Illinois Considering Data Privacy Law

Beginning with the EU General Data Protection Regulation (GDPR) in 2018 and continuing with the California Consumer Privacy Act (CCPA) in 2020, governments have become increasingly active in regulating how businesses use personal information of consumers. Legislation is currently pending before the Illinois General Assembly that would adopt a similar data protection framework for Illinois residents. Businesses that collect, store, or use personal information of Illinois residents should be aware that they may soon have new obligations to respond to consumer requests, provide disclosures, and comply with other requirements.

The Illinois “Data Transparency and Privacy Act,” proposed to become effective on July 1, 2021, would apply to any “business” that processes “personal information or deidentified information.”  A “business” would encompass any for-profit, legal entity that does business in Illinois and that collects or discloses the personal information of more than 50,000 Illinois residents or derives 50% or more of its annual revenues from selling personal information. Notably, this law would not apply to not-for-profit corporations or third parties that host or manage websites or information on behalf of the owner. The Data Transparency and Privacy Act (“DTPA”), adopts a broad definition of “personal information” that includes information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household. This would cover obvious information, like names, addresses, and Social Security numbers, but also less obvious information, such as IP addresses, geolocation data, browsing history, and even thermal or olfactory information. Under this definition, virtually any information about a person or his or her activities would be covered. However, the DTPA grants exceptions for information lawfully obtained from government sources and information protected under the Gramm-Leach-Bliley Act, HIPAA and the Fair Credit Reporting Act.

Businesses subject to the DTPA would be required to comply with consumer requests related to their personal information, to provide disclosures about personal information, and to allow consumers to “opt-out” of the sale or use of their information.  Under the DPTA, consumers would have the right to review their personal information collected by a business, to request correction of inaccurate information, to opt out of the sale or disclosure of the information, and to request deletion of the information. At the point of collecting personal information, the business must provide certain disclosures to the consumer, including a description of the categories of personal information the business collects, how the business may use the information, and how the consumer can exercise DTPA rights to the information. Any collection or use of the information beyond what was described to the consumer is prohibited, unless the business obtains express consent from the consumer.

The DTPA requires businesses to set up a process for handling, authenticating, and responding to consumer requests. Businesses must post a notice on their webpages describing where requests may be submitted, which must include a street address for receiving notices by mail. Any business receiving a request must respond promptly, usually within 45 days, and free of charge to the consumer. Once a business receives a request form a consumer to “opt out” of the sale or disclosure of the consumer’s information, the business must immediately cease selling or disclosing the information.

In addition to consumer rights to personal information, the DTPA requires businesses to implement and maintain reasonable security measures to protect the information from unauthorized use, disclosure, or access. What is reasonable will depend upon the sensitivity of the information; the nature, size, and scope of the business; and technical limitations. Before each processing activity involving personal information to weigh the benefits of processing the information with the potential risks to the consumer. If the risk of harm to the consumer is substantial, then the business would be precluded from processing the information without the consumer’s express consent.

For remedies, the DTPA proposes a private right of action by the consumer for any unauthorized access, theft, or disclosure of personal information if the business violates its duty to secure the personal information. The Attorney General will also have enforcement powers, with the authority to enforce violations under the Consumer Fraud and Deceptive Business Practices Act.

We will continue to monitor the DTPA for changes to the law as it proceeds through the legislative process. If the DTPA becomes law, regulations will likely be issued providing additional details about the law’s provisions and how it will be enforced. Businesses that could be subject to the DTPA should be planning now to update policies, design architecture, and train employees to comply with it when it is intended to come into force in 2021. 

This article is provided for general information and should not be relied upon as legal advice for a specific situation. If you are in need of specific advice or legal representation, please do not hesitate to contact us.

©2020 Bea & VandenBerk

Accepting Donations of Crypto Currency

More frequently, nonprofit development officers and fundraisers are asked by prospective donors about whether their organization will accept donations of “Crypto Currency”, or other types of virtual currency.[i] The most commonly known form of Crypto Currency is Bitcoin, however, there are many other types of Crypto Currency that can be bought, traded, and sold.

While nonprofit organizations are accustomed to handling donations of cash, real estate, or other real property, donations of Crypto Currency represent a new form of giving that many nonprofits are unwilling to discuss with donors about—let alone accept that type of donation. While many smaller to medium sized nonprofits may have yet to receive inquiries regarding donations of Crypto Currency, many large nonprofits, especially community foundations, have had discussions with donors about Crypto Currency and have accepted such donations. Whether or not your nonprofit plans to accept Crypto Currency, it’s important to be able to talk with prospective donors about Crypto Currency and the related IRS rules and regulations when dealing with it in regard to donations.

It is important to realize that the IRS treats Crypto Currency as non-cash asset similar to stock, which means that a nonprofit will need to report it as such to the IRS. When a nonprofit accepts a donation of Crypto Currency, it must acknowledge the donation to the donor. If the donation is more than $250, then the nonprofit must provide the donor with a contemporaneous written acknowledgement of the donation. If the donation is over $5,000, the donor may ask the nonprofit to sign Part IV of Form 8283—Donee Acknowledgement. By signing the Form 8283, the nonprofit acknowledges the receipt of the Crypto-Currency as described and dated on Form 8283 and understands the reporting requirements imposed by Form 8283. Please note: by signing Form 8283, the organization is not attesting to the Crypto Currency’s value.

As stated earlier, nonprofits that receive donated Crypto Currency should handle it as a non-cash contribution. As such, it should be reported on the nonprofit’s Form 990 as well as the Schedule M, if applicable. If the organization decides to sell, exchange, or liquidate a portion or the entire Crypto Currency donation within three years after the date of receiving it, the organization must then file the Form 8282, “Donee Information Return.”  

One final consideration is that if a nonprofit plans to accept Crypto Currency, it must have the necessary technology in-place to accept, hold, and then eventually sell, exchange, or liquidate the donated Crypto Currency.

[i] The IRS defines virtual currency as a representation of value “that functions as a unit of account, store of value, and a medium of exchange.” Crypto currency is treated by the IRS as a type of virtual currency that uses cryptography to secure transfers recorded digitally on a ledger. For the purposes of this article, crypto currency will be used to refer to both virtual and crypto currency.

This article is provided for general information and should not be relied upon as legal advice for a specific situation. If you are in need of specific advice or legal representation, please do not hesitate to contact us.

©2020 Bea & VandenBerk

COVID-19: Family and Medical Leave Legislation

On Wednesday, March 18th, the President signed into law the Families First Coronavirus Response Act (FFCR). The FFCR applies to all employers with 500 or fewer employees and contains three primary sections related to employers: Emergency Family and Medical Leave Act Expansion; Emergency Paid Sick Leave Act; and Tax Credits for Paid Sick and Paid Family and Medical Leave. The FFCR is slated to take effect April 2, 2020 and will expire on December 31, 2020.

The FFCR applies to almost all private employers with fewer than 500 employees. Exemptions are for health care providers, emergency responders, and businesses with fewer than 50 employees—if the employer can establish that the requirements would “jeopardize the viability of the business”. Guidelines regarding what “jeopardizes the viability of the business” means have not been issued.

Emergency Family and Medical Leave Act

Under the Emergency Family and Medical Leave Act, only employees who have worked for an employer for 30 calendar days are eligible to take leave for a “qualifying need due to a public health emergency.” A qualifying need is defined as an employee who is unable to work because the employee’s child, under the age of 18, is at home due to a school or day care closure or the unavailability of other child care providers because of a COVID-19 emergency. Employees may take up to 12 weeks of leave, with 10 of those weeks  paid as an extra benefit under the Act. The employer is not required to provide paid leave for the first 10 days (2 work weeks) of leave, but employees have the option to use other paid leave benefits to cover this period.  After the first 10 days, the paid leave should be calculated at two-thirds of the employee’s regular pay and capped at $200 a day and $10,000 in total.

Emergency Paid Sick Leave Act

The Emergency Paid Sick Leave Act requires paid sick leave when an employee cannot work due to one of the following:

  • The employee is under a federal, state, or local quarantine or isolation order because of COVID-19;
  • The employee is advised by a health care provider to self-quarantine because of COVID-19;
  • The employee has symptoms of COVID-19 and is seeking a medical diagnosis;
  • The employee is caring for an individual who meets one of the first two conditions, above;
  • The employee is caring for a son or daughter whose school or child care center is closed because of COVID-19 precautions, or whose child care provider is unavailable for the same reason; or
  • “The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.”

The employer must provide paid leave to employees immediately, even if those employees were just hired. Full-time employees are eligible to take 80 hours of paid leave. The calculation for part-time employees should be based on the average number of hours worked over a two-week period.
For reasons 1-3 above, the employee should be paid at the employee’s regular rate of pay capped at $511 a day and $5,110 total. For reasons 4-6 above, the employee should be paid at the employee’s regular rate of pay capped at $200 and $2,000 total.

If an employer offers other types of paid leave, the employer can choose to have the employee use the federal, state, or local “statutory” paid leave first. But an employer cannot make the employee use the employer’s other non-statutory paid leave first.

Understand: an employer may not terminate, discipline, or discriminate against an employee who takes leave under this provision. As well, this law does not preempt any local, state, or federal laws regarding paid leave laws or the employer’s own paid leave policies.

Tax Credits for Paid Sick and Paid Family

Employers are eligible to receive tax credit against the employer’s Social Security tax liability equal to 100% of the sick leave amounts paid by the employer, subject to the limits described above. In addition, certain employer paid health premiums will increase the credit.    

Contact our office if you have questions about this or other legal matters.  We remain open to serve our clients during this crisis.  

This article is provided for general information and should not be relied upon as legal advice for a specific situation. If you are in need of specific advice or legal representation, please do not hesitate to contact us.

©2020 Bea & VandenBerk

Illinois Employment Law for 2020

2019 was a busy year for the Illinois legislature with respect to state employment law changes. Below is a summary of the most important pieces of legislation affecting employers in 2020:

Amendments to the Equal Pay Act of 2003

Made effective on September 29, 2019, the intent of the legislation is to address pay disparity between men and women. As amended, the Equal Pay Act prevents employers from:

  • Requesting or requiring that an applicant disclose wage or salary history as a condition of employment;
  • Requesting or requiring a wage or salary history as a condition of being considered for employment, as a condition of being interviewed, as a condition of an offer of employment, or as a condition of an offer of employment or an offer of compensation;
  • Screening job applicants based on their current or prior wages or salary histories, including benefits or other compensation, by requiring that the wage or salary history of an applicant satisfy minimum or maximum criteria; or   
  • Seeking the wage or salary history, including benefits or other compensation, of a job applicant from any current or former employer.
Continue reading “Illinois Employment Law for 2020”

IRS Grants The Salt Lake Tribune Tax-Exempt Status

In an interesting new development, the IRS granted 501(c)(3) tax-exempt status to a major daily newspaper.  On November 3, 2019, the Salt Lake Tribune announced that it had incorporated as a non-profit corporation, re-structured its operations, and obtained IRS recognition of its 501(c)(3) status.  Tax-exempt practitioners have speculated for years that a daily newspaper could, in theory, qualify for tax-exempt status under Section 501(c)(3).  However, the Salt Lake Tribune’s announcement was the first time that a major daily newspaper is known to have succeeded in obtaining recognition of 501(c)(3) tax-exempt status. Granting tax-exempt status to this daily newspaper means that the IRS has now officially recognized news-reporting as an exempt purpose. 

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Where to Incorporate?

An early decision founders of new non-profit organizations must make is where to incorporate. A U.S. charitable, religious, or educational organization has its choice of incorporating in any of the 50 states as well as the District of Columbia. With this many choices, founders may ask if it is advantageous to incorporate in one state over another. When it comes to for-profit companies, it is common for them to incorporate or organize in Delaware due to tax or regulatory issues. We recently ran across an article advising non-profits to incorporate in Delaware. We thought it would be helpful to address if non-profits derive any advantage from incorporating in Delaware or another state in particular.

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States Rush to Pass Economic Nexus Legislation

Following the Supreme Court’s June 2018 decision in South Dakota v. Wayfair, states have acted quickly to enact economic nexus laws to require remote sellers to pay sales tax.  “Economic nexus” is the power of a state to compel remote sellers to pay sales tax on their transactions with purchasers in the state.  As of October 1, 2019, economic nexus laws have gone into effect in all states with a statewide sales tax, except Missouri and Florida. States are using economic nexus laws to compel remote sellers, or sellers with no physical presence in the state, to collect sales tax if the seller’s economic activity in the state reaches a pre-determined threshold. Previous laws required the seller to have a physical presence within the state, such as a brick-and-mortar store, office, or warehouse.

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New Proposed Fair Labor Standards Act Overtime Rules

The Department of Labor (DOL) finalized its proposed rules for overtime eligibility. As some may recall, the DOL attempted to issue new overtime rules back in 2015, but those overtime rules were enjoined by a federal district court in 2016. Below is a summary of the final 2019 overtime rules:

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Nonprofits and Taxable Parking Expenses

Navigating the Possibility of Incurring UBTI

Nonprofit organizations that provide employee parking benefits may be surprised to learn that they may be subject to incur unrelated business taxable income (UBTI). In addition, organizations with no UBTI may now be required to file form 990-T.   

The Tax Cuts and Jobs Act (Act) amended Section 274 of the Internal Revenue Code (IRC) to disallow for-profit employers from deducting certain expenses related to transportation fringe benefits provided to their employees. The Act added IRC Section 512(a)(7) to what constitutes UBTI for nonprofits and other tax-exempt entities. The Act states that tax-exempt entities are required to increase their UBTI by expenses related to transportation fringe benefits provided to their employees. The transportation fringe benefits subject to this tax include expenses associated with:

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Receipting Donations

Don’t be complacent.

Each year tax-exempt organizations in the United States receive hundreds of millions of dollars in donations.  Donors contributing to 501(c)(3) organizations are able to deduct their own contributions from their taxes, subject to IRS limitations.  Recently, a higher standard deduction has been put in place through the Tax Cuts and Jobs Act.  This will likely diminish the number of taxpayers and donors who itemize their deductions, making it tempting for charities to assume that receipting donations is no longer important.  However, charities should continue to exercise care in receipting donations for the benefit of the donor. Continue reading “Receipting Donations”