The "RED FLAGS" Rule
The Federal Trade Commission (FTC) will begin  enforcing the Red Flags Rule on
August 1, 2009. The Red Flags Rule applies not only to traditional financial
institutions, but also to most businesses that allow customers or clients to
defer payment. All businesses identified as subject to the Red Flags Rule must
develop a written program to prevent, detect, and minimize the damage that can
be caused by identity theft. The FTC has specifically identified finance companies,
automobile dealers, mortgage brokers, utility companies, and telecommunications
companies as businesses subject to the Red Flags Rule. Other entities subject
to the Red Flags Rule include non-profit and government entities like colleges
and universities that defer payment for goods or services. Franchisors,
merchants, hospitals, doctors, dentists, veterinarians, and other healthcare
providers are also considered creditors under the Red Flags Rule.
Every business entity subject to the Rule must implement a written program to
prevent, detect, and minimize the damage caused by identity theft. "Red Flags"
are patterns, practices, and activities that are warning signs of identity
theft like suspicious account activity or warnings from consumer reporting
agencies. Business must create programs to mitigate identity theft in
connection with accounts kept for customers or clients including
loans, cell phones accounts, utility accounts, and checking and savings
accounts.
The Red Flags Rule does not mandate a particular program to implement at your
business. The law allows you to tailor a program appropriate to the size and
scope of your business. However, there are certain essentials that must be
included in your plan. If your business still needs to develop a program to
comply with the Red Flags Rule, attorneys at Sivia Business & Legal
Services, P.C. can assist you. Please call or email our office today to make an
appointment to develop your Red Flags program today.
|
Two Corporate Communications
Some Illinois business owners may be getting two  communications: one requires a careful answer and the other requires no answer at all.
Recent users of the website of the Illinois Secretary of State's Business Services would have seen the following red, bold warning:
WARNING! A non-governmental firm called "Illinois Corporate Compliance" is contacting Illinois businesses in an attempt to collect a $150 fee to file corporate meeting minutes. Please be aware that corporations are NOT required by law to file minutes with ANY government or private entity. It is recommended that corporations do NOT reply to this solicitation.
The Secretary of States' office has received visitors who have attempted to pay this fictional fee to file corporate minutes. This is actually a scam.
Illinois corporations are just a few corporations in America that have been victims of this type of scam. These scams take advantage of the fact that a company's address and contact information are public and can be used by unscrupulous people to the company's disadvantage. Don't assume that any solicitation is official without reviewing it first. The state's website is a good resource to determine whether or not a solicitation is real or fake.
The important communication to pay attention to is the state questionnaire. States may decide to send corporations questionnaires for various reasons including tax return filings, or determining qualifications to "do business" in Illinois. If a company has offices in another state or does a significant amount of business in another state, it is fairly easy to determine where a company must file tax returns, but if there is a one-time event in another state or orders are solicited from other states at a time, knowing where the company "does business" may be more complicated.
In tough economic times, states often send out questionnaires to companies that might be transacting business in the state. Companies should take these questionnaires seriously and view it as an effort by the state to find additional taxpayers. Answering these questionnaires incorrectly or ignoring them could result in major tax exposure, penalties, interest, and filing fees.
If you have received a communication from the state or you are unsure what to do with a communication regarding your business, please don't hesitate to call or email our office for assistance.
|
