In a late-stage amendment to Senate Bill 1336, the Arizona legislature repealed several long-standing exclusions from the definition of “property” in the Arizona unclaimed property law. Although the legislation does not expressly impose new escheatment requirements, the repeal raises questions about the treatment of property types that were previously exempt from escheatment, particularly gift certificates, gift cards, stored-value cards, and similar instruments.
Brief Overview of Arizona SB 1336
SB 1336 was introduced in the Arizona Senate on January 26, 2026. It originally had no connection to the state’s unclaimed property law; the bill only impacted the Arizona State Land Department. When Governor Katie Hobbs signed an amended version of SB 1336 into law on June 22, 2026, it still largely addressed matters related to the State Land Department. But crucially, SB 1336 as signed contains a provision that dramatically alters the Revised Arizona Unclaimed Property Act. The provision in question, which is contained in Section 23 of the bill and was inserted seemingly out of nowhere in a House floor amendment late in the legislative process, amended the definition of “property” in the act to repeal the part of the definition that excludes certain property types.
In particular, the excluded property types are:
- “De minimis property,” which is defined as “any account balances of business associations of $50 or less that is payable to another business association.” Although excluded from the definition of property, this definition of “de minimis property” itself was not impacted by SB 1336.
- Property of a person that is “maintaining a current business relationship with the holder.”
- Monies collected pursuant to Arizona Revised Statutes Section 46-441, which is the state’s central support payment clearinghouse for spousal and child support payments.
- Property that is “referred to or evidenced by gift certificates, electronic gift cards, nonrefundable tickets, [and] certificates evidencing property denominated in value other than a currency, including prepaid phone cards, frequent flyer miles, stored value cards and merchandise points.”
As a result of SB 1336’s repeal of these exclusions, these property types are no longer expressly exempt from escheatment in Arizona, meaning that they are now arguably escheatable. However, SB 1336 did not add new provisions to the act that purport to require the escheat of these property types, which we believe the state must do in order to validly require escheatment, at least for property types such as gift certificates, gift cards, merchandise points, and similar instruments that are not redeemable for cash. On the other hand, property types that are redeemable for cash (including amounts owed to business associations) that have been removed from the statutory list of exemptions are now likely escheatable as a result of SB 1336 under the act’s existing miscellaneous catch-all provision.
The effective date of SB 1336 is September 12, 2026, which is after the June 30, 2026 cut-off date for considering property presumed abandoned for purposes of 2026 reporting. Thus, the provisions will not impact the fall 2026 reporting process.
Motive for and Impact of This Repeal?
The motive for SB 1336’s repeal of the exclusions is unclear. As amended, SB 1336 does not make any other changes to the act, and the summary of the floor amendment that included the repeal makes no mention of the repeal or unclaimed property at all. It is also notable that the original version of the floor amendment filed by Rep. Griffin did not include this repeal; rather, it simply reorganized the definition of “property” such that the exclusions were contained in subsection (c) of the definition rather than in subsection (b). There is no explanation in the legislative history for why the original version of the amendment was replaced with the current version repealing the provision.
A number of companies have structured their gift card (or other similar) programs around Arizona’s now-repealed exemption by forming card-issuing entities under Arizona law or redomesticating existing entities to Arizona. Indeed, the state presented several benefits for domestic entities by excluding not just gift cards and gift certificates but also nonrefundable tickets, stored-value cards, and merchandise points, among other property types. Companies should now strongly explore redomesticating the issuer to a state that has an applicable exemption from escheatment for the property types in question.
Even though the act does not expressly require the escheat of non-cash obligations such as gift cards and gift certificates in the aftermath of SB 1336, the fact that the express exemption has been removed from the act increases the risk of escheatment and calls into question a holder’s ability to rely on the non-escheatable status of its instruments. Given the numerous other states that have favorable laws in this regard, it would be logical to move the issuing entity from Arizona as a result of SB 1336.
Is a Legislative Fix in the Works?
It has recently been reported (but not verified) that the governor’s office has issued a statement that repealing the exemptions in SB 1336 was an error, and that the office is working on a solution for correcting this error. In particular, the governor’s office is reported to have said that it is committed to reversing this repeal through a technical correction in the 2027 legislative session. There is no guarantee, however, that a legislative fix will be made (and Arizona has a gubernatorial election in November).
Breaking News – Department of Revenue Policy Ruling
The Arizona Department of Revenue (DOR) released a substantive policy ruling (UPR 26-001) on July 31, 2026 providing its interpretation of the changes made by Section 23 of SB 1336, which the ruling refers to as a “drafting anomaly.” The DOR analyzed the effectiveness of the statutory changes to the act through the lens of the state constitutional requirement that an act “must embrace but one subject, and that subject must be expressed in the act’s title.” In sum, using that analysis, the DOR has asserted that Section 23’s revision to the definition of “property” does not “enlarg[e] the categories of property subject to” the act. “Property that was not subject to [the act] before the effective date of [SB 1336] does not become subject to it by reason of that act.” (emphasis added).
Accordingly, the DOR concludes by advising holders that:
- Property from the categories included in the deleted definition should not be reported to the state, and the DOR will not accept such property.
- The DOR will not include these categories within the scope of examinations.
- A holder may take a reporting position consistent with this ruling and file a written express notice of a dispute about the property, which implicates the running of the statute of limitations provision.
- A holder that reasonably relies on the ruling is entitled to abatement of interest and penalties.
- A holder seeking a determination applying the ruling may request a private letter ruling or a holder information ruling from the DOR.
- Nothing in the ruling discharges, limits, or affects an obligation that the holder owes to any customer or to another person under contract or other law, or any right of an owner to demand payment or performance from the holder.
Companies should weigh the protection afforded by UPR 26-001 against residual risks, including the Arizona gubernatorial election in November 2026, which could affect both the department’s administrative posture and the likelihood of legislative action. For companies with significant Arizona-domiciled programs, the ruling meaningfully mitigates near-term escheatment risk, but redomestication to a state with a statutory exemption remains the most conservative approach for those seeking maximum certainty.
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