[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 827 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                 S. 827

 To establish a program to reunite bondholders with matured unredeemed 
                      United States savings bonds.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                April 3 (legislative day, April 2), 2009

 Mr. Rockefeller (for himself, Mr. Roberts, and Mr. Leahy) introduced 
the following bill; which was read twice and referred to the Committee 
                               on Finance

_______________________________________________________________________

                                 A BILL


 
 To establish a program to reunite bondholders with matured unredeemed 
                      United States savings bonds.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Unclaimed Savings Bond Act of 
2009''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) To maintain public confidence in the United States 
        savings bond program, sound public policy favors diligent and 
        productive efforts to locate the owners of matured unredeemed 
        savings bonds and return to such owners the more than 
        $16,500,000,000 in associated bond proceeds.
            (2) The Government does not have an organized program to 
        identify the owners of all matured unredeemed savings bonds and 
        return to such owners their bond proceeds.
            (3) All 50 States, the District of Columbia, the 
        Commonwealth of Puerto Rico, and the United States Virgin 
        Islands operate unclaimed property programs that return to 
        rightful owners over $1,500,000,000 of property annually, and 
        but for the efforts of State unclaimed property programs, this 
        property would almost certainly remain lost.
            (4) Providing assistance to State unclaimed property 
        programs to help return the proceeds of matured savings bonds 
        to their rightful owners would benefit owners of savings bonds, 
        stimulate the economy, and recognize the important, 
        longstanding role of these programs in consumer protection.
            (5) For the Government to develop and administer an 
        unclaimed property program like the successful ones that States 
        already have would be costly, duplicative, and administratively 
        burdensome, and would involve the Government in an area that 
        historically has been the province of the States.
            (6) Although the proceeds of matured unredeemed savings 
        bonds are held in the United States Treasury, these proceeds 
        are not Federal funds and belong to bond owners, not the 
        Federal Government.
            (7) Income taxes on matured savings bonds are due at final 
        maturity. To promote equity among all taxpayers, estimated 
        taxes due should be withheld from savings bond proceeds in 
        Federal Government possession.

SEC. 3. DEMONSTRATION PROGRAM TO RETURN THE PROCEEDS OF MATURED 
              UNREDEEMED U.S. SAVINGS BONDS TO THEIR RIGHTFUL OWNERS.

    (a) Establishment of Demonstration Program.--
            (1) In general.--Subject to the succeeding provisions of 
        this section, beginning in the first fiscal year beginning 
        after the date of the enactment of this Act, the Secretary 
        shall conduct a demonstration program (referred to in this 
        section as the ``demonstration program'') under which the 
        Secretary--
                    (A) attempts to identify and locate the owners of 
                specified unredeemed savings bonds, and
                    (B) provides assistance to States in the form of 
                bondholder location and assistance grants (as defined 
                in subsection (b)) for the purpose of owner location 
                and notification activities with respect to such bonds.
            (2) Participation in demonstration program.--A State 
        electing to participate in the demonstration program for any 
        fiscal year by receiving a bondholder location and assistance 
        grant shall notify the Secretary of such election on or before 
        September 1 of the fiscal year preceding such fiscal year by 
        filing a grant application with the Secretary, in such manner 
        and accompanied by such information as the Secretary may 
        reasonably require.
            (3) Direct outreach.--Under the demonstration program, the 
        Secretary shall attempt to locate the owners of specified 
        unredeemed savings bonds for which the registered address (as 
        determined under subsection (c)(2)(C)(i)(II)) is located in a 
        State not participating in the demonstration program in the 
        fiscal year in which such bond would otherwise have been 
        referred to such State under subsection (c)(2)(C)(iii), or is 
        not located in any State.
            (4) Authorization of appropriations.--There is authorized 
        and appropriated from the general fund of the Treasury such 
        sums as are necessary to carry out the purposes of this 
        section. Such sums shall be available until expended.
            (5) Report to congress.--The Secretary shall report to 
        Congress not later than October 31 of each fiscal year 
        regarding the program established under this subsection. Such 
        report, which may be combined with other reports of the 
        Secretary to Congress, shall include--
                    (A) a description of the actions taken under this 
                subsection in the preceding fiscal year,
                    (B) for each State, the number of specified 
                unredeemed savings bonds referred to such State during 
                the preceding fiscal year,
                    (C) for each State, the amount and number of such 
                bonds referred to such State in all fiscal years, by 
                year of referral, that were redeemed in the preceding 
                fiscal year,
                    (D) the average amount of time between the receipt 
                of valid claims for such bonds and the issuance of 
                payment to redeem such bonds, and
                    (E) the States receiving a bondholder location and 
                assistance grant under the demonstration program during 
                the preceding fiscal years of such program, the total 
                number of such grants awarded during such fiscal years, 
                and the total amount of grant funds distributed under 
                subsection (b)(2) during such fiscal years.
    (b) Bondholder Location and Assistance Grants.--
            (1) In general.--For purposes of the demonstration program 
        established under subsection (a), a bondholder location and 
        assistance grant is a grant issued by the Secretary to a State 
        for the purpose of locating the owners of specified unredeemed 
        savings bonds referred to the State as provided in subsection 
        (c)(2)(C)(iii) and providing the owners of such bonds with 
        assistance in claiming the proceeds of such bonds.
            (2) Awarding of grants.--Subject to the availability of 
        funds, the Secretary shall make an award in each fiscal year of 
        a bondholder location and assistance grant under the 
        demonstration program established under subsection (a) to any 
        State that has submitted for such fiscal year a grant 
        application under paragraph (2) of such subsection that 
        satisfies all requirements stipulated by the Secretary for such 
        applications. The funds under such grant shall be made 
        available to the State within 30 days of the later of the start 
        of such fiscal year or the appropriation of funds for the 
        demonstration program for such fiscal year.
            (3) Grant amount.--The amount of each bondholder location 
        and assistance grant awarded to a State for any fiscal year 
        shall be an amount equal to the product of--
                    (A) the number of bonds that will be referred to 
                such State in such fiscal year, as estimated by the 
                Secretary based on the recommendation of the State 
                coordinator under subsection (c)(2)(C)(i), and
                    (B) $30,
        such amount to be made available to the State until expended.
            (4) Grant activities.--
                    (A) Mandatory activities.--A State receiving a 
                bondholder location and assistance grant in any fiscal 
                year shall conduct the following activities under such 
                grant in such year:
                            (i) Written notification efforts.--Written 
                        notification, mailed to each owner of record of 
                        each specified unredeemed savings bond referred 
                        to the State with respect to whom an address 
                        suitable for the delivery of mail can be 
                        determined, of--
                                    (I) the existence of such bond,
                                    (II) the fact that such bond is no 
                                longer earning interest, and
                                    (III) the fact that the bond may be 
                                redeemed through agents of the 
                                Department of the Treasury.
                            (ii) Inclusion in state databases.--In the 
                        case of any State that operates a searchable 
                        database of unclaimed property, inclusion in 
                        such database of information about each 
                        specified unredeemed savings bond referred to 
                        the State and the owner of such bond.
                    (B) Optional activities.--In addition to the 
                activities required under subparagraph (A), funds 
                received by a State under a bondholder location and 
                assistance grant may be used for the following 
                activities:
                            (i) Owner location and notification 
                        efforts.--In addition to the activities 
                        required under subparagraph (A)(i), activities 
                        to locate the owners of specified unredeemed 
                        savings bonds referred to the State and to 
                        notify such owners of such bonds, including 
                        matching bond records against State databases 
                        or constituent lists maintained by State 
                        legislators, researching the location of such 
                        owners, and publishing notices in newspapers 
                        and magazines of general circulation.
                            (ii) Assistance to bondholders.--Actual and 
                        attempted communications with owners of 
                        specified unredeemed savings bonds about 
                        methods of bond redemption, requirements for 
                        filing claims for missing bonds or other 
                        similar claims, the status of claims for bonds, 
                        and similar matters.
                    (C) Restrictions on location and notification 
                efforts.--The Secretary may provide for such 
                restrictions on methods used to locate and notify 
                owners of specified unredeemed savings bonds as the 
                Secretary deems appropriate, including any restrictions 
                on the use of commercial locator services.
            (5) Provision of bond records.--Subject to any other 
        requirements and limitations provided in this section, the 
        State coordinator shall provide to a State receiving a 
        bondholder location and assistance grant such records with 
        respect to the bonds referred to such State under subsection 
        (c)(2)(C)(iii) as are necessary and appropriate to carry out 
        the purposes of such grant.
    (c) Examination and Referral of Bonds.--
            (1) In general.--Not later than 90 days after the date of 
        the enactment of this Act, the Secretary shall enter into a 
        cooperative agreement (within the meaning of section 6305 of 
        title 31, United States Code) with the State coordinator for 
        the purpose of--
                    (A) identifying the owners of specified unredeemed 
                savings bonds, and
                    (B) referring specified unredeemed savings bonds to 
                the State of residence of the owner, in the case of a 
                State that is participating in the demonstration 
                program by receiving a bondholder location and 
                assistance grant under subsection (b) for the fiscal 
                year in which the referral is made.
            (2) Agreement requirements.--The cooperative agreement 
        entered into under paragraph (1) shall provide for the 
        following with respect to specified unredeemed savings bonds:
                    (A) Access to bond records.--The Secretary shall 
                provide the State coordinator with full access to 
                records related to such bonds.
                    (B) Compilation of information.--The State 
                coordinator shall compile relevant information with 
                respect to such bonds and make the results of such 
                compilation available to the Secretary for the 
                Secretary's review and concurrence.
                    (C) Referral of bonds to states for processing.--
                            (i) Recommendation of state of referral.--
                                    (I) The State coordinator shall 
                                make a recommendation to the Secretary 
                                regarding to which State each bond 
                                should be referred for owner location 
                                and notification activities.
                                    (II) Such recommendation shall be 
                                based on the registered owner's address 
                                of record being in the State to which 
                                the bond will be recommended to be 
                                referred as determined in accordance 
                                with Government Auditing Standards for 
                                appropriateness and sufficiency.
                            (ii) Finality of determination.--The 
                        Secretary shall make the final determination 
                        regarding the State, if any, to which each bond 
                        should be referred for processing after taking 
                        into account the recommendation of the State 
                        coordinator. Such determination by the 
                        Secretary shall be conclusive and shall not be 
                        subject to judicial review.
                            (iii) Referral.--Subject to clauses (iv) 
                        and (v), in the case of a State that is 
                        participating in the demonstration program by 
                        receiving a bondholder location and assistance 
                        grant under subsection (b) for the fiscal year 
                        in which the referral will be made, the 
                        Secretary shall refer to such State each bond 
                        that the Secretary has determined should be 
                        referred to such State, for activities under 
                        such grant.
                            (iv) Limitation based on availability of 
                        funds.--The Secretary shall not refer a bond to 
                        a State described in clause (iii) unless 
                        sufficient funds are available to provide to 
                        such State the full grant amount described in 
                        subsection (b)(3) for the fiscal year in which 
                        the referral will be made.
                            (v) Limitation based on maximum allowable 
                        number of bonds.--
                                    (I) In general.--The State 
                                coordinator shall not examine under the 
                                agreement described in this subsection 
                                more than the number of bond records 
                                that is reasonably expected to result 
                                in the referral to the States of a 
                                number of such bonds that is not 
                                greater than such maximum allowable 
                                number.
                                    (II) Maximum allowable number of 
                                specified unredeemed savings bonds.--
                                For purposes of this clause, the 
                                maximum allowable number of specified 
                                unredeemed savings bonds is a number of 
                                such bonds such that the sum of--
                                            (aa) the product of--

                                                    (AA) the number of 
                                                bonds, and

                                                    (BB) $30, and

                                            (bb) the estimated amounts 
                                        to be paid by the Secretary to 
                                        the State coordinator under 
                                        paragraph (3),
                                equals $300,000,000.
                    (D) Searchable database.--After the Secretary 
                concurs with the information compiled under 
                subparagraph (B), the State coordinator shall establish 
                a searchable database which includes such information 
                specified by the Secretary with respect to each bond 
                and the State to which each bond is recommended to be 
                referred for processing. The State coordinator shall 
                update the information contained in such database 
                (including information indicating which bonds have been 
                redeemed) in such manner as the Secretary may provide.
            (3) Payment of funds.--The cooperative agreement entered 
        into under this subsection shall specify that the Secretary 
        shall pay to the State coordinator, from the funds appropriated 
        for the demonstration program, an amount equal to the 
        reasonable costs of carrying out the State coordinator's duties 
        under the agreement.
    (d) Confidentiality.--
            (1) Return information.--Except as provided in paragraph 
        (2), for purposes of section 6103 of the Internal Revenue Code 
        of 1986, records provided to the State coordinator or to a 
        State by the Secretary under this section shall be treated as 
        return information as defined in section 6103(b)(2) of such 
        Code.
            (2) Exception.--Notwithstanding section 6103(b)(2)(A) of 
        the Internal Revenue Code of 1986, for purposes of this 
        paragraph, the name and address of the holder of a bond and 
        such other information as may be specified by the Secretary 
        shall not be treated as return information when provided to the 
        State coordinator or to a State by the Secretary.
    (e) Definitions.--For purposes of this section--
            (1) Registered address.--The term ``registered address'' 
        means the address of the bond owner inscribed on the face of 
        the bond or maintained by the Secretary at the time of final 
        maturity of such bond.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury or the Secretary's delegate.
            (3) Specified unredeemed savings bond.--The term 
        ``specified unredeemed savings bond'' means each outstanding 
        United States savings bond, except that such bond shall not be 
        treated as a specified unredeemed savings bond until the later 
        of--
                    (A) the date that is 5 years after the date of the 
                maturity of such bond; or
                    (B) the date of the enactment of this Act.
            (4) State.--The term ``State'' includes the District of 
        Columbia and any territory or possession of the United States 
        that maintains a program for the administration of unclaimed 
        property.
            (5) State coordinator.--The term ``State coordinator'' 
        means the eligible entity which is determined by the Secretary, 
        after consultation with the States, to be best suited to carry 
        out the activities described in subsection (c). For purposes of 
        the preceding sentence, the term ``eligible entity'' means any 
        State or the National Association of Unclaimed Property 
        Administrators.

SEC. 4. WITHHOLDING OF TAX ON UNCLAIMED INTEREST.

    (a) In General.--The Secretary of the Treasury shall deduct and 
withhold from the proceeds of any matured outstanding United States 
savings bond, on the later of the date of maturity of such bond or the 
date of the enactment of this Act, a tax in an amount equal to the 
applicable percentage of the amount which, if such bond were redeemed, 
would constitute interest.
    (b) Applicable Percentage.--For purposes of this section, the 
applicable percentage is the 2nd highest rate of individual income tax 
under section 1(c) of the Internal Revenue Code of 1986.
    (c) Treatment in Same Manner as Wage Withholding.--Except as 
otherwise provided by the Secretary of the Treasury, for purposes of 
sections 3403 and 3404 of the Internal Revenue Code of 1986 and so much 
of subtitle F of such Code (except section 7205) as relates to chapter 
24 of such Code, payments to any person as a result of the redemption 
of any bond subject to withholding under this subsection shall be 
treated, at the time of maturation of such bond, as if such payments 
were wages paid by an employer to an employee.
    (d) Inclusion in Income of Bondholder.--Effective on the date of 
maturity of any matured outstanding United States savings bond, the 
amount which, if such bond were redeemed, would constitute interest 
shall be treated as gross income of the holder of such bond for 
purposes of section 61 of the Internal Revenue Code of 1986.
    (e) Filing of Amended Returns.--
            (1) In general.--Upon redemption of any matured outstanding 
        United States savings bond, the bondholder may file an amended 
        Federal income tax return for the taxable year of the maturity 
        of such bond in order to claim a credit for the amount withheld 
        in such year under subsection (a), provided that such amended 
        return includes the inclusion in the income of the bondholder 
        of the amounts specified in subsection (d).
            (2) Exception to statute of limitations.--An amended return 
        filed by reason of paragraph (1) shall be considered a return 
        for purposes of sections 6501(a) and 6511(a) of the Internal 
        Revenue Code of 1986.
    (f) Conforming Amendment.--Subsection (b) of section 1324 of title 
31, United States Code, is amended--
            (1) by striking ``and'' at the end of paragraph (1);
            (2) by striking the period at the end of paragraph (2) and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(3) refunds due from the credit provision of section 
        4(e)(1) of the Unclaimed Savings Bond Act of 2009.''.
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