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The new Illinois unclaimed property law references a dormancy charge and an escheat fee. We begin charging a monthly dormancy fee when a checking account is inactive for 365 days, but we do not charge an escheat fee when reporting and remitting an account to the state. Is our dormancy fee considered an escheat fee? – IBA Compliance Connection

IBA Compliance Connection

Your go to source for compliance!

The new Illinois unclaimed property law references a dormancy charge and an escheat fee. We begin charging a monthly dormancy fee when a checking account is inactive for 365 days, but we do not charge an escheat fee when reporting and remitting an account to the state. Is our dormancy fee considered an escheat fee?

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No, we do not believe that your bank’s dormancy fee would be treated as an escheat fee under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA).

The Illinois RUUPA defines an escheat fee as one “imposed solely by virtue of property being reported as presumed abandoned.” Because your bank’s dormancy fees are not charged in connection with reporting the accounts as abandoned, we do not believe that they would be considered escheat fees.

Note that the Illinois RUUPA was revised before it became effective to remove a previous prohibition on charging escheat fees; as revised, the Illinois RUUPA imposes identical requirements on dormancy fees and escheat fees, which are copied below.

For resources related to our guidance, please see:

  • Illinois RUUPA,  765 ILCS 1026/15-102(8.5) (“‘Escheat fee’ means any charge imposed solely by virtue of property being reported as presumed abandoned.”)
  • Illinois RUUPA,  765 ILCS 1026/15-602(a) (“A holder may deduct a dormancy charge or an escheat fee from property required to be paid or delivered to the administrator if: (1) a valid contract between the holder and the apparent owner authorizes imposition of the charge for the apparent owner’s failure to claim the property within a specified time; and (2) the holder regularly imposes the charge and regularly does not reverse or otherwise cancel the charge.”)
  • Illinois RUUPA,  765 ILCS 1026/15-602(b) (“The amount of the deduction under subsection (a) is limited to an amount that is not unconscionable considering all relevant factors, including the marginal transactional costs incurred by the holder in maintaining the apparent owner’s property and any services received by the apparent owner.”)