IRAs For All? Mandatory Retirement Accounts Part Of $3.5 Trillion Budget Plan

Do Americans need a nudge from their employers—and a handout from Washington—to get them to save for retirement? That’s the premise behind draft retirement language in the the House Ways and Means Committee mark up of the $3.5 trillion budget reconciliation package.

Under the proposal, starting in 2023, employers with five or more employees would have to offer a retirement plan and automatically enroll employees, diverting 6% of their pay to a retirement account. An automatic escalation clause would increase the automatic contribution to 10% of pay by year five. The default plan would be a Roth IRA invested in a target-date fund, a mix of investments based on your expected retirement year.

For employers, it’s a mandate. They would have to offer the plans. Employees would be able to opt out.

“We’re not trying to put an undue burden on the small employer. We’re trying to help the employee who works for a small employer be a lifetime saver,” Ways and Means chairman Richard Neal (D-Mass.) said at the hearings.

The retirement section of the Build Back Better Act is expected to dramatically expand retirement savings. It would create 62 million new retirement savers and would add an additional $7 trillion in retirement savings over a 10-year period, according to the Employee Benefit Research Institute. Nearly all—98%—of these new savers would be folks who earn less than $100,000 per year.

“We know that people are far more likely to save for retirement if they have access to a retirement plan at work (12 times more likely), but there’s a real access problem – small businesses just never quite seem to get around to setting these up,” says Nevin Adams, chief content officer for the American Retirement Association.

To offset administrative costs for employers, the proposal includes a tax credit to employers for setting up the plans. And a tax penalty of up to $900 per employee per year if they don’t comply.

“Main Street now faces an onerous new mandate from Washington and a tax penalty if you don’t comply. Small business owners know this is yet another, or feels like another, war on work,” Rep. Kevin Brady (R-Texas), the top Republican on the Ways and Means Committee said at the hearings.

The small business lobby is crying foul. The National Federation of Independent Business (NFIB) says the tax credits provided to employers for setting up plans are temporary and limited, and that the cost of compliance amounts to a “hidden tax.”

There is evidence that auto-IRAs work for both employers and employees. Rep. Earl Blumenauer of Oregon noted how a similar state-mandated auto-IRA program mandated for all employers in his state has generated $120 million of savings “in our little state” so far. And a Pew survey found that 73% of employers were either satisfied or neutral about the Oregon program.

Hand-in-hand with the auto-IRA provision is a change to the Saver’s Credit. Lower-income Americans, even those who don’t owe taxes, would get a newfangled Saver’s Credit—a government match on their savings—$100 to $500 per person per year from the U.S. Treasury paid into their individual retirement account. The $47 billion cost of the retirement proposal is evenly split between the Saver’s Credit provision and the auto-IRA provision.

This auto-IRA proposal is different from the one that is in pending bipartisan retirement legislation known as SECURE 2.0, which would not mandate that employers offer these accounts but rather make them voluntary. SECURE 2.0 contains other important provisions, such as allowing employers to provide matching money to retirement accounts when workers pay off student loan debt.

Representative Neal said that SECURE 2.0 is “getting over the goal line this year” too. Some of the revenue raisers for the Build Back Better Act under discussion relate to retirement, and Representative Neal said that they could be released this weekend.

Follow me on Twitter or LinkedIn.

I cover personal finance, with a focus on retirement planning, trusts and estates strategies, and taxwise charitable giving. I’ve written for Forbes since 1997. Follow me on Twitter: @ashleaebeling and contact me by email: ashleaebeling — at — gmail — dot — com

Source: IRAs For All? Mandatory Retirement Accounts Part Of $3.5 Trillion Budget Plan

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3 Issues To Consider Before You Introduce Recurring Revenue Streams Into Your Business

All business owners understand and appreciate the importance of revenue to the success of their businesses. At the outset, revenue is critical to the ability of a business to pay its expenses and satisfy any payroll obligations. Investors will examine the history of revenue of a business as a benchmark to evaluate the future profitability and potential growth of the company. Revenue is also an important criteria that lenders use when assessing whether to extend credit to a business  the lifeblood of every business.

With revenue being so important to the success of a business, it is often a surprise how little time most business owners spend on exploring how their businesses can meet  if not exceed  their revenue-generating potential.

The reality is most business owners are so focused on the day-to-day realities of running their businesses that they simply do not have the time to consider if their businesses are generating as much income as they should or if there are other opportunities to increase revenue-generating potential.

Related: 17 Passive Income Ideas for Increasing Your Cash Flow

What is a recurring revenue stream?

A recurring revenue stream is simply a way of conducting business that results in customers paying the business on a regular basis in exchange for some value. This value can either be the right to receive goods or services from a business or the right to access or use the property of the business for a given time.

This is very different from non-recurring revenue-generation business models, such as the sale of a product or the provision of a service, where a business has no expectation that a current customer will be a customer in the future. Recurring revenue streams enable business owners to better predict how much revenue their businesses will generate in the future. Savvy business owners use these recurring revenue streams to attract investors, obtain credit and grow their companies.

It is no wonder that the foundation of many successful modern businesses today often relies on recurring revenue streams.

Related: Why You Should Use a Subscription Business Model

What are some examples of recurring revenue streams?

You may be intimidated by the idea of a recurring revenue stream. You have no reason to be: Recurring-revenue business models are all around us. Here are three common examples of recurring revenue streams that you may be familiar with and ought to consider implementing in your business.

  1. Renting or leasing. If you have ever leased a car or rented a home, you are familiar with this business model. Leasing is a form of generating revenue where a business collects money from a customer in exchange for giving a customer the right to use a physical asset for a specified time.
  2. Licensing. Do you pay for any online services? Do you use any form of social media? Your relationship with those online services is often governed by a license agreement, which sets out terms for how intellectual property of one party can be used by the other. If one party is required to pay for the rights to use the intellectual property of the other party, those payments are often calculated based on how often that customer uses that intellectual property or on the amount of money the customer generates using the intellectual property of the business.
  3. Subscription. This is the model you are most likely familiar with. Whether it be your account to the latest video-streaming platform, your fresh coffee subscription or even your subscription to a pizza service, subscription-based business models are everywhere. The success of most subscription-based business models relies on providing ongoing value to customers in exchange for recurring payments for as long as possible.

What to ask before integrating a recurring revenue stream

While introducing a new revenue stream for your business is certainly attractive, recognize that not every recurring-revenue business model is the same. The reality is that each type of recurring revenue stream needs to be tailored to the capabilities of each business and the needs of each customer. Here are some questions to ask when considering the opportunities to integrate a recurring revenue stream into your business:

What value from your business are your customers willing to pay for on a regular basis? What price will customers pay for that value on a regular basis? What changes in your business operations need to happen to make these revenue streams a reality?

Related: 3 Simple But Effective Strategies to Create Consistent Income Online

Don’t go it alone

While I hope this article illustrates some of the benefits of integrating recurring revenue streams into your business, I must emphasize that this is simply an introduction to the concept. Don’t underestimate the amount of time, money and energy that may be required to create a new revenue stream for your business.

I would encourage you to find lawyers, accountants and other advisors to guide both your assessment of the suitability of a recurring-revenue business model for your business and the implementation of your strategic decisions. After all, a little time and energy invested in preparation often pays dividends in the long term.

Romesh Hettiarachchi

By: Romesh Hettiarachchi  – Entrepreneur Leadership Network Contributor

Source: 3 Issues to Consider Before You Introduce Recurring Revenue Streams Into Your Business

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Crypto Investors Get Ready for More Taxes But Clearer Rules

Sure, you might have to actually pay U.S. taxes on those crypto trades. But at least it will be easier to figure out how much you owe.

A new push by Congress to require crypto brokers to report transactions to the Internal Revenue Service could create some unwelcome tax bills but could clarify rules for traders and users of Bitcoin and other digital tokens, potentially strengthening the system in the long run, people in the industry say.

The new rules — a last-minute addition to the $550 billion bipartisan infrastructure package now being considered by the U.S. Senate — would also force businesses to disclose trades of digital assets of more than $10,000. The provisions are designed to raise $28 billion.

The measures add to increased scrutiny the IRS has recently applied to traders of Bitcoin, Ethereum and other digital assets. The agency has promised it will issue new rules that clarify how those virtual currencies should be taxed.

People who trade digital currencies must pay income taxes on any gains, even if some crypto investors have been ignoring their tax obligations. But even for those who want to follow the law, it can be difficult to keep track of what’s owed.

Filing taxes on crypto trades can create huge headaches, especially for those who conduct multiple transactions each year. While traditional stock brokerages are already required to send detailed tax forms to clients, crypto exchanges aren’t. Even if firms wanted to help their clients file taxes, it’s not always clear how to do that under the current regulations.

In addition, tax obligations can pop up in surprising places. People who use digital currencies to pay for things — like, say, a Tesla, or a pizza — are supposed to pay taxes on any increase in value of the crypto they spend. It’s a key difference between using digital “currencies” and actual, fiat currencies such as the U.S. dollar to conduct commerce.

Andrew Johnson, a project manager at a large national bank, has invested tens of thousands in crypto and uses a dedicated service to figure out what he owes in taxes. He’s been using CoinTracker, which he learned about though a YouTube channel that he trusts.

“Most would benefit from a tracking service to help with taxes,” he said. “For me, I decided it was worth the cost to not have to manually track all the trades I did — which could take hours or days.”

Read more from Bloomberg Opinion: How Can I Lower My Taxes on Bitcoin?

Cryptocurrency exchanges and others in the industry have raised concerns that the U.S. Senate is rushing the rules into effect without consulting them first.

Some wondered whether the new rules and regulatory attention would encourage mainstream investors to join the space — or hurt the appeal of cryptocurrencies by killing its anything-goes ethos.

“Some portion of crypto investors may start to have second thoughts about the tax consequences,” said Michael Bailey, director of research at FBB Capital Partners. “It’s almost like crypto is a really fun party, but it’s getting late and a few people are starting to look at their watches as they think about the next morning.”

For years, the IRS has been warning taxpayers to report cryptocurrency transactions on their tax returns. More recently, the agency has made clear that fighting tax evasion through digital currencies is a top priority.

The IRS has started collecting vast amounts of data on blockchain transactions, has subpoenaed crypto exchanges and worked on coordinating enforcement with foreign governments. Last year, the IRS added a yes-or-no question to the front page of the 1040 income tax form asking whether filers had sold or exchanged virtual currencies.

The jurisdiction of U.S. law enforcement only reaches so far, and crypto traders who prize secrecy could flee to offshore exchanges, or take other measures to avoid being spotted by the IRS. However, the U.S. has already shown it can crack down on foreign tax evasion by, for example, forcing banks in Switzerland and elsewhere to divulge details on American clients.

Even if parts of the crypto universe remain hidden, it may be difficult to move those assets onshore and turn them into legitimate wealth.

“If a U.S. taxpayer is into crypto for the ability to underreport income from sales or transfers, chances are someone in a chain somewhere may have to disclose it,” said Julio Jimenez, an attorney who is principal in the tax services group at Marks Paneth LLP.

All this isn’t necessarily a bad thing for law-abiding investors in digital assets if they end up with clearer rules and easier-to-understand annual statements from crypto firms.

“I think it will have a positive effect on the industry,” said Brett Cotler, an attorney at Seward and Kissel LLP in New York who specializes in blockchain and cryptocurrency. While exchanges and fintech firms that deal in digital currencies may have to spend money upgrading reporting and compliance systems, it will improve customer service, he said.

Johnson, the crypto trader, said he thinks the new rules will help legitimize the crypto ecosystem and foster international growth.

“While at its heart, crypto assets have been a means of moving value outside of government-controlled rails, I still understand the need for regulation in the crypto space in order for wider adoption to take place,” he said.

— With assistance by Natasha Abellard, and Laura Davison

By ,  , and

Source: Bitcoin (BTC): What Is Impact of Government Plan to Tax Crypto Trades? – Bloomberg

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The IRS Bottleneck Most Taxpayers Have Never Heard Of

The one-day deadline for taxpayers to approve authorization requests only applies to authorizations for multiple representatives. All representatives must be approved on the same day or later approvals will overwrite prior approvals. Currently there is no deadline for taxpayers to approve authorization requests.

Bottlenecks are nothing new to the Internal Revenue Service. IRS issues with mail processing, return processing, and issuing refunds have been well publicized. Nevertheless, one of the most common IRS bottlenecks is one that many taxpayers, including many members of Congress, are unaware of.

IRS notices about return adjustments, balances due, delays in refund processing, and a host of other issues continued to be sent automatically during the Covid-19 pandemic and continue to be issued after what most tax practitioners agree was the worst income tax filing season ever (even worse than filing season 2020).

Taxpayers who choose to pay a professional to assist with an IRS notice must provide proper authorization, typically using either Form 2848, Power of Attorney, or Form 8821, Tax Information Authorization. The representative then files the signed 2848 or 8821 with the Centralized Authorization File (CAF) unit either by mailing it, faxing it, or (more recently) via online submission. Once CAF approval has been granted, the tax practitioner can then represent the taxpayer, but getting CAF approval has become an increasingly fraught process.

The Internal Revenue Manual (or IRM) specifies that “receipts” [of authorization requests] are processed within five business days. Nevertheless, over the last few years processing times of three to six weeks or even longer have become increasingly common. This January tax practitioners were given the ability to submit authorizations online. Online submission was greeted with enthusiasm because it also allowed for the use of electronic (as opposed to “wet”) signatures.

Online submission definitely made the process of getting a client’s signature and submitting the authorization form to the CAF unit much simpler, but because online submissions are processed in order along with mailed or faxed in submissions, uploading authorization forms has not been an expedient option for taxpayers needing immediate assistance.

Typically practitioners representing taxpayers with short deadlines call the Practitioner Priority Line (PPL) and fax the form to the answering representative. Because all faxed forms require a “wet” signature the electronic signature and online submission process has proved less than helpful except for non-urgent matters.

The IRS CAF units in Memphis and Ogden were completely shut down in March 2020 in response to the pandemic (as was a third unit that serves taxpayers located outside of the U.S.). Consequently, authorization processing (which was already slow) was brought to a standstill—and then it went into reverse. Although all three CAF units re-opened in July 2020, and although the IRS has added additional staff to help clear the backlog, the CAF units are still taking several weeks to process mailed or faxed submissions.

While there have been anecdotal reports of uploaded forms being processed in two weeks (as opposed to the six or more it sometimes takes for a mailed or faxed-in authorization), the IRS continues to state that the CAF units process all mailed, faxed, and uploaded forms on a first-in, first out basis.

John Sheeley, Enrolled Agent and owner of Tax Practice Pro, Inc. (which provides continuing education to tax practitioners), has recommended that the IRS stop issuing automatic notices and re-direct any available staff to the CAF units to assist with processing backlogged authorization requests (and then move those staff on to processing notice responses that have also been languishing, sometimes since mid-2020).

Additional improvements to the traditional CAF authorization process that have been recommended by many practitioners include notifying the practitioner via their e-Services account when an authorization form has been accepted for processing (similar to the acknowledgement received for electronically filed tax returns and that includes the date of acknowledgment and the taxpayer’s identification number) and again when the authorization has been processed.

These two additional notifications would allow tax practitioners to quickly determine if their authorization request got to the CAF unit and if it was approved. Currently practitioners must log into their e-services accounts and manually check to see if an authorization form has been processed (again, with no way of knowing if it was even received).

Tax practitioners would also like notification if the authorization request form is rejected and why so that any errors can be corrected. Currently forms submitted by mail, fax, or upload go into a black hole that requires practitioners to continue to check to see if the form has been accepted.

It is never clear whether a long delay is an actual delay in processing, if the form was lost, or if it was rejected. This is inefficient both for practitioners and the IRS. Practitioners who can’t wait for the authorizations to be accepted are often forced to call an already overburdened PPL only to be told the form was rejected and will have to be corrected and resubmitted.

On July 18, 2021 the IRS opened a practitioner portal that is supposed to make filing and obtaining authorizations easier. The new submission and approval system promises to greatly improve efficiency for practitioners whose clients have or can get an IRS online account. Tax practitioners can log into a special Tax Pro account to submit authorization requests for their clients who can then approve the request.

In general, the requests record in real-time to the CAF database. The practitioner is alerted to many issues (e.g., a CAF number mismatch) before the authorization is submitted. Once the request has been approved by the client, authorization approval should be displayed in the practitioner’s Tax Pro account within two business days. Marc Dombrowski, Enrolled Agent Owner of Tax Help Associates, a Buffalo, New York, firm that specializes in resolving tax issues had his first two submissions record in real time and the third in approximately 30 hours. That’s a huge improvement over the several weeks which had become the norm since at least 2020.

Of course, there is some fine print. Authorizations requested using the new portal are limited in scope (most notably they can only be used for individual accounts, not businesses and they can only authorize access back to tax year 2000). Additionally, while the practitioner is notified that an online request has not been approved, the unapproved request is not identified in any way (for example using the taxpayer’s name or TIN). While this may be a necessary security precaution it does pose problems for tax resolution specialists who often submit multiple authorization requests each day.

Processing the older authorization backlog may be even more important with the new portal now online. The IRS has always stressed to practitioners not to submit multiple copies of the same authorizations as it will delay CAF processing. Tax practitioners tend to be a methodical bunch and most will typically check to determine if a client authorization has been granted before attempting to upload an authorization using the new portal.

It would be extremely helpful (and would help to avoid duplicate submissions) if the information provided to practitioners reflects up-to-date CAF information. Dombrowski states that when it comes to the CAF process, “It’s simplicity is its perfection.” New submissions will reliably always overwrite older submissions. That means that the limited scope authorization requests submitted online using the new Tax Pro accounts will replace any full-scope authorizations (2848 or 8821) the IRS currently has on file, so practitioners should be mindful when using the portal for requests on existing clients.

Of course new submissions overwriting older submissions also means that full-scope authorizations submitted by mail, fax, or upload will overwrite limited scope authorizations if the full-scope authorizations are processed after an authorization submitted using the portal. Morris Armstrong, an Enrolled Agent who owns an independent tax practice in Cheshire, Connecticut, says “it is likely safer to request the 8821 [which allows a practitioner to obtain information but not to negotiate] and preserve the 2848, barring urgency to negotiate.”

Finally, client approval of an online authorization request must also be provided the same day as the request is made by the practitioner and, depending on the client, that is not always possible. Truthfully, many practitioners can resolve their clients’ issues if the client has an IRS online account and is willing to request the necessary transcripts and provide them to their practitioner.

Nevertheless, while a transcript review may resolve some problems, often further intervention by the tax practitioner is required. Still, anything that speeds up CAF approval and provides simpler options for obtaining taxpayer transcripts has the potential to greatly reduce IRS phone traffic. And anything that reduces IRS phone traffic will be enthusiastically welcomed by taxpayers, tax practitioners, and the IRS.

I own Tax Therapy, LLC, in Albuquerque, New Mexico. I am an Enrolled Agent and non-attorney practitioner admitted to the bar of the U.S. Tax Court. I work as a tax general practitioner preparing returns for individuals and (really) small businesses as well as representing individuals before the IRS and, occasionally, the U.S. Tax Court. My passion is translating “taxspeak” into English for taxpayers and tax practitioners. I write to dispel myths with facts and to explain “the fine print” behind seemingly simple tax concepts. I cover individual tax issues and IRS developments with a focus on items of interest to taxpayers and retail tax practitioners. Follow me on Twitter @taxtherapist505

Source: The IRS Bottleneck Most Taxpayers Have Never Heard Of

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Apple Floats Above China Technology Crackdown For Now

The Chinese government under President Xi Jinping has rattled investors in Chinese technology companies by announcing regulatory measures meant to curb the country’s fast-growing economy while reasserting control over some of its biggest companies. But the big U.S. technology company most exposed to China — Apple Inc. — is likely insulated from the turmoil for the time being.

“The crackdown out of Beijing has caught investors by surprise given the scale and scope,” said Dan Ives, an Apple analyst at Wedbush Securities. “It’s a major overhang on Chinese tech names, but Apple has been able to navigate the China political climate unlike any other U.S technology company in the last thirty years. Apple is able to be more Teflon-like in terms of regulatory focus.”

On Tuesday — when Chinese tech giant Tencent Holdings had its worst day in a decade and Chinese tech companies ranging from food delivery to online tutoring sectors continued a multi-day free fall — Apple underscored its dominance by releasing earnings that topped Wall Street expectations for both sales and profit and reported quarterly revenue that topped $100 billion for the first time. That included strong growth in Apple’s Greater China region, in which it reported $14.8 billion in sales, up 58% from the same quarter a year ago.

Under the premise of tackling the technology industry’s anti-competitive practices and cybersecurity concerns to curbing rising costs of tutoring companies, the Chinese government has sent a clear message: It is not afraid to wipe out massive economic gains in order to pursue its policies. “China goes back and forth on cracking down on their companies,” said Mark Zgutowicz, an analyst at Rosenblatt Securities.

“If you think about Tencent, Alibaba, JD.com — China does not want any of their companies to get too big for them to control. And whenever these companies get too big for their britches, China will come down and say, ‘You know what, we’re going to regulate this or bring in another competitor.’”

Apple’s manufacturing supply chain is based in China and Taiwan, where nearly every iPhone, iPad and Mac computer is made. Over the years, China has proven itself to be both an important customer and partner to Apple.

According to Zgutowicz, Apple’s presence in China is actually a boon to the government’s agenda. Chinese technology companies like Huawei Technologies, Shenzhen Zhixin New Information Technology, Vivo Communication Technology Company and Guangdong Oppo Mobile Telecommunications Corp. have more or the same amount of mobile phone market share in China as Apple, according to data from market research firm Counterpoint.

This means that Apple is simply another player that keeps its domestic companies from getting too big. “Ironically, Apple keeps the other companies in check,” Żgutowicz said. “It keeps things level for the other Chinese manufacturers.”

Apple may not be facing the brunt of the Chinese crackdown, but it has not been totally immune to its regulatory bodies in recent years. In 2017, after China passed a cybersecurity law that required technology companies operating in China to store Chinese users’ data in the country, Apple agreed to build two data centers in the country. Cook assured the public that it would keep that data safe. But a recent New York Times investigation asserted that the company had more or less given up control of the computers inside the data center to the Chinese state.

In August 2020, Apple took down 47,000 applications from its App Store at the request of the Chinese government for not obtaining the appropriate gaming licenses, according to Rich Bishop, CEO of AppInChina, a Beijing-based firm that is a leading publisher of international apps in China and helps developers localize their apps and be compliant with local laws.

This request came after a decade of China turning a blind eye on how Apple operates its App Store in the country. “It is very unclear why the Chinese government has allowed Apple to operate until now without compliance with Chinese law,” said Bishop. “I would imagine it is because Apple contributes a lot to the Chinese economy in terms of manufacturing and sales — or maybe they have solid government relationships.”

The company’s heavy reliance on the region was an effort led in large part by Tim Cook, who worked at Apple for thirteen years under Steve Jobs before becoming its CEO in 2011. In the early 2000s, the Chinese government and its business leaders welcomed Apple, spending billions to build factories, power plants and employee housing. In one instance in 2004, when Apple was looking to expand its footprint in the country, a manufacturing partner in China physically moved a mountain in order to make space for an iPod-building factory.

Chief executives at some of Apple’s largest supply chain partners in China and Taiwan have become billionaires themselves. Zhou Qunfei, who chairs Lens Technology, a smartphone screen supplier that has long been one of Apple’s earliest suppliers for the iPhone, is one of the greater China region’s richest women, worth a cool $12.7 billion. Terry Gou, who founded Foxconn and assembles iPhones for Apple, is the richest person in Taiwan with a net worth of $6.7 billion.

“Part of this tight-wire balancing act for Apple and Cook has been to make sure they are successful in China without any blowback from the ongoing U.S.-China Cold Tech War,” said Ives of Wedbush. “And the reality is that in a peak iPhone cycle, Apple through its supply chain is one of the biggest importers in the whole country of China, potentially employing more than a million employees across the broader supply chain in the country.”

Apple and the greater China region have enjoyed a symbiotic relationship, but the company has made concessions in order to placate an increasingly controlling government. For now, it works — until the Chinese government starts to see Apple as a threat. “China welcomes the competition as long as Apple doesn’t get too big,” said Zgutowicz. “But whenever a company starts to get too big, they will see it from miles away. They do not want companies to get too big and create their own government with their users.”

Follow me on Twitter or LinkedIn. Send me a secure tip.

I am a staff writer at Forbes. Follow me on Twitter or send me an email at aau-yeung@forbes.com.

Source: Apple Floats Above China Technology Crackdown — For Now

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Haven’t Checked On That Bitcoin Account In A While? Your State Could Have It Liquidated

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If you know you have an old bitcoin or dogecoin account somewhere but haven’t gotten around the digging up your login information, you may have a nasty surprise waiting for you. With the rise of cryptocurrency, nine states have now adopted rules that include it as a form of unclaimed property and several more are requiring or recommending that companies report their unclaimed virtual currency.

That means that this fall, when banks, insurers, retailers and state government agencies are required to annually report and remit any unclaimed funds, your old cryptocurrency account could be liquidated and turned in to the state’s unclaimed property office.

There are a lot of concerns about this possibility, not the least of which is the fact that liquidating a cryptocurrency account prevents the owner from realizing any future gains. But there’s also a larger economic issue, says Kristine Butterbaugh a solution principal, at the tax firm Sovos.

“Some of our clients don’t want to liquidate these accounts because it could have an impact on the market as a whole,” she says. “We’re talking millions of accounts, potentially, across the country.”

What’s muddling things is a lack of clarity on the rules around cryptocurrency. Unclaimed property law is written for traditional property but now it’s being enforced for non-traditional property.

Here’s how unclaimed property law usually works: Every fall, businesses are required to remit any unclaimed property to the state. For accounts and other financial instruments to be considered unclaimed, they have to be dormant for three to five years, depending on the state. That means the account holder hasn’t accessed the account or responded to any communications. Once the account is deemed unclaimed, it gets transferred to the state’s general fund.

That’s all well and good when we’re talking about a traditional bank account that is sitting around earning minimal — if any — interest. But states aren’t equipped to hold cryptocurrency, so they’re telling firms to turn those accounts into cash before handing them over.

Now let’s say you watched the meteoric rise of dogecoin this past spring and decided to go hunting for those coins you invested in on a whim a few years ago. And when you finally tracked them down you discovered your account was liquidated back in November, robbing you of thousands of dollars in potential earnings? You’d probably be pretty angry.

“Companies are in a really uncomfortable position because they’re unsure whether or not they should be liquidating for fear of owner retribution down the road,” says Butterbaugh. “And then you have the state saying, ‘You have to,’ even if it’s not explicitly in the statute.”

States are also motivated to enforce unclaimed property laws because it’s a revenue gain for them. Although the state keeps track of the amount due and the rightful owner can still eventually claim the money at any time, states in the meantime can use the money for their general operations. This may seem like a gamble, but only about 2% of unclaimed property ever gets returned to the true owner, according to Accounting Today.

Delaware — home to more than a million companies — is one of the most aggressive states when it comes to auditing companies on unclaimed property law compliance and has secured hundreds of millions of dollars over the last decade in unclaimed property and fines.

So, companies are stuck between not wanting to get dinged for noncompliance and being afraid to liquidate a cryptocurrency account. They want more clarity on what to do and Butterbaugh says two places — New York and Washington, D.C. — are working on a solution.

But in the meantime, she advises companies dealing in cryptocurrency to start addressing their dormant accounts now.

I am a fiscal policy expert, national journalist and public speaker who has spent more than 15 years writing about the many ways state and local governments collect and spend taxpayer money. I sift through that complicated information then break it down in quick ways that everyone can understand. I’m most known by policy wonks for my work at Governing magazine and for my fellowship at the Rockefeller Institute of Government where I write about the intersection of government and the future of work. My work is also in the Wall Street Journal, Bloomberg, CityLab and other national publications. Frequent and enthusiastic radio and podcast guest.

Source: Haven’t Checked On That Bitcoin Account In A While? Your State Could Have It Liquidated

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How Investing in Strategic Partnerships Can Help Grow Your Business

How Investing in Strategic Partnerships Can Help Grow Your Business

The best entrepreneurs understand the power of people. Whether thinking about accessible healthcare or, more broadly, startup success, collaboration and partnerships have always been vital, even before the pandemic strengthened the need for a collective approach.

Of course, for entrepreneurs looking to scale their business, cash is a critical piece of the puzzle. For obvious reasons, access to capital enables a business to grow, whether that’s investing in research and development (R&D), expanding overseas, or hiring top talent.

But capital shouldn’t be treated as a silver bullet. Instead, founders should turn their attention toward creating strong, strategic partnerships to drive business growth. Working with other established organisations builds credibility, allowing businesses to make further connections and expand their operations.

Entrepreneurs, though, should learn exactly how to unlock beneficial relationships that will ultimately set them up for long-term victory. Partnerships must be win-win and goals aligned so that everyone comes out as beneficiaries.

Why connections matter.

When executed wisely, strategic partnerships can foster business growth. With the potential to form a critical part of any growing business, these partnerships benefit startups and corporates alike. For large corporations, startups and scaleups can fuel innovation; for early-stage founders, big companies can enable fresh revenue, scaling possibilities and credibility.

With established partners come established networks. Existing knowledge, suppliers and customers can make selling products on a larger scale much easier to achieve. This empowers startups to scale quickly, with that revenue used to reinvest in operations and innovation, fuelling further growth and making it easier to establish new business relationships with a wider pool of organisations.

What’s also important, particularly if operating in a crowded space such as healthcare, is the potential for impact. Healthcare solutions – rightly or wrongly – are often judged by the number of patients using them. So, establishing key strategic partnerships – as we’ve done with Microsoft, Allianz and Portuguese healthcare provider Médis – provides an avenue to millions of patients.

Infermedica experimented with different business models, but eventually settled on a B2B strategy over B2C as we had the potential to reach more patients through a partnership network. This accelerated on our goal to bring more accessible healthcare to all. Strategic partnerships enable startups to quickly build credibility and cut through loud crowded markets.

Investor partnerships can play a role as well. Relationships don’t need to simply need to be between providers, but investors can bring knowledge, connections and consultancy which can help startups to overcome growing challenges and open doors that may otherwise remain closed until certain milestones around size, revenue and customers have been reached. What’s key is ensuring both sides remain committed to moving forward together.

How to unlock the opportunity.

But what’s the best way to go about creating these relationships? For founders, the first step to achieving this is to remember that although partnerships are sealed between companies, they’re created by people and that human connection has to be built first. Talk to the potential partner to understand what they are truly trying to achieve and how a partnership could help them solve it.

Similarly, founders must understand their own goals and what they need from any relationship to ensure they keep progressing towards it. When discussions are open and the people are looked after, great relationships are forged.

Developing a partner program at an early stage: creating a network of trusted resellers and innovative partners also allows entrepreneurs to explore opportunities in their immediate area and beyond. Indeed, European founders shouldn’t simply look within their own country or continent for partnerships, by looking further afield they open themselves up to new ways of thinking and opportunities.

Partner programs and ecosystems establish a feedback community, each organization provides feedback which improves each other’s offerings, leading to greater growth and credibility for all. This also drives thoughts around integration, how compatible one offering is with another to ensure it truly adds value in a real-world environment. Collaboration with partners enables entrepreneurs to see how their product fits into the bigger picture which fuels wider innovation.

For example, Infermedica’s partner program enables organizations from all aspects of healthcare to collaborate with us and access our AI technology, enhancing and diversifying services which offer better end-user outcomes. Of course, there is still some way to go and things will never stop evolving. The top SaaS companies have on average around 350 integrations as they understand all of the potential engagement points and are establishing ecosystems that reflect them. The key takeaway: when creating partner ecosystems, always keep in mind how an end-user could potentially interact with your offering.

Take your time.

As in life, building a long-last relationship takes a lot of time and effort. So, while it can be tempting to rush into an exciting partnership or program, it’s vital to take your time to build trust and establish clear boundaries. Drawing on our own experience, it took more than a year to establish partnerships with Microsoft and Allianz, and it’s an ongoing process of building mutual trust and finding new ways to collaborate.

Remember that there should be no A and B side in partnerships. Each party brings their own benefits to the table. Combining knowledge and resources makes the relationship greater than the sum of its parts, delivering greater value to customers, industry and economy.

At all times, specificity is key to success. Be sure that the partnership is truly feeding into your overall strategy and that you have all the necessary resources to support you on your journey. Plan it well and take your time. It’s a long-term strategy that requires patience, commitment and perseverance. Rome was not built in a day, but the foundations of a long lasting relationship could start tomorrow.

Keep your goals in mind and ensure you’re going into every conversation with completely open eyes because when you find those strategic connections that just work, the opportunity for growth is truly great.

By: Tomasz Domino / Chief Operating Officer, Infermedica

Source: How Investing in Strategic Partnerships Can Help Grow Your Business

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Critics:

A strategic partnership (also see strategic alliance) is a relationship between two commercial enterprises, usually formalized by one or more business contracts. A strategic partnership will usually fall short of a legal partnership entity, agency, or corporate affiliate relationship. Strategic partnerships can take on various forms from shake hand agreements, contractual cooperation’s all the way to equity alliances, either the formation of a joint venture or cross-holdings in each other.

Typically, two companies form a strategic partnership when each possesses one or more business assets or have expertise that will help the other by enhancing their businesses. This can also mean, that one firm is helping the other firm to expand their market to other marketplaces, by helping with some expertise.

According to Cohen and Levinthal a considerable in-house expertise which complements the technology activities of its partner is a necessary condition for a successful exploitation of knowledge and technological capabilities outside their boundaries. Strategic partnerships can develop in outsourcing relationships where the parties desire to achieve long-term “win-win” benefits and innovation based on mutually desired outcomes.

No matter if a business contract was signed, between the two parties, or not, a trust-based relationship between the partners is indispensable. One common strategic partnership involves one company providing engineering, manufacturing or product development services, partnering with a smaller, entrepreneurial firm or inventor to create a specialized new product. Typically, the larger firm supplies capital, and the necessary product development, marketing, manufacturing, and distribution capabilities, while the smaller firm supplies specialized technical or creative expertise.

References

Richard Branson Plans To Get To Space Before Jeff Bezos

US-ECONOMY-NYSE-VIRGIN

The “billionaire space race” just got a bit more literal Thursday, as Virgin Galactic announced that it would be opening up the flight window for its first fully crewed mission to space on July 11, and that one of its first passengers would be Richard Branson. That’s 9 days prior to Jeff Bezos’ planned launch on July 20 on a capsule from his company Blue Origin.

If everything goes as planned, Branson wouldn’t be the first billionaire to go to space, but he would be the first to go on his own company’s spacecraft. Shares of Virgin Galactic stock soared in after-hours trading, up to over $51 at the time of publication. The stock had closed down at $43.19 on Thursday.

The “Unity 22” mission, as the company has dubbed it, is part of a series of test flights Virgin Galactic is conducting before it opens up its space tourism business to paying customers. The mission’s goal, the company says, is to accomplish several things: first, to evaluate the customer experience, including the periods of weightlessness and views of Earth. Second will be to test aspects of conducting research experiments, another revenue stream for the space. Third is to ensure that the company’s training program adequately prepares customers for the experience.

Joining Branson on the flight are Beth Moses, Virgin’s chief astronaut instructor; Colin Bennett, the company’s lead operations engineer; and Sirisha Bandla, the company’s VP of researcher operations, who will be conducting a science experiment for the University of Florida.

Virgin Galactic was founded by Branson in 2005, and began publicly trading on the New York Stock Exchange in 2019. If July’s flight is successful, the company plans two more test flights evaluating other aspects of the experience before beginning commercial service in 2022.

“It’s one thing to have a dream of making space more accessible to all; it’s another for an incredible team to collectively turn that dream into reality,” Branson said in a statement. “As part of a remarkable crew of mission specialists, I’m honoured to help validate the journey our future astronauts will undertake and ensure we deliver the unique customer experience people expect from Virgin.”

Follow me on Twitter or LinkedIn. Check out my website. Send me a secure tip.

I’m a senior editor at Forbes covering healthcare, science, and cutting edge technology.

Source: Richard Branson Plans To Get To Space Before Jeff Bezos

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Critics:

Virgin Galactic is not the only corporation pursuing suborbital spacecraft for tourism. Blue Origin is developing suborbital flights with its New Shepard spacecraft. Although initially more secretive about its plans, Jeff Bezos has said the company is developing a spacecraft that would take off and land vertically and carry three or more astronauts to the edge of space.

New Shepard has flown above the Karman line and landed in 2015 and the same vehicle was reflown to above the Karman line again in 2016. In April 2021, they completed their fifteenth test flight, with the next mission, NS 16, aiming to carry a crew as early as 20 July 2021.

On 16 September 2014, SpaceX and Boeing were awarded contracts as part of NASA’s CCtCap program to develop their Crew Dragon and CST-100 Starliner spacecraft, respectively. Both are capsule designs to bring crew to orbit, a different commercial market than that addressed by Virgin Galactic.

Now-defunct XCOR Aerospace had also worked on rocket-powered aircraft during many of the years that Virgin Galactic had; XCOR’s Lynx suborbital vehicle was under development for more than a decade, and its predecessor, the XCOR EZ-Rocket experimental rocket powered airplane did actually take flight, but the company closed its doors in 2017.

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5 Questions to Ask Before Including Services in Your Bootstrapping Strategy

Most tech entrepreneurs these days stay away from services because investors are looking for high-margin, repeatable revenue. Service revenues don’t command the same multiples that product revenues do.

When I decided to bootstrap my startup, I never expected to be selling professional services. I quickly learned, however, that offering services tied to your product can be incredibly useful when bootstrapping. When my company started offering design and development services utilizing our low-code development platform, these services led to high-margin recurring revenue and greatly improved unit economics. These services also drove a tremendous amount of customer success.

But, service offerings are not for everyone. Here are a few questions you should ask yourself in order to determine whether services should be part of your bootstrapping efforts.

Related: 5 Reasons Bootstrapping Your Business is the Best Thing You Can Do

Do the services have good margins?

For bootstrapping to work, you need a healthy margin. At one of the companies I founded, our professional services were a necessary element of customer onboarding since product implementation was incredibly complex and not self-service.

Our professional services margin was -20%, which eroded our cash significantly. In this instance, service was not a revenue center but a loss leader — something we had to offer to secure the more valuable recurring revenue. If you find yourself in the same boat, services will never be a viable bootstrapping strategy. They could, however, be a tool you utilize to drive the rapid growth of recurring revenues.

Does the market/customer want the services?

Many products simply can’t be used by most people without a services component. At my company, we found that even though our low-code development platform could be utilized by people with minimal coding expertise, certain segments of our user base simply didn’t have the inclination to build their solution on our platform. We also discovered that even with powerful tools, many people wanted to leverage the expertise of an experienced software design team.

This prompted us to spin up a services team that could charge for design and development as an initial project and even provide ongoing development services on a monthly basis. Going this route is driving a three-to-six month payback on and marketing investment for us. Do these types of opportunities exist for you?

Related: 7 Ways to Bootstrap Your Business to Success

Can your service offering eventually be outsourced to an ecosystem of providers?

Services can serve as a bridge to help fund platform losses up to a point where outsiders can take over. Building an ecosystem can create an awesome flywheel effect, whereby participants not only become service providers but a channel for bringing in new product sales — without the expense of having to add to your own sales team.

Salesforce and Workday both did a brilliant job of executing this strategy. Ideally your product will gain enough acceptance that you can sell off your services division for additional profit.

Do services provide you with more customer intimacy and enhance your retention metrics?

A customer’s switching costs go way up when there is both a human and technological connection to your product and services. This sort of intimacy can provide a significant boost to your retention metrics and ensure predictable revenue.

Having great people to support clients can make up for early product deficiencies and create a level of trust that a pure low-touch product cannot. This is especially important in the early days of any startup’s product lifecycle.

Related: What Nobody Tells You About Taking VC Money

Can bootstrapping with services strengthen your product development?

Launching a services division also provides another benefit: the chance for you to “eat your own dogfood.” It’s a fact that when employees use their own product, it gets markedly better. At my company, we rotate core team members in and out of the professional services team to ensure every engineer feels what our customers feel. I believe this leads to product brilliance.

Now I’m not advocating you become a services company, but having a product company with a service business could stave off having to secure venture backing before your product is more mature. This can help you avoid things like dilution, a loss of control and the pressure to grow fast for a speedy exit.

As someone who’s previously founded two venture-backed startups, I like how bootstrapping with services is allowing my company to grow more thoughtfully. We have time to think about product/market fit before scaling up, we’re not pursuing growth rates that our platform can’t support, we’re making smart hires and we’re scrutinizing the ROI of all of our expenses because every dollar counts.

Additionally, we are vetting the utility of our own product with real-life customers and creating a virtuous circle of feedback to drive new features. I feel like it’s the smarter way to evolve a business like ours — building a company for the long haul versus hitting some arbitrary goal to secure additional venture capital.

There is one important consideration before bootstrapping with services: You’ll want to make sure you’re growing (albeit at a deliberate pace) and not just treading water. That’s why the above questions are something you’ll want to consider before following my lead. It’s critical you feel confident that you’ll create enough runway and customer success for your ultimate business model to take shape, while not letting services become a distraction.

By:

Source: 5 Questions to Ask Before Including Services in Your Bootstrapping Strategy

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Critics:

In computer technology the term bootstrapping, refers to language compilers that are able to be coded in the same language. (For example, a C compiler is now written in the C language. Once the basic compiler is written, improvements can be iteratively made, thus pulling the language up by its bootstraps) Also, booting usually refers to the process of loading the basic software into the memory of a computer after power-on or general reset, the kernel will load the operating system which will then take care of loading other device drivers and software as needed.

Bootstrapping can also refer to the development of successively more complex, faster programming environments. The simplest environment will be, perhaps, a very basic text editor (e.g., ed) and an assembler program. Using these tools, one can write a more complex text editor, and a simple compiler for a higher-level language and so on, until one can have a graphical IDE and an extremely high-level programming language.

Historically, bootstrapping also refers to an early technique for computer program development on new hardware. The technique described in this paragraph has been replaced by the use of a cross compiler executed by a pre-existing computer. Bootstrapping in program development began during the 1950s when each program was constructed on paper in decimal code or in binary code, bit by bit (1s and 0s), because there was no high-level computer language, no compiler, no assembler, and no linker.

A tiny assembler program was hand-coded for a new computer (for example the IBM 650) which converted a few instructions into binary or decimal code: A1. This simple assembler program was then rewritten in its just-defined assembly language but with extensions that would enable the use of some additional mnemonics for more complex operation codes.

The enhanced assembler’s source program was then assembled by its predecessor’s executable (A1) into binary or decimal code to give A2, and the cycle repeated (now with those enhancements available), until the entire instruction set was coded, branch addresses were automatically calculated, and other conveniences (such as conditional assembly, macros, optimisations, etc.) established. This was how the early assembly program SOAP (Symbolic Optimal Assembly Program) was developed. Compilers, linkers, loaders, and utilities were then coded in assembly language, further continuing the bootstrapping process of developing complex software systems by using simpler software.

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The 3 Biggest Mistakes the Board Can Make Around Cyber Security

The role of the Board in relation to cyber security is a topic we have visited several times since 2015, first in the wake of the TalkTalk data breach in the UK, then in 2019 following the WannaCry and NotPeyta outbreaks and data breaches at BA, Marriott and Equifax amongst others. This is also a topic we have been researching with techUK, and that collaboration resulted in the start of their Cyber People series and the production of the “CISO at the C-Suite” report at the end of 2020.

Overall, although the topic of cyber security is now definitely on the board’s agenda in most organisations, it is rarely a fixed item. More often than not, it makes appearances at the request of the Audit & Risk Committee or after a question from a non-executive director, or – worse – in response to a security incident or a near-miss.

All this hides a pattern of recurrent cultural and governance attitudes which could be hindering cyber security more than enabling it. There are 3 big mistakes the Board needs to avoid to promote cyber security and prevent breaches.

1- Downgrading it

“We have bigger fishes to fry…”

Of course, each organisation is different and the COVID crisis is affecting each differently – from those nearing collapse, to those which are booming. But pretending that the protection of the business from cyber threats is not a relevant board topic now borders on negligence and is certainly a matter of poor governance which non-executive directors have a duty to pick up.

Cyber attacks are in the news every week and have been the direct cause of millions in direct losses and hundreds of millions in lost revenues in many large organisations across almost all industry sectors.

Data privacy regulators have suffered setbacks in 2020: They have been forced to adjust down some of their fines (BA, Marriott), and we have also seen a first successful challenge in Austria leading to a multi-million fine being overturned (EUR 18M for Austrian Post). Nevertheless, fines are now reaching the millions or tens of millions regularly; still very far from the 4% of global turnover allowed under the GDPR, but the upwards trend is clear as DLA Piper highlighted in their 2021 GDPR survey, and those number should register on the radar of most boards.

Finally, the COVID crisis has made most businesses heavily dependent on digital services, the stability of which is built on sound cyber security practices, in-house and across the supply chain.

Cyber security has become as pillar of the “new normal” and even more than before, should be a regular board agenda, clearly visible in the portfolio of one member who should have part of their remuneration linked to it (should remuneration practices allow). As stated above, this is fast becoming a plain matter of good governance.

2- Seeing it as an IT problem

“IT is dealing with this…”

This is a dangerous stance at a number of levels.

First, cyber security has never been a purely technological matter. The protection of the business from cyber threats has always required concerted action at people, process and technology level across the organisation.

Reducing it to a tech matter downgrades the subject, and as a result the calibre of talent it attracts. In large organisations – which are intrinsically territorial and political – it has led for decades to an endemic failure to address cross-silo issues, for example around identity or vendor risk management – in spite of the millions spent on those matters with tech vendors and consultants.

So it should not be left to the CIO to deal with, unless their profile is sufficiently elevated within the organisation.

In the past, we have advocated alternative organisational models to address the challenges of the digital transformation and the necessary reinforcement of practices around data privacy in the wake of the GDPR. They remain current, and of course are not meant to replace “three-lines-of-defence” type of models.

But here again, caution should prevail. It is easy – in particular in large firms – to over-engineer the three lines of defence and to build monstrous and inefficient control models. The three lines of defence can only work on trust, and must bring visible value to each part of the control organisation to avoid creating a culture of suspicion and regulatory window-dressing.

3- Throwing money at it

“How much do we need to spend to get this fixed?”

The protection of the business from cyber threats is something you need to grow, not something you can buy – in spite of what countless tech vendors and consultants would like you to believe.

As a matter of fact, most of the breached organisations of the past few years (BA, Marriott, Equifax, Travelex etc… the list is long…) would have spent collectively tens or hundreds of millions on cyber security products over the last decades…

Where cyber security maturity is low and profound transformation is required, simply throwing money at the problem is rarely the answer.

Of course, investments will be required, but the real silver bullets are to be found in corporate culture and governance, and in the true embedding of business protection values in the corporate purpose: Something which needs to start at the top of the organisation through visible and credible board ownership of those issues, and cascade down through middle management, relayed by incentives and remuneration schemes.

This is more challenging than doing ad-hoc pen tests but it is the only way to lasting long-term success.

By: JC Gaillard

Source: The 3 Biggest Mistakes the Board Can Make Around Cyber Security – Business 2 Community

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Critics:

A data breach is the intentional or unintentional release of secure or private/confidential information to an untrusted environment. Other terms for this phenomenon include unintentional information disclosure, data leak, information leakage and also data spill. Incidents range from concerted attacks by black hats, or individuals who hack for some kind of personal gain, associated with organized crime, political activist or national governments to careless disposal of used computer equipment or data storage media and unhackable source.

Definition: “A data breach is a security violation in which sensitive, protected or confidential data is copied, transmitted, viewed, stolen or used by an individual unauthorized to do so.”Data breaches may involve financial information such as credit card & debit card details, bank details, personal health information (PHI), Personally identifiable information (PII), trade secrets of corporations or intellectual property. Most data breaches involve overexposed and vulnerable unstructured data – files, documents, and sensitive information.

Data breaches can be quite costly to organizations with direct costs (remediation, investigation, etc) and indirect costs (reputational damages, providing cyber security to victims of compromised data, etc.)

According to the nonprofit consumer organization Privacy Rights Clearinghouse, a total of 227,052,199 individual records containing sensitive personal information were involved in security breaches in the United States between January 2005 and May 2008, excluding incidents where sensitive data was apparently not actually exposed.

Many jurisdictions have passed data breach notification laws, which requires a company that has been subject to a data breach to inform customers and takes other steps to remediate possible injuries.

A data breach may include incidents such as theft or loss of digital media such as computer tapes, hard drives, or laptop computers containing such media upon which such information is stored unencrypted, posting such information on the world wide web or on a computer otherwise accessible from the Internet without proper information security precautions, transfer of such information to a system which is not completely open but is not appropriately or formally accredited for security at the approved level, such as unencrypted e-mail, or transfer of such information to the information systems of a possibly hostile agency, such as a competing corporation or a foreign nation, where it may be exposed to more intensive decryption techniques.

ISO/IEC 27040 defines a data breach as: compromise of security that leads to the accidental or unlawful destruction, loss, alteration, unauthorized disclosure of, or access to protected data transmitted, stored or otherwise processed.

See also

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