Can the South Dakota Treasurer's Unclaimed Property Division proactively use data matching to find owners of unclaimed property and just send them a check, without making them file a claim?

Plain-English summary

South Dakota holds millions of dollars in unclaimed property: forgotten bank accounts, uncashed payroll checks, dormant security deposits, abandoned insurance proceeds, old utility credits. Banks, employers, insurers, and other "holders" are required to turn this property over to the State Treasurer after a statutory dormancy period. The State Treasurer's Unclaimed Property Division then publishes the names of likely owners and waits for claims.

During COVID, the Division started doing something more proactive. Its software searches the database for properties between $10 and $5,000 where there's a complete federal tax identification number and a last-known South Dakota address. The system matches that information against other records to confirm the owner is still findable, then mails a check directly to the owner. No claim form, no waiting on the owner to discover that they're owed money.

State Treasurer Haeder asked the AG whether this proactive return process is lawful. AG Marty Jackley said yes.

The reasoning is straightforward. SDCL 43-41B-25(a) says a person claiming an interest in unclaimed property "may file a claim." The South Dakota Supreme Court read "may" as permissive in Matter of Gronseth International (1989). Permissive language about owners does not mean filing is the only way property can leave state custody. It just means the owner is not required to file; the state must accept and process claims when they are filed.

Separately, SDCL 1-10-1 imposes a constitutional-office duty on the Treasurer to "safely keep all public moneys ... and pay out the same as directed by law." Unclaimed property is held in trust for owners; the state doesn't take legal title without further legal process. So the Treasurer is sitting on money that belongs to identifiable people. The AG concluded that the safekeeping duty, combined with the Unclaimed Property Act's recordkeeping requirements (which require the Treasurer to publish names and last-known addresses under SDCL 43-41B-19 and 43-41B-24), allows and arguably encourages the Treasurer to use modern data-matching technology to return property without forcing owners to come find it.

Nothing in the Unclaimed Property Act prohibits this approach. The AG was careful to frame the conclusion as "logically follows" from the trust relationship rather than as an explicit statutory grant.

What this means for you

For Treasurer's Office and Unclaimed Property Division staff

This opinion gives you legal cover to continue and expand the proactive return process. Maintain documentation of the matching criteria (federal tax ID, address verification, threshold amounts), the database sources, and the verification step before checks issue. If the program expands, keep the audit trail strong. For high-dollar items above the $5,000 threshold, the AG opinion describes the current program but doesn't analyze whether the same proactive process can scale up. Treat that as an open question if you contemplate raising the cap.

For South Dakota residents

If you ever lived in SD and may have unclaimed property in your name (an old bank account, a forgotten utility deposit, a check that bounced back), the state may already be on its way to mailing you the money. You can also still check yourself at the Treasurer's unclaimed property portal. The proactive return only applies when the database has good last-known address and ID information; if you've moved repeatedly or the records are incomplete, you may need to file a claim manually.

For tax professionals and estate planners

If you handle estate administration or are working with a client who suspects they're owed property, the proactive return process means a check could arrive without your client having taken any action. Verify the source before deposit. Tax treatment of returned unclaimed property follows the underlying property type; a returned bank balance is generally not income, but interest accrued may be.

For holders required to report unclaimed property

This opinion doesn't change your reporting obligations under SDCL Chapter 43-41B. You still file annual reports, you still pay or deliver property after the dormancy period. The change is downstream: the Treasurer is doing more to return the property after you turn it over.

For businesses and individuals receiving unsolicited checks from the SD Treasurer

The proactive return program is real and legal. A check from the SD State Treasurer's Office for an amount between $10 and $5,000, identifying a specific source (a former employer, a closed bank account, an insurance refund), is a legitimate return of property. If you receive one and suspect fraud, you can verify by contacting the Treasurer's Unclaimed Property Division directly at the number listed on the state website (not on the check).

For other states' unclaimed property administrators

SD's AG opinion may be persuasive in other Uniform Unclaimed Property Act states. The reasoning (permissive "may file" language plus trustee-style safekeeping duty plus available recordkeeping data) translates well to other UUPA jurisdictions. Several states have already moved to similar proactive return programs.

Common questions

Q: How would I know if the state owes me money?
A: The Treasurer publishes the names of owners under SDCL 43-41B-19 and operates an online search portal. If you're potentially in the proactive return queue (amount under $5,000, complete federal tax ID, valid SD address), a check may simply arrive in the mail.

Q: Why is there a $5,000 cap?
A: The cap appears to be a Division-imposed administrative threshold to limit risk on each individual mailed payment. The AG opinion describes the current cap but doesn't say whether it's required by statute. Larger claims still go through the standard claim process under SDCL 43-41B-25.

Q: What happens if a proactive return check is undeliverable?
A: The check is canceled and the cancellation recorded in the database. The property remains in state custody. The owner can still claim later through the standard process.

Q: Can the Treasurer do this for property held by other states?
A: The opinion addresses SD's program; it doesn't reach interstate cooperation. Many states do reciprocate on unclaimed property because each state's UUPA implementation has similar trustee logic.

Q: What if I want to "opt out" of the proactive return?
A: There's no opt-out mechanism in the statute or opinion; the proactive return is functionally just a different mode of executing the same statutory trust duty. If you receive a check, you can decline to deposit it, but the underlying property record will continue to be tracked.

Q: Is the data matching covered by privacy law?
A: The Treasurer is already lawfully in possession of the federal tax ID and address information under SDCL 43-41B-19 and 43-41B-24. Using that information internally to return the property to the rightful owner is consistent with the purpose for which the information was collected. The opinion doesn't address third-party data privacy laws like 26 U.S.C. § 6103 (federal tax return information confidentiality); the Treasurer should confirm any external data inputs comply with applicable privacy law.

Q: Does this affect what banks and businesses owe to the state in unclaimed property reports?
A: No. Holder reporting and turnover obligations are governed by SDCL 43-41B-18 and 43-41B-20 and are unchanged.

Background and statutory framework

South Dakota's Uniform Unclaimed Property Act (SDCL Chapter 43-41B) is part of a national framework that has been adopted in some form in every state. The structure is consistent: businesses hold money or intangible property for customers; if customers don't claim it within a dormancy period (typically three to five years), it's presumed abandoned; the state takes custody as trustee; the state holds the property pending owner claims.

The traditional default has been owner-initiated claims. State unclaimed property offices published names and waited for owners to find them. Recovery rates have historically been low; many owners never learn they're owed money. Over the last decade, several states have started using data matching, the IRS Locator service, and other proactive techniques to push returns instead of waiting for pulls.

The legal question, when these programs began, was whether the statutes authorized a different administrative approach. The Uniform Act language was drafted before modern data matching was feasible, so the statutes don't expressly authorize or prohibit proactive returns. The AG opinion is the first official SD statement that the proactive approach is consistent with the statutory framework.

The AG's analysis combines two distinct sources of authority: the constitutional safekeeping duty under SDCL 1-10-1 (anchoring the obligation to actively manage trust assets) and the permissive nature of "may file" in SDCL 43-41B-25 (clearing space for alternative return mechanisms). The result is a measured opinion: yes, this is allowed, but framed as "logically follows" rather than as an express statutory grant.

Citations and references

Statutes:
- S.D. Const. Art. IV § 7
- SDCL 1-10-1 (Treasurer general duties)
- SDCL 4-6-22 (Treasurer accounting)
- SDCL Chapter 43-41B (Uniform Unclaimed Property Act)
- ARSD 48:02:02:01, 48:02:03:01 (administrative rules)

Cases:
- Olson v. Butte County Comm'n, 2019 S.D. 13, 925 N.W.2d 463
- Goetz v. State, 2001 S.D. 138, 636 N.W.2d 675
- Matter of Gronseth International, Inc., 442 N.W.2d 229 (S.D. 1989)

Source

• Landing page: https://atg.sd.gov/OurOffice/OfficialOpinions/opinionhtml.aspx?id=1767
• Original PDF: https://atg.sd.gov/OfficialOpinions/Official%20Opinion%2025-01%20.pdf

Original opinion text

OFFICIAL OPINION No. 25-01

Re: Official Opinion Concerning the Use of a Data Matching Process to Locate Owners of Unclaimed Property

Dear Treasurer Haeder,

In your capacity as State Treasurer for South Dakota, you have requested an official opinion from the Attorney General's Office on the following question:

QUESTION:

Whether the State Treasurer's Unclaimed Property Division ("Division") can use a data matching process to locate owners of unclaimed property and attempt to return that property without the owner initiating a claim for the property.

ANSWER:

Yes. The Division can use a data matching process to locate owners of unclaimed property and attempt to return that property without the owner initiating a claim.

FACTS:

During COVID, the Division began using a data matching process to locate owners of unclaimed property held by the State Treasurer under the Uniform Unclaimed Property Act (SDCL ch. 43-41B). Under this process, the Division's software provider searches the Unclaimed Property database for qualifying unclaimed properties between $10.00 and $5,000.00. Qualifying properties are those that have a complete Federal Tax Identification number on file and a last-known address in South Dakota. After a verification process, a claim is created and a check is issued and mailed to the property owner. Any checks returned as undeliverable are canceled and recorded in the database.

IN RE QUESTION:

The State Treasurer is an independently elected Constitutional officer. S.D. Const. Art. IV § 7. SDCL § 1-10-1 provides that the Treasurer "shall have charge of and safely keep all public moneys which shall be paid into the state treasury, and pay out the same as directed by law, and perform such other duties as are required of him by law." In addition, the Treasurer "shall account to the state for all money and funds directly or indirectly received by him by virtue of his office, or as interest or compensation for the use, deposit, or forbearance of any state money in his hands or under his control." SDCL § 4-6-22.

The Treasurer also acts as the administrator under the Uniform Unclaimed Property Act ("the Act"). SDCL ch. 43-41B. Under the Act, all intangible property that is held, issued, or owing in the ordinary course of a holder's business and has remained unclaimed by the owner for a certain amount of time after it became payable or distributable is presumed abandoned. SDCL § 43-41B-2 and SDCL §§ 43-41B-5 to 43-41B-17, inclusive. Intangible property includes, but is not limited to, money, checks, interest, income, unpaid commissions, royalties, credit balances, refunds, stocks, insurance policy payouts, benefit plan distributions, and United States savings bonds. SDCL § 43-41B-1(10).

Intangible property is subject to the custody of the State as unclaimed property if it meets the statutory requirements for the presumption of abandonment and certain requirements connecting the property to this state. SDCL § 43-41B-3. The holder of any unclaimed property is required to pay or deliver the unclaimed property to the Treasurer. SDCL §§ 43-41B-18 and 43-41B-20. Upon payment or delivery of the property, "the state assumes custody and responsibility for the safekeeping of the property." SDCL § 43-41B-21. The Treasurer is required to publish notice of unclaimed property and the names of persons appearing to be the owners of the property. SDCL § 43-41B-19. If the property remains unclaimed for the specified period of time after payment or delivery to the Treasurer, it shall be sold at a public sale. SDCL § 43-41B-23. All unclaimed property paid or delivered to the Treasurer shall be deposited in the general fund of this state, including the proceeds from the sale of such property. SDCL § 43-41B-24.

SDCL § 43-41B-25 sets out the process for the owner of unclaimed property to seek its return:

Filing claim with administrator, Handling of claims by administrator.

(a) A person, excluding another state, claiming an interest in any property paid or delivered to the administrator may file a claim on a form prescribed by the administrator and verified by the claimant.

(b) The administrator shall consider each claim within one hundred eighty days after it is filed and provide notice to the claimant if the claim is denied in whole or in part. The notice may be sent by mail to the last address of the claimant stated in the claim for the receipt of notices. In the alternative, the notice may be sent electronically to the last e-mail address of the claimant or to the e-mail address stated in the claim for the receipt of notices.

If no address for notices is stated in the claim, the notice may be mailed to the last address, or emailed to the last e-mail address of the claimant, as stated in the claim. No notice of denial need be given if the claim fails to state either the last mailing or e-mail address to which notices are to be sent or the mailing or e-mail address of the claimant.

(c) If a claim is allowed, the administrator shall pay over or deliver to the claimant the property or the amount the administrator actually received or the net proceeds if the property has been sold by the administrator, together with any additional amount required by § 43-41B-22.

If the claim is for property that is presumed abandoned under § 43-41B-10 and that was sold by the administrator within one hundred eighty days of confirmed receipt of the property, the amount payable for that claim is the net proceeds of sale. When property is paid or delivered to the administrator under this chapter, the owner is not entitled to receive income or other increments accruing thereafter.

You ask whether the Division can use the data matching process described above to locate owners of unclaimed property and pay out claims without the owners themselves initiating the claims process?

The Act does not require owners to initiate the process to claim property; rather it states that an owner "may file a claim." SDCL § 43-41B-25. When interpreting statutes, "'the language expressed in the statute is the paramount consideration.'" Olson v. Butte County Comm'n, 2019 S.D. 13, ¶ 5, 925 N.W.2d 463, 464 (quoting Goetz v. State, 2001 S.D. 138, ¶ 15, 636 N.W.2d 675, 681). "When the language in a statute is clear, certain and unambiguous, there is no reason for construction[.]" The use of the term "may" in SDCL § 43-41B-25 implies a permissive or discretionary act by the owner, not a mandatory or obligatory act. Matter of Gronseth International, Inc., 442 N.W.2d 229, 231 (S.D. 1989) (The use of "may" in a statute gives permissive or discretionary meaning). It is my opinion that the plain language of the statute does not establish owner-initiated claims as the exclusive avenue for the return of unclaimed property held by the Treasurer. I conclude the Treasurer has authority to return unclaimed property to its owners without the owners themselves initiating the process.

Again, the Treasurer has the duty to "have charge of and safely keep all public moneys which shall be paid into the state treasury, and pay out the same as directed by law..." SDCL § 1-10-1. This duty applies to unclaimed property paid or delivered to the Treasurer under the Act. The Treasurer holds the property in trust and is responsible for its safekeeping, and while deposit of the unclaimed property into the general funds benefits the public, the State does not take legal title to the property without further legal process under the Act. The Treasurer has the obligation under the Act to return property to the rightful owner, and even if the property itself has been already sold at a public sale, the Treasurer is required to pay the net proceeds of the sale. SDCL § 43-41B-25.

Importantly, by virtue of the statutory requirements, the Treasurer is in possession of all information needed to verify a claim. Under the Act, the Treasurer must publish notice of unclaimed property with the name of all persons appearing to be owners. SDCL § 43-41B-19. In addition, the Treasurer is required to record the name and last known address of each person appearing to be entitled to the unclaimed property before it is deposited into the general fund. SDCL § 43-41B-24. I find nothing in the Act that prohibits the Treasurer from using the available information to return unclaimed property absent an affirmative act by the owner. Rather, it logically follows that as safekeeper of the property, the Treasurer can and should use the best means available to return unclaimed property to its rightful owner. The technology and information available through the data matching process allows the Treasurer to verify claims and return property in an efficient manner, which is the primary purpose of the Act.

CONCLUSION:

I conclude that based upon the statutory duties and responsibilities of the State Treasurer, including those imposed by the Act, the Treasurer has the authority to use a data matching process to locate owners of unclaimed property and attempt to return that property to the owner without the owner initiating the claim.

Sincerely,

Marty J. Jackley

ATTORNEY GENERAL