In their research, they purchased 4 previously used digital copiers and removed the hard drives.   Using software that was easily found and downloaded off the Internet they read the drives, discovering tens of thousands of scanned document images containing highly sensitive data.

The story went on to say that in 2008, Sharp Imaging commissioned a survey which found that 60% of Americans don’t know that copiers store these images on their hard drives.  While most of the major copier manufacturers offer security features to protect this data, most users either don’t know about them, or don’t understand the need to use them.

In response to the outcry from this story, US Representative Ed Markey sent a letter to the Federal Trade Commission, calling for an investigation into the potential impact on data privacy presented by this practice.  The FTC responded that they were contacting copy machine manufacturers and vendors to find out what communication and education they were providing to their customers about the potential risks, and what security options they offered to help mitigate them.  The FTC also promised to review its own educational materials and create some guidelines for businesses to use when leasing, purchasing and securing digital copiers.

In November, 2010, the FTC’s Bureau of Consumer Protection released those guidelines in this: Copier Data Security: A Guide for Businesses.

The guidelines provide a comprehensive analysis of the problem as well as several best practices to use during the entire life cycle of your copier.  Some of these include:

• Include your IT staff in the purchase decision.  Make sure the copier has built in security options that meet the requirements of your business.  This can be anything from the ability to encrypt data on the drive, to the ability to wipe the drive completely.
• At a minimum, wipe the data on the drive on a regular basis.  Wiping and deleting data are not the same thing.  Deleting the data doesn’t actually remove it from the drive.  Wiping the data goes further and involves actually overwriting the file with random bits of data to ensure it can’t be read or recreated.
• Make sure that the manufacturer, dealer, or servicing company allows you to wipe the hard drive before returning the machine, or better yet, allows you to keep the hard drive at the end of the lease.

When it comes to data security, most businesses are aware of the rules that govern their internal security practices.  Regulations like HIPAA, Sarbanes Oxley, and Gramm-Leach, Bliley have been in place for several years.  This recent discovery has just served to remind us that not all data is stored in paper files in our file rooms, or electronic files on our computers.  There can be other unexpected and hidden places that we have to protect with the same level of diligence and planning.

The 2010-2011 Tax Planning Guide explains how to not only take advantage of the changes in the tax law, but also how to use proven strategies to minimize taxes on your personal and business income.  It gives you many tax-smart ideas about investing, education funding, estate planning, and saving for retirement.  Check out the online version of the 2010-2011 Tax Planning Guide. This online version is continuously updated as new legislation is passed.

A few highlights from recent tax legislation to which we’d like to draw your attention are:

• Section 179 Expensing Election – the expensing limit is $500,000 for 2010 and 2011.
• Bonus Depreciation – extension of the 50% first year write-off on qualified assets placed in service during 2010.
• The Small Business Jobs Act of 2010 extends and expands numerous tax breaks for businesses.  See pages 8 and 9 for further discussion.
• Small businesses with fewer than 25 full-time equivalent employees with average annual wages of less than $50,000 may be eligible for a tax credit if they pay health insurance for employees.  See page 10 for further discussion.
• Long-term capital gain rate remains at zero for capital gains that would be taxed at 10% or 15% based on the taxpayer’s regular income tax rate.  These low tax rates will expire as of December 31, 2010.  See page 6 for more planning ideas.
• Roth IRA Conversions – taxpayers with adjusted gross income exceeding $100,000 now qualify to convert a traditional IRA to a Roth IRA, similar to those with adjusted gross incomes of less than $100,000.  This conversion is taxable in the year of the rollover.  For conversions made in 2010 only, the income can be recognized over two years (2011 and 2012).  See page 13 for further discussion.
• A one-year repeal of the estate and generation-skipping transfer taxes is currently in effect for 2010.  See page 14 for further discussion.
• The gift exclusion remains at $13,000 per recipient for 2010.

Olsen Thielen can help answer any questions about state and federal tax law, the changes listed above, or other tax matters.  We can also review your current tax and financial standing and develop a plan that makes sense for your family or company.  We want to help you keep more of your hard-earned money.