Unclaimed Property:                                                                       April 26, 2012  What It Is and W...
Overview of Unclaimed Property    • Unclaimed Property very broadly covers most types of tangible      and intangible prop...
History & Evolution of Unclaimed Property (cont’d)    • In the U.S., modern custodial state statutes have been in      exi...
Audits of Unclaimed Property    •      States are dramatically increasing their audits of compliance with           unclai...
Example: Delaware    • Delaware is particularly active in pursuing unclaimed      property audits.       - Unclaimed prope...
What is Unclaimed Property Today?   •       Unclaimed property refers to the transferring of abandoned property to the    ...
What are the Elements of Unclaimed Property?       •    “Fixed and Certain”             •     There must be a fixed and ce...
Presumption of Abandonment    • Under the Uniform laws, vary for different types of           property.    •      Generall...
Throwback Rule    •      Many states have a third, “transaction-based” rule.    •      Not adopted by the Supreme Court in...
Trends              • Shortening the dormancy period for reporting Unclaimed                    Property.              •  ...
Compliance Requirements    •      Relevant data    •      Types of property    •      Abandonment periods    •      Quanti...
What is Unclaimed Property Today?    • Common forms of Unclaimed Property:               -     Accounts payable           ...
Quantifying the Potential Liability    • Identify periods where detailed records are available    • Review records and sch...
Why Perform Due Diligence    • Due diligence is mandated by state law    • Good customer relations      - Reestablishes co...
Performing State Mandated Due Diligence –    Where to Begin    • 43 fall states – all property types due Oct 31/Nov 1 with...
Mailing Requirements    • Send to valid owner addresses    • Most states accept first class mailing as proof      - Do’s  ...
Mailing Requirements    • Letter Content - Do’s       - Use the specific verbiage that may be required by the reporting   ...
Reciprocal Reporting    • Where domiciled vs. incorporated      - Not accepted by all states      - Delay in remitting pro...
Unclaimed Property Audits    • New focus – securities/insurance    • Contract auditors    • What, if any, standard guideli...
To Reduce the Possibility of Being Selected for a    Compliance Examination a Holder Should:    •      File your report an...
Typical System Related Issues    • Transaction data is not property codified:       - Last customer initiated activity    ...
Best Practices and Next Steps    • Determine your company’s compliance status    • Identify areas of potential exposure   ...
Questions?            Jennifer Wood, CPA                                                  David C. Blum            Sikich ...
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Unclaimed Property: What It Is and Why You Should Care

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Panel of experts from Sikich and Levenfeld Pearlstein, LLC presented this introduction to unclaimed property highlighting: Uniform Model Acts and State law regulating unclaimed property; Types of unclaimed property and dormancy periods; Requirements for reporting unclaimed property; How to identify hidden unclaimed property in your organization; and, How to prepare for, and help prevent, an audit.

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Unclaimed Property: What It Is and Why You Should Care

  1. 1. Unclaimed Property: April 26, 2012 What It Is and Why You Should Care Panel: David C. Blum, Partner, Levenfeld Pearlstein, LLC Jacqueline Amatulli, Associate, Levenfeld Pearlstein, LLC Jennifer E. Wood, CPA, Partner, Director of International Tax Services, Sikich LLP Moderator: Mary OConnor , ASA, Partner, Valuation and Dispute Advisory Services, Sikich LLP Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved 1 Introduction • One of the hottest topics among state and local taxation is not a tax at all. • Unclaimed Property is a major source of revenue for many states. • What constitutes Unclaimed Property varies by state, is uncertain and continues to evolve.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 2
  2. 2. Overview of Unclaimed Property • Unclaimed Property very broadly covers most types of tangible and intangible property including dormant accounts held in financial institutions, and money owed by a business, government, or not-for-profit to its customers, owners, employees, vendors, etc. • Generally falls under property law and is not considered a tax. • As a result, - No nexus requirements - Limited statute of limitations - Uncertain appeal procedure • Think of state unclaimed property laws as a type of consumer protection law which is designed to benefit owners of tangible and intangible property.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 3 History & Evolution of Unclaimed Property • Unclaimed property and the term “escheat” originated in feudal England and related solely to land. - In feudal England, “escheat” meant that when an individual died without an heir, land was returned to the tenant’s lord, or in absence of such a lord, to the Crown. • “Bona Vacantia” allowed the Crown to claim certain personal property against all but rightful owner.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 4
  3. 3. History & Evolution of Unclaimed Property (cont’d) • In the U.S., modern custodial state statutes have been in existence since the 1940s. • Concept was further advanced in 1951 in Standard Oil Co. v. New Jersey, which solidified state’s rights to take possession of Unclaimed Property (in this case, stock and dividends that were abandoned for 14 years). • The Court established a base premise of modern Unclaimed Property law: - Unclaimed Property is better held by the states and used for the general good (i.e., public benefit) than held by an individual or entity for a singular enrichment.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 5 History & Evolution of Unclaimed Property (Today) • Implicit adoption of bona vacantia doctrine. • States “step into the shoes” of the true owner and claim the same rights, second only to the missing true owner. • Thus, states take custody, but not ownership, of unclaimed property. • However, states are generally free to use this money until it is claimed by the owner. • As a result, states are increasing audit efforts and aggressively collecting unclaimed property.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 6
  4. 4. Audits of Unclaimed Property • States are dramatically increasing their audits of compliance with unclaimed property laws, oftentimes with third party “contract” auditors who may audit on behalf of 20 or 30 states simultaneously. • There has been widespread non-compliance with unclaimed property statutes. • States are finding unclaimed property audits to be an easy source of revenue – and one that doesn’t require imposition of new taxes or even new legislation. • Vast majority of money collected through assessments is never returned to property owners. • One of the biggest problems with Unclaimed Property Audits is a state (or contract auditor’s) ability to “estimate” for prior periods (especially when there is no statute of limitations).Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 7 What is At Stake? • According to NAUPA, state treasurers and other agencies are safeguarding nearly $32.9 billion in unclaimed property. • Almost $1.8 billion was returned to rightful owners in 2006, leaving the majority in the hands of the states.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 8
  5. 5. Example: Delaware • Delaware is particularly active in pursuing unclaimed property audits. - Unclaimed property collections rose from $106 million in 1998 to $493 million in 2010 - Third largest source of revenue for the state - Accounts for 15% of revenue • More than state lottery, corporate income taxes, cigarette taxes, alcoholic beverage taxes and inheritance taxes combined. • It is not uncommon for Delaware to audit back to 1981.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 9 Who is Liable for Unclaimed Property? • Almost everyone has an obligation to account for and report unclaimed property, including: - Corporations - Partnerships - Limited Liability Companies - Business Trusts - Not-for-Profit Organizations - Local Governments and InstrumentalitiesCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 10
  6. 6. What is Unclaimed Property Today? • Unclaimed property refers to the transferring of abandoned property to the state custodian for owners that cannot be located after a certain period of time. • All 50 states and the District of Columbia have enacted unclaimed property statutes; many have adopted or modified one of four different Model Acts (discuss later). • Common forms of Unclaimed Property: - Accounts Payable - Dormant Savings or checking - Uncashed Payroll Checks accounts - Uncashed checks to vendors - Unclaimed stocks and certificates - Gift certificates and gift cards of deposit - Insurance payments or refunds - Uncashed dividends and life insurance policies - Deposits of all types - Customer Overpayments - Unredeemed travelers checks and - Customer Refunds money orders - Benefits (non-ERISA) - Trust distributions - Almost any other credit account - Contents of Safe Deposit Boxes carried on booksCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 11 Key Unclaimed Property Terms - Unclaimed or Abandoned Property • Property which has reached dormancy and is subject to escheat laws - Escheatable • The point when the burden of being the custodian of unclaimed property shifts to the state - Owner • The person or entity that owns the rights to the property - Holder • The entity that holds property owed to another - Custodian • The entity or governmental unit that maintains the property for safe keeping - Dormancy • The period of time that a company has to hold on to a liability before it is considered escheatable - Common Exceptions • Business to Business • De minimisCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 12
  7. 7. What are the Elements of Unclaimed Property? • “Fixed and Certain” • There must be a fixed and certain legal obligation of the holder to the owner – Unclaimed property is not the physical instrument by which the obligation is evidenced, but rather, the right of the owner against the holder. The obligation of the holder must be absolute and for a specific amount. • Example: In many states unclaimed property does not include credit card points programs and other uncertain value programs. • Dormancy must run • The property must remain unclaimed by the owner for the dormancy period - The dormancy period represents a period of inactivity. If the owner demonstrates an interest in the property then the dormancy period may start over again. The dormancy period generally begins at the time the property first becomes payable or distributable and continues until the state-imposed limit in years is reached. • Example: Gift card last activity date. • Owner cannot be located • The apparent owner of the property cannot be located – State laws require the holder to perform due diligence by attempting to locate the true owner and requires the owner to respond to the letter to toll the dormancy period • Example: If the owner receives a due diligence letter but does not respond to the letter within the dormancy period, the property in question becomes escheatable to the state.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 13 Uniform Acts • All 50 states and the District of Columbia have enacted unclaimed property statutes; many have adopted or modified one of four different Model Acts: - Uniform Disposition of Unclaimed Property Act (1954) – Resolved the multiple liabilities issue through enactment of reciprocity provisions, which had come as a result of more than one state imposing its jurisdiction over the same property. - Revised Uniform Disposition of Unclaimed Property Act (1966) – Addressed problems involving money orders and travelers checks. - Uniform Unclaimed Property Act (1981) – Replaced the earlier acts, codified priority standards set out in Texas v. New Jersey, 379 U.S. 674 (1965). - Uniform Unclaimed Property Act (1995) – Superceded the 1981 Act. Reaffirmed Texas v. New Jersey. Clarified the debtor’s identity when payments made by intermediaries.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 14
  8. 8. Presumption of Abandonment • Under the Uniform laws, vary for different types of property. • Generally shortened with each succeeding Act. • 1954, 1966 (7 years) • 1981 (5 years) • 1995 (3 years for most property) - Travelers checks 15 years - Money orders 7 years - Stock or equity interest in business/ debt of a business 5 years - Property distributed in dissolution of business 1 year • Rules still vary under state laws.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 15 What State Gets the Unclaimed Property? The “Priority Rules” • The U.S. Supreme Court has set forth the following “Priority Rules” (Texas v. New Jersey) to determine which state holds the unclaimed property: - First: The State of the owner’s last known address. - Second: If there is no known address or if the state of last known address does not provide for escheat of that property, then the state in which the entity is domiciled (i.e., incorporated). • Note, because this is based on the state of owner’s last known address, you could have unclaimed property obligations to numerous states (even though you do not have nexus in any of those states).Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 16
  9. 9. Throwback Rule • Many states have a third, “transaction-based” rule. • Not adopted by the Supreme Court in Texas v. New Jersey - If both the state of owner’s last known address and the state of holder’s domicile decline or fail to cover an item of property in their unclaimed property acts, then the state where the transactions giving rise to such property occurred has the right to claim the property. - Premises jurisdiction by a state if the transaction out of which the property arose occurred in this state, the holder is domiciled in a state that does not provide for escheat or custodial taking and the last known address of the apparent owner or other person entitled to the property is unknown or in a state that does not provide for escheat.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 17 Business to Business Exemption • Some states have a B2B Exemption from reporting unclaimed property for business transactions under the theory that unclaimed property laws are designed to protect consumers, not transactions between businesses. • This exemption (if available) varies from state to state but generally exempts outstanding checks, refunds, deposits payments and credit balances resulting from transactions between business.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 18
  10. 10. Trends • Shortening the dormancy period for reporting Unclaimed Property. • Targeting new types of property. • (e.g., securities, store value cards, promotional incentives) • Creating new jurisdictional rules to claim property. • (e.g., “place of purchase” presumption and third-priority rule) • Retroactively escheating Unclaimed Property. • Increase in state audits and compliance opportunities (e.g., Amnesty and Voluntary Disclosure). • States’ increased willingness to litigate contested assessments.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 19 Reporting & Filing ObligationsCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 20
  11. 11. Compliance Requirements • Relevant data • Types of property • Abandonment periods • Quantifying the potential liability • Mailing requirements • Recordkeeping, retention and reporting • Reciprocal reporting • Becoming compliant • Audit triggers • Voluntary compliance • IT considerationsCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 21 Gathering Relevant Data • Look at your corporate structure • History of mergers or acquisitions • Review general ledger and chart of accounts • Bank reconciliations and outstanding checklist • Journal entries • Accounts receivable reports • De minimis or automatic system write-offs • Review contracts with applicable third party service providersCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 22
  12. 12. What is Unclaimed Property Today? • Common forms of Unclaimed Property: - Accounts payable - Dormant savings or checking - Uncashed payroll checks accounts - Uncashed checks to vendors - Unclaimed stocks and certificates - Gift certificates and gift cards of deposit - Insurance payments or refunds - Uncashed dividends and life insurance policies - Deposits of all types - Customer overpayments - Unredeemed travelers checks and - Customer refunds money orders - Benefits (non-ERISA) - Trust distributions - Almost any other credit account - Contents of safe deposit boxes carried on booksCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 23 Abandonment Period (in years) for Illinois and Reciprocal States
  13. 13. Quantifying the Potential Liability • Identify periods where detailed records are available • Review records and schedule items that are potential unclaimed property • For example: - Stale dated outstanding checks - Voided checks that were not reissued – state will ask why did you void? - Stale dated credit balances • Research items to determine if they represent a fixed and certain obligationCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 25 Due Diligence • Due diligence is the process of a holder attempting to contact the true owner of dormant property to give them a last opportunity to claim the property from the holder before it is turned over to a State Unclaimed Property Administration.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 26
  14. 14. Why Perform Due Diligence • Due diligence is mandated by state law • Good customer relations - Reestablishes communication with the customer - Increases goodwill • Smart business practice - Fraud prevention tool - Prevents material misstatement on financial statementsCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 27 Performing State Mandated Due Diligence • Generally, in most states, requirement applies to property having a value of $50 or more - Adhere to additional state requirements - Newspaper publication: New York - Written notice to owner by certified mail: New Jersey, New York, Ohio - Specific letter content and/or format: California, Florida, Idaho, Illinois, Iowa, Kansas, Kentucky, Maryland, Massachusetts, Missouri, Nevada, New Hampshire, New Jersey, North Carolina, Ohio, South Dakota, Tennessee, West VirginiaCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 28
  15. 15. Performing State Mandated Due Diligence – Where to Begin • 43 fall states – all property types due Oct 31/Nov 1 with June 30 cut-off date • What is it? - State mandated letter, specific time period, address - No less than 60 days, no more than 120 days - Font/specific wording requirements • Timeline - Might want to choose early July date to get mailings out the door to the owners of the assets • California – 365 days to 180 days, Texas – by August 31st, Iowa – July 1st to end of September, Hawaii – begin May 1stCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 29 Failure to Complete Due Diligence • Non-completion of due diligence does not relieve the holder from reporting unclaimed funds • Early reporting does not relieve the holder of performing due diligenceCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 30
  16. 16. Mailing Requirements • Send to valid owner addresses • Most states accept first class mailing as proof - Do’s • List the owner’s name • List your company’s name • List the company’s contact person • List the company’s contact informationCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 31 Mailing Requirements • Letter Content – Don’ts - List the state’s contact information - Refer the owner to the statesCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 32
  17. 17. Mailing Requirements • Letter Content - Do’s - Use the specific verbiage that may be required by the reporting state - State the timeframe the owner has to respond in order to receive their money or cash the check if possible before turning the property over to the stateCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 33 Sample Letter Missing Owner Name Missing Owner Last-Known Address City in Texas, Texas 77000 Our records show that we, XYZ Company, are holding unclaimed property that may belong to you. We also have not had direct contact with you since mm/dd/yyyy. The check or identifying number for the $ 0,000.00 we are holding is Nbr. 123456 and the item is dated mm/dd/yyyy. Under Texas state law, we may be required to deliver this property to the Texas Comptroller of Public Accounts, on or before Nov. 1 if the property is not claimed. Please complete the information below and return this letter to XYZ Company no later than mm/dd/yyyy, so that we may meet our unclaimed property reporting obligations. Do not forget to sign and date your response. _____ I am entitled to the above referenced property. Please issue a new check and mail to the following address: ______________________________________________________ _____ I am not entitled to the above referenced funds or these funds have already been paid to me. _____ I am aware of these funds and choose not to claim them at the present time. _____ Please change the address on my account to: ______________________________________________________ Owner signature Date signed Your response is appreciated. Please contact us at (999) 999-9999 if you have any questions. Sincerely, XYZ CompanyCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 34
  18. 18. Reciprocal Reporting • Where domiciled vs. incorporated - Not accepted by all states - Delay in remitting property to right state - Conflict within dormancy periodsCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 35 Recordkeeping & Retention • In general, holder must maintain records relating to property in report for 10 years after the holder files the report, unless a shorter period is provided by rule of the administrator • Consequences of failure: - Potential liability for holder: Barron v. Fidelity Magellan Fund - Potential liability for state: Taylor v. WestlyCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 36
  19. 19. Unclaimed Property Audits • New focus – securities/insurance • Contract auditors • What, if any, standard guidelines are used • What oversight does the state exercise over contract auditors? • Authority to estimate – when and how? • How and when are interest and penalties applied? • What options/recourse is available for a holder?Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 37 Audit Triggers • State registration and payment of other taxes with no compliance history • Filing only negative unclaimed property reports • Failing to file all property types • Claiming property without being compliant • Merger and acquisition history • Transient workforce • State of incorporation • Media event/publicityCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 38
  20. 20. To Reduce the Possibility of Being Selected for a Compliance Examination a Holder Should: • File your report annually. Even if you have no property to report, file a "negative" report as required by the Administrative Rules. • Make sure your report and remittance balance. Use the Treasurers forms and formats when possible. • Make sure that your report gives complete owner information/detail. • Report all types of property that you may have. Reporting of certain types of property and non-reporting of other types triggers a closer look at your reporting history. • Make sure to perform your due diligence as required by the Act. Contact owners at their last known address and have them reactivate accounts, cash dividend checks, etc. If contact cannot be established, remit the property.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 39 Voluntary Compliance • Accurate financials • Improved character of penalty and interest abatement • Limited “look-back” period • Reduced assessments • Risk of audit • Avoid laborious auditor requests • Set own timetable for compliance • Avoid whistleblowers • Avoid litigationCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 40
  21. 21. Typical System Related Issues • Transaction data is not property codified: - Last customer initiated activity - Property type - At risk dormancy date - Date remitted to state - State of remittance - Report ID • Lack of seamless integration between LOB systems and reporting systems • Lack of closed loop processCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 41 Typical System Related Issues • Catalog of property types • Workflow diagram of identification of transactions • Should have an IT unclaimed property expert by property types • Need to understand what data is available to you and how to apply • Need to document data extract rulesCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 42
  22. 22. Best Practices and Next Steps • Determine your company’s compliance status • Identify areas of potential exposure • Consider voluntary compliance programs in jurisdictions where exposure exists • Implement policies, procedures and mechanisms through which to report • Test your current procedures • Don’t claim property if you have not been compliantCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 43 Resources • National Association of Unclaimed Property Administrators (NAUPA) (www.unclaimed.org) • National Association of State Treasurers (NAST) (www.nast.net) • Unclaimed Property Professionals Organization (UPPO) (www.uppo.org) • Institute for Professionals in Taxation (IPT) (www.ipt.org) • Council on State Taxation (COST) (www.statetax.org)Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 202 44
  23. 23. Questions? Jennifer Wood, CPA David C. Blum Sikich LLP Levenfeld Pearlstein, LLC 6815 Weaver Road 2 N. LaSalle St., Suite 1300 Suite 100 Chicago, Illinois 60602 Rockford, Illinois 61114 312.476.7557 815.282.6565 dblum@lplegal.com jwood@sikich.com Mary O’Connor, ASA Jacqueline Amatulli Sikich LLP Levenfeld Pearlstein, LLC 123 North Wacker Drive 2 N. LaSalle St., Suite 1300 Suite 1500 Chicago, Illinois 60602 Chicago, Illinois 60606 312.476.7586 312.648.6652 jamatulli@lplegal.com moconnor@sikich.comCopyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 45 Disclaimer The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or opinion provided by Sikich LLP or Levenfeld Pearlstein. This material may not be applicable to, or suitable for, specific circumstances or needs, and may require consideration of non-tax factors and tax factors not described herein. Contact Sikich LLP, Levenfeld Pearlstein or another tax professional prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Sikich LLP and Levenfeld Pearlstein assume no obligation to inform the reader of any such changes. Pursuant to requirements relating to practice before the Internal Revenue Service, any tax advice in this communication (including any attachments) is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties imposed under the United States Internal Revenue Code, or (ii) promoting, marketing or recommending to another person any tax related matter.Copyright 2012, Levenfeld Pearlstein, LLC and Sikich LLP, All rights reserved April 26, 2012 46

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