including an annual review of reporting, sales tax, unclaimed property and more. Retailers should understand the tax and accounting issues that arise when responding to consumer demands for discounted goods. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmus. Coronavirus Tax Issues. Resources Risk Bulletin Technology Bulletin. Resources Newsletters. Resources Market Insights Quarterly Newsletter. Business Services Professional Services. Resources Case Studies Events and Webcasts. Automotive Energy. Nonprofit Education. Technology Media and Entertainment Telecommunications. New Jersey court finds merchandise credits improperly escheated. Related Insights Retailers must be mindful of gift card tax pitfalls Retailers should assess gift card procedures including an annual review of reporting, sales tax, unclaimed property and more. Discounting Consumer demand vs. Share email linked in facebook twitter. Im not a robot please enter the number 2. Related Resources Retail trends and issues Unclaimed Property Delaware grants more time for unclaimed property estimation rules UPPO conference highlights key trends in unclaimed property. All rights reserved.
Sidamon-Eristoff, F. The statute, however, does add some strict prohibitions regarding stored value cards, and gift cards and certificates in particular. These prohibitions are such that a retailer that issues gift cards could be exposed to significant penalties unless it makes sure its practices conform to the requirements of this statute. At the same time, the law reduces the potential escheat of unredeemed gift cards. It also protects small issuers of stored value cards. Now for the details. The features of the new law that are beneficial to retailers are that 1 it repeals the provision of the old law that if the issuer does not maintain the address of the owner or purchaser of the stored value card, the value of the card must be escheated to New Jersey if the card was issued there 2 it eliminates the requirement of the old law that the issuer obtain information about the gift card purchaser or owner, but instead requires that by July 1, , the issuer maintain a record of the zip code of the owner or purchaser 3 it extends the period of abandonment i. The first requires that, for a valid expiration period or dormancy fee for a gift certificate or gift card, the issuer must disclose in 10 point font on the gift certificate or gift card, or the sales receipt or package for the certificate or card 1 the expiration period or dormancy fee and 2 a telephone number that the consumer may call for information regarding the expiration date or dormancy fee. The second new feature is even more onerous. The statute provides that the sole enforcement means for a violation of this section is a hearing before the Director of the Division of Consumer Affairs. The potential penalties for the unwary direct marketer are significant, so a gift card program should include protocol to make sure that the company satisfies this new law. Leave a Comment Message. For that reason, we have launched and continuously update a COVID Legal Resource Library critical and timely information on key legal developments.