New Jersey Amends Treatment Of Stored Value Cards

On June 29, New Jersey amended its unclaimed property statutes related to stored value cards.1 This amendment is the latest in a series of changes in the state's treatment of stored value cards over the past two years. There are several important components to the new version of the stored value card law that will affect both holders and owners of unclaimed property, and possibly taxpayers subject to the New Jersey Corporation Business Tax (CBT).

Stored Value Cards

A "stored value card" is a pre-funded record that may be redeemed for merchandise, services or cash and the value of which is reduced upon each redemption.2 Stored value cards include, but are not limited to, paper gift certificates, records that contain a microprocessor chip, magnetic stripe or other means of information storage, gift cards, electronic gift cards, rebate cards, stored value cards or certificates, store cards, and similar records or cards.3

Prior Treatment of Stored Value Cards

Effective July 1, 2010, New Jersey amended its Uniform Unclaimed Property Act to add, for the first time, "stored value cards," such as gift cards, as a type of property subject to escheat.4 This previous version of the law included two controversial provisions. First, issuers of stored value cards were required to obtain the name and address of the purchasers or owner of each stored value card issued or sold, and, at a minimum, maintain a record of the zip code of the owner or purchaser.5 Second, under a "place of purchase" provision that was held to be unconstitutional by the U.S. Court of Appeals for the Third Circuit in January 2012,6 if the stored value card issuer did not have the name and address of the card's purchaser or owner, the address would have been assumed to be the address of the New Jersey business where the stored value card was purchased or issued.7

Current Treatment of Stored Value Cards

The amended stored value card law no longer includes the unconstitutional "place of purchase" provision, but keeps the requirement to obtain the purchaser's information and has a number of other important requirements:

Stored value cards will be presumed abandoned after there has been no activity8 on the card for five years.9 This dormancy period is retroactive to all cards issued after July 1, 2010. For many stored value cards, 60 percent of the amount remaining on an abandoned card will be subject to escheat.10 Beginning on July 1, 2016,11 an issuer of a stored value card must obtain...