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Committee rejects nonprofit exemption to unclaimed‑property rules after heated debate
Summary
A proposal to exempt nonprofits with annual revenue under $5 million from state unclaimed‑property remittance requirements failed on a 3–3 roll call. Supporters said the measure would help smaller nonprofits keep funds they hold temporarily; opponents said the auditor’s office is better equipped to reunite money with rightful owners.
A Senate committee on Monday voted down Senate Bill 283, a measure that would have created a limited exemption allowing nonprofit organizations with annual revenue below $5 million to retain unclaimed property on their books rather than remit it to the state auditor.
Sponsor testimony described the bill as a carve‑out for small nonprofits that hold funds payable to others — for example, refundable initiation deposits or small payroll checks that the nonprofit is unable to deliver. Steve Lux, testifying as a nonprofit treasurer, told the committee an illustrative liability for one club exceeded $1 million in refundable deposits and said many nonprofit treasurers and local churches were unaware of unclaimed‑property duties.
Why it matters: Committee witnesses said Arkansas holds roughly $526,490,980 in unclaimed property statewide (figure cited from a January 5 staff request), and nonprofits account for less than 1% of that total. Proponents argued the state’s existing rules impose administrative burdens on smaller nonprofits and that existing state exemptions for very large corporate gift‑card issuers do not reflect the nonprofit context.
Opponents said the state auditor’s office has a robust system for contacting owners and returning funds, and that the public interest is best served by routing unclaimed property through the auditor so it can be reunited with rightful owners or moved into general revenue when owners cannot be located. Senator Tucker cautioned that the funds at issue are “someone else’s money” and said the auditor has broader capacity to find missing owners.
Formal action: Senator Hammer moved to pass the bill and Senator Sullivan seconded. The committee then took a roll call: Senator Clark — yes; Senator Hammer — yes; Senator Sullivan — yes; Senator Tucker — no; Senator King — no; Senator Peyton — no. The chair announced the result as “3 ayes, 3 no’s” and said the bill failed.
After the roll call the committee voted to expunge that recorded vote from the minutes on a subsequent motion by Senator Clark; the motion to expunge carried by voice vote.
Key numeric and procedural details cited in committee discussion: - Statewide unclaimed property total cited in testimony: $526,490,980 (staff figure provided January 5). - Sponsor’s requested threshold in the bill: annual revenue less than $5,000,000 would be exempt from remittance under the proposed subchapter. - Example liability described by witness Steve Lux: in excess of $1,000,000 in initiation deposits for a single members’ club over multiple years.
What’s next: With the roll‑call failure and the subsequent expungement of that recorded vote, the bill did not pass out of committee. Sponsors and opponents said they will continue to discuss the policy; proponents said they selected the $5 million threshold after negotiations with the auditor’s staff.
Ending: Committee debate centered on ownership and stewardship of unclaimed funds, with supporters arguing that some small nonprofits lack staff and systems to comply effectively and opponents arguing that central administration by the auditor better serves owners.
