Maryland Democrats Want to Take "Abandoned" Gift Certificates for Revenue

Maryland Legislature Website ^ | 11/08/07 | Reaganesque

[Reaganesque]

I was listening to the radio this morning when I heard of a bill that has been proposed in the Maryland Legislature. House Bill 30 states:

From the summary:

"Establishing the Maryland Education Fund; providing that after a specified date, the balance remaining on a gift certificate shall be presumed abandoned; requiring a person that sells or issues a gift certificate in the State to remit to the Comptroller the remaining balance on gift certificates on or before a specified date each year; etc."

From the bill itself:

(C) (1) THE BALANCE REMAINING ON A GIFT CERTIFICATE SHALL BE PRESUMED TO BE ABANDONED ON THE LATER OF:

(I) THE DATE THAT IS 4 YEARS AFTER THE DATE THE GIFT CERTIFICATE IS PURCHASED; OR

(II) THE DATE THAT IS 1 YEAR AFTER THE DATE OF THE LAST PURCHASE MADE USING THE GIFT CERTIFICATE.

(2) ON OR BEFORE MARCH 1 OF EACH YEAR, A PERSON THAT SELLS OR ISSUES GIFT CERTIFICATES IN THE STATE SHALL REMIT TO THE COMPTROLLER THE BALANCE REMAINING ON EACH GIFT CERTIFICATE THAT WAS PRESUMED ABANDONED DURING THE PREVIOUS YEAR.

(3) ON OR BEFORE APRIL 1 OF EACH YEAR, THE COMPTROLLER SHALL DISTRIBUTE THE REVENUES RECEIVED UNDER PARAGRAPH

(2) OF THIS SUBSECTION TO THE MARYLAND EDUCATION FUND ESTABLISHED UNDER § 5–201.1 OF THE EDUCATION ARTICLE.

(Click on "House Bill 30" title at the top of the summary page for the full PDF copy of the bill.)

[sauropod]

Why are you surprised? It is the People’s Republic after all.

[icwhatudo]

One has to wonder if this is not one of those “feel good win targets”. Its the tactic of pushing the thing you really want and putting something up so stupid that you get people to focus on that instead:

GOV-”Sales taxes are going up and we are also going to tax your dog.”

Talk radio-”Thats crazy! Protest! Call your representative! Petition! Organize!!!”

GOV-”Ok, Ok, we give in. No new taxes...on the dogs.”

Talk radio-”Woohhoooo we win!!!”

GOV-”suckers...”

[craig_eddy]

Someone gets the money.

That's not technically correct. No additional money changes hands. Your $25 gift card is now just worth $20.

The retailer got their $25 when you purchased the card. They don't get more from you, except that they now only have to sell you $20 worth of stuff. This will (very loosely) show up as a gross income of an additional $5, which will be taxed at some rate. Md. is just proposing that the rate be 100%.

Let's say you don't ever use the card. Why should the retailer have to give that money to the state because you didn't use the gift card?

[Reaganesque]

I’m not surprised by their “out of the box” thinking. I’m just surprised at the level of gall.

[Peet]

This is nothing more than thievery.

This is the logical action of people Rush described thus: They believe all money is governmant money. Therefore their money.

P.

[craig_eddy]

I especially hate how some cards lose value after a certain amount of time passes. Now, that’s theft!

Believe it or not, there is a cost to maintaining the inventory of outstanding unused gift cards. It's not theft.

[3AngelaD]

Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame, danger, and scruple which their acts would otherwise involve. Sometimes the law places the whole apparatus of judges, police, prisons, and gendarmes at the service of the plunderers, and treats the victim — when he defends himself — as a criminal. In short, there is a legal plunder, and it is of this, no doubt, that Mr. de Montalembert speaks.

This legal plunder may be only an isolated stain among the legislative measures of the people. If so, it is best to wipe it out with a minimum of speeches and denunciations — and in spite of the uproar of the vested interests.

Sounds like a discussion of the farm bill!

[Squawk 8888]

It’s only theft if the terms were not clearly spelled out at the time of the purchase. I’m actually surprised that (1) retailers do it at all, as these cards are in effect interest-free loans, and (2) consumers would actually purchase them without some sort of discount in exchange for payment in advance.

[Styria]

actually it’s not just junior but also the retailer that loses out. They have to disperse the funds that had been allocated for purchases....what a headache, and I can’t imagine that it wouldn’t cost the retailers additional money to process.

Not only that, but they don't always have said funds. Lots of businesses will give free gift certificates to non-profit organizations, who might auction them off or use them as door prizes at a banquet, etc. So the state will be after money that didn't exist to begin with.

[Crazieman]

This has to be one of the most spectacular examples of the democrat party one can illustrate.

[Fishtalk]

I used to work in Merryland and I had to fill out that "unclaimed property" thing. Let me flesh out the issue if I may.

First ALL states have unclaimed property laws as money left sitting in the bank, cars left on a titled property and stock certificates never claimed, do NOT belong to either the bank, the property owner or the company issuing the stock, respectively.

You may argue that it should but it does not and while the laws vary by state, there's rules about how it should be handled.

As for unredeemed gift certificates, I am assuming by this article that until now this money did NOT go back to the state. It probably should.

If I purchase a Visa gift card for you for one hundred bucks, and you never use it, the bank issuing the card normally does NOT get to keep the money. They are supposed to fill out the annual unclaimed property form and send any unclaimed funds in to the state.

The state then publishes the information and tries to find the proper owner. You'd be surprised at some of the stuff supposed to go on unclaimed property. Let's say you buy office supplies on credit. The office supplier goes out of business and you no longer have somewhere to send the payment. The money you owe that office supply store is unclaimed property and since you can't pay the vendor you're supposed to send the money into the state. It's not supposed to be a boom for you as you did get supplies for your order. The heirs and/or creditors of that office supply store are entitled to that money.

This is especially important for government contractors as most likely the government was billed for those office supplies so it is only right the government get the money no longer needed to pay the vendor.

Gift cards used to be more nuisance than anything. I might give a gift certificate to, say, Chili's restaurant. Or maybe WaWa....whatever. Such small sums of money are often a bigger problem to track than it's worth.

But now we have such as big VISA gift cards and the like and this often ends up as a lot of money. I help manage a mobile home park and the owner doesn't get to keep mobile homes left on his property by runaway owners. He has to give it BACK TO THE STATE!

My experience is that the owner/proprietor/bank is generously reimbursed for their trouble. The state does not intend, at least in most cases that I am aware and I've done this kind of thing for many states, for an innocent banker/property owner to be punished financially for this kind of thing which he or she does not want. My mobile home park buddy would just as soon have owners taking their mobile homes instead of leaving him with that big hulking thing to unload. He gets to deduct all expenses for dismantling, selling or moving that abandoned mobile home before giving any sale proceeds to the state. He probably pads it a big, probably all companies do. Don't cry for them Argentina.

Companies know when their gift cards expire. They have to put them on their books as liabilities until they are used. There is usually some sort of expiration date on these things. They then are allowed to write off that liability because for a company to keep accumulating liabilites over the years affects their credit and bank ratings and all manner of things. When they write off that liability they should debit the liability and credit cash. Then send a check into the appropriate state agency. Hey, the company GOT cash when the gift was purchased.

And so this sort of thing is nothing new and there really is a logic to it.

[alarm rider]

Many Marylanders are choosing to leave for WVA and PA.

I’m one of them.

[MarkT]

I still believe the Dems are missing an opportunity. Contract with a firm to exhume bodies and retrieve gold fillings, wedding rings, etc. that are buried with the dead. A totally new revenue source and the dead won’t complain.

[Steve_Seattle]

This is basically legalized theft. The state has NO claim on that money.

[Steve_Seattle]

Something like this has existed in Washington for years, but I don’t know if it applies to gift certificates. It’s called the Unclaimed Property Act, and after a certain period of time, any uncashed checks, unclaimed deposits, etc, must be reported to the state, where - I think - one final effort is made to contact the owner. If this fails, the state - not the bank or the business or the local government - keeps the money.

[Steve_Seattle]

"I especially hate how some cards lose value after a certain amount of time passes. Now, that’s theft!"

There is a cost to business for issuing gift cards. First of all, there is the cost of designing and manufacturing them, and setting up the software to process them. Plus, from an accounting standpoint, an issued card goes on the books as a debit to cash and a credit to a liability account. I think it's only when the card is redeemed that the sale is recorded and the liability liquidated. So there's a lot of accounting work associated with these cards that you don't have with an ordinary sale.

[LIConFem]

Maryland Democrats Want to Take "Abandoned" Gift Certificates for Revenue

This headline could be collapsed down to:

Democrats Want to Take Revenue

[bert]

A more sinister example would be juniot giving the certificate to Granma. She is saving the balance to be added to the nexst certificate she knows will surely come.

The combined total will be enough to buy her medicine at the Walmart pharamcy for three months. The rats are taking Grannies medicine away.

[rellimpank]

-—this came up as a brilliant idea in several state legislatures about a year ago —Rush hit upon it—

[ctdonath2]

Indeed - the vast unused sums, amounting to goods paid for then abandoned, is what really motivates retailers etc. to offer gift certificates.