On June 22, Arizona Gov. Katie Hobbs signed S.B. 1336 into law, significantly broadening the scope of the state’s Unclaimed Property Act by eliminating several longstanding exclusions for specific categories of property. Those categories include property associated with business-to-business/current business relationships, de minimis property ($50 or less), gift certificates, electronic gift cards, stored value cards, nonrefundable tickets, prepaid phone cards, frequent flyer miles, and merchandise points and similar loyalty or rewards programs. Effective September 12, 2026, those property types are no longer expressly exempt from unclaimed property reporting in Arizona.
A key cause of uncertainty is the Arizona statute’s lack of clearly established dormancy periods and specific abandonment triggers for many of the listed categories, raising questions regarding how and when such property would become reportable. In the absence of property-specific rules, the state could look to the general catchall dormancy provision (Ariz. Rev. Stat. §44-302(A)(16)), under which all other property not listed in the statute is presumed abandoned after the first of either three years after the owner's right to demand the property or the holder's obligation to pay or distribute it.
However, on July 31, the Arizona Department of Revenue (DOR) issued substantive policy ruling UPR 26-001, characterizing the relevant unclaimed property language in S.B. 1336 as a “drafting anomaly” that was not meant to expand the categories of property subject to the Unclaimed Property Act. Although the ruling is advisory in nature, it specifies that property that was not subject to the Unclaimed Property Act before September 12, 2026 (the effective date of S.B. 1336) does not become subject to” the act by reason of S.B. 1336.
Consistent with that position, the DOR also clarified that:
- It does not construe S.B. 1336 as enlarging the categories of unclaimed property;
- Property listed in S.B. 1336 should not be reported and will not be accepted by the state;
- The DOR will not include the S.B. 1336 categories of property in the scope of any examinations;
- Holders that take a reporting position consistent with the ruling can file a written notice of a dispute regarding such property; and
- Holders that reasonably rely on the ruling are eligible for abatement of interest and penalties.
Importantly, UPR 26-001 is the DOR’s construction of Arizona law and does not have the force of law. Further, it binds no other state and does not address any claim to property asserted by another jurisdiction. Accordingly, companies should evaluate the guidance provided in UPR 26-001 against the risk that future legislative action could change that result.
BDO Insight
- S.B. 1336 introduced significant uncertainty by removing longstanding statutory exclusions, but UPR 26-001 substantially tempers the immediate compliance and audit risk by signaling that the DOR does not intend to treat those categories as newly reportable property.
- Because UPR 26-001 is only administrative guidance, not binding law, companies should view it as meaningful but not permanent protection, particularly if future legislative action or claims by other jurisdictions could produce a different outcome.
- Holders with significant potential exposure should treat UPR 26-001 as a valuable interim safeguard while preserving flexibility to revisit reporting should Arizona change its interpretation through legislation or other enforcement.
- Because S.B. 1336 takes effect September 12, the Arizona DOR has indicated that the legislation’s changes are not expected to affect the unclaimed property reports due November 1.
- For companies with significant Arizona-domiciled programs, UPR 26-001 reduces the risk of any immediate escheat exposure.
Please visit BDO’s State & Local Tax Services and Unclaimed Property pages for more information on how BDO can help.