United States: Pennsylvania Corporations To Fund State Spending Increase

Last Updated: March 17 2014
Article by Sara A. Lima and Christine M. Hanhausen

Most Read Contributor in United States, October 2017

On February 4, Governor Corbett proposed his 2014-2015 budget, keeping his promise not to increase taxes, despite a nearly $1 billion proposed increase in spending. However, the budget includes a $150 million increase to state revenue that is to be funded by Pennsylvania entities and their vendors. Under the governor's proposal, this $150 million increase in revenue will be obtained through a change to the commonwealth's unclaimed property law.1

Under Pennsylvania's unclaimed property law, Pennsylvania-incorporated entities that hold certain property for the actual owners, including uncashed checks and outstanding credits, must remit that property to Pennsylvania after a period of inactivity, referred to as the dormancy period. For example, Pennsylvania-incorporated entities must pay unidentifiable credits over to Pennsylvania after the dormancy period. Further, any vendors holding credits to Pennsylvania-based businesses must pay those credits over to Pennsylvania after the dormancy period.2 Once the property has been remitted, the commonwealth is supposed to hold the property in trust for owners to claim. However, in reality, the value of the unclaimed property remitted to the commonwealth goes directly to the General Fund as revenue. The state returns only an estimated 5 percent of the almost $2 billion of unclaimed property it holds each year.3

Currently, the dormancy period for most property is five years.4 So, for example, a credit issued to a Pennsylvania customer in 2011 becomes dormant in 2016—absent any customer-initiated activity—and is remitted to Pennsylvania with the unclaimed property report due in April 2017. This is true even where the holder and the Pennsylvania customer still do business together. The governor's proposal is to reduce the dormancy period from five to three years—in order to accelerate state revenue.5 The governor views the change as merely a "timing issue,"6 but it can have real implications for Pennsylvania businesses.

First, any late reporting of unclaimed property by a holder as a result of slow adaptation to the change in the dormancy period would result in an interest accruing at a rate of 12 percent per year on any property reported late.7 So, for example, if a Pennsylvania-incorporated company remits a credit after year five as opposed to year three, the company will be subject to interest.

Second, Pennsylvania businesses will be forced to use any credits they have on account with their vendors more quickly. Otherwise, they may only be able to recover those amounts from the state through the claims process.8 Given the low percentage of unclaimed property returned to owners by Pennsylvania, many of those credits likely will never be recovered.

Finally, there is some ambiguity as to which transactions will be subject to the new dormancy period. For example, will credits issued in 2011 and still unclaimed as of the law change be reportable as unclaimed property after three years of dormancy (in 2014) or five years of dormancy (in 2016)? To the extent that the new dormancy period is considered to apply retroactively—that is, to transactions outstanding as of the date new legislation goes into effect—it could have serious constitutional flaws.9

As we keep an eye out for any specific legislation that would change the dormancy period in Pennsylvania, it's important for companies to ensure their unclaimed property policies are up to date in all states—both for reporting and for recovering property. If your company still does not have an unclaimed property compliance process in place, now might be the time to implement one.

If you are interested in more details on the proposed changes to Pennsylvania's unclaimed property law, please contact one of the authors of this alert, or the Reed Smith attorney with whom you normally work.

1. Governor's Budget in Brief at 8, available at PA Budget in Brief.
2. Texas v. New Jersey, 379 U.S. 674 (1965).
3. See http://www.patreasury.gov/unclaimedProperty.html (publicizing approximately $2BB of unclaimed property held by state and reporting a return of $100MM in 2012).
4. 72 P.S. §§ 1301.1–1301.10.
5. The reduction contemplated appears to be in addition to the reduction the House has proposed for inactive share accounts held by credit unions. See H.B. 2009 (proposed Feb. 4, 2014).
6. See Secretary of Revenue Daniel Meuser's answers to questions from the Senate Appropriations Committee on February 18, 2014.
7. 72 P.S. § 1301.24. Note that penalty provisions may apply if the omission is deemed to be "without reasonable cause." 72 P.S. § 1301.
8. 72 P.S. § 1301.19.
9. See, e.g., American Exp. Travel Related Services Co., Inc. v. Hollenbach, 630 F.Supp.2d 757 (E.D. Ky., 2009), judgment vacated by, judgment vacated, 641 F.3d 685 (6th Cir. 2011); New Jersey Retail Merchants Ass'n v. Sidamon-Eristoff, 669 F.3d 374 (3rd Cir. 2012) (addressing constitutional problems inherent in retroactive application of unclaimed property laws).

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.