Well, That’s Different — Illinois Considers Lengthening Dormancy Periods
In recent years, there have been a number of instances where states have proposed (and sometimes ultimately enacted) laws to change the “dormancy period” for various types of property. For those still new to unclaimed property law, the dormancy period is the statutorily defined period of time before a “holder” (the entity in possession of the property) may hold it before it must be reported and delivered to the state. For example, if a state prescribes a three year dormancy period for bank accounts, that generally means that if the account owner engages in no activity in the bank account (e.g., deposits, withdrawals) for three years, the bank must report and deliver the property to the state.
Because shortening the dormancy period has the effect of allowing the state to take custody of unclaimed property sooner, states have frequently resorted to shortening the dormancy periods for unclaimed property to generate more revenue. For example, Michigan shortened the dormancy period for nearly all property types from 5 years to 3 years. According to the Michigan House Fiscal Agency this change was projected to result in increased revenue to the state in excess of $200 million.
Against this backdrop, it is little surprise to see that there is a bill pending in the Illinois General Assembly that, if enacted, would change the dormancy period for most property types. But, there’s a twist – House Bill 5823 would actually lengthen the dormancy period for most property types under Illinois law, from 5 years to 8 years. There is no accompanying legislative report or recommendation (as yet) explaining the rationale for the proposal, but the longer dormancy period would conceivably cut down on the amount of non-unclaimed property that gets swept up into state coffers.