The California Consumer Privacy Act, also known as CCPA, will take effect beginning January 1, 2020. Signed into law in June of 2018, the act stands to impact businesses throughout California as well as those who work with consumers who live in the state — even if said businesses exist outside of state lines. Though there’s no such thing as an official guide to CCPA compliance at this point, there are certain strategies that you can implement to prepare for its arrival.

Disclaimer: This information is provided for informational purposes only and does not constitute — nor is it a substitute for — legal advice. 

What is CCPA, and How Does it Affect Me?

As a tax preparation professional, you’re already aware of the importance of protecting your clients’ data. You ensure that your practice’s software is up to date and that you follow all IRS standards for consumer information security. CCPA is essentially a law that will enforce stricter requirements regarding consumer data, applicable to all for-profit businesses. Specific requirements include — but are not limited to — the following:

  • Businesses must provide a clear and conspicuous link on the business’s Internet homepage, titled “Do Not Sell My Personal Information,” to an Internet Web page that enables a consumer, or a person authorized by the consumer, to opt-out of the sale of the consumer’s personal information. A business shall not require a consumer to create an account in order to direct the business not to sell the consumer’s personal information.
  • Professional entities must ensure that their customers can easily access and exercise their right to opt-out of the sale of their personal information and refrain from selling personal information collected by the business about the consumer.
  • Businesses shall not sell the personal information of consumers if the business has actual knowledge that the consumer is less than 16 years of age, unless the consumer, in the case of consumers between 13 and 16 years of age, or the consumer’s parent or guardian, in the case of consumers who are less than 13 years of age, has affirmatively authorized the sale of the consumer’s personal information. A business that willfully disregards the consumer’s age shall be deemed to have had actual knowledge of the consumer’s age. This right may be referred to as the “right to opt-in.”

This data is sourced directly from the SB-1121 California Consumer Privacy Act of 2018, courtesy of the California Legislature at the date of this article’s publishing. 

Fortunately, many tax preparation practices won’t be adversely affected by CCPA. In fact, unless the following apply to your business, you may be exempt from its requirements:

  • Alone or in combination, your business annually buys, receives for the business’s commercial purposes, sells, or shares for commercial purposes, alone or in combination, the personal information of 50,000 or more consumers, households, or devices.
  • Your practice derives 50 percent or more of its annual revenues from selling consumers’ personal information.
  • Your business exceeds twenty-five million dollars ($25,000,000) in annual gross revenues.

If you can answer “yes, one or more of the above is true for my practice,” then CCPA compliance should be at the top of your to-review list for the new year. If not, though, you may not have to worry as much as some of the bigger firms in the industry. And if any of your clients come to you with concerns, you can offer them reassurance backed by well-informed research, and we’re always here to help when you need us.