Monthly LRA Update: July 2021

TAX DEVELOPMENTS

Groom Law Group Asks IRS to Provide Guidance on Repurposing Surplus VEBA Assets

On May 28, Groom Law Group principals Louis Mazawey and Kathryn Bjornstad Amin sent a letter to the IRS, recommending that Treasury and the IRS publish official guidance confirming that the 100% excise tax on VEBA reversions would not apply when an employer “repurposes” surplus retiree benefit assets in a welfare benefit fund to provide health and other welfare benefits to active employees.

According to the letter, the IRS has issued private letter rulings confirming that the 100% excise tax would not apply when an employer repurposes retiree medical assets to pay active medical benefits.

LEGISLATIVE DEVELOPMENTS

Colorado Legislature Passes Privacy Law

On June 25, after passage in the Colorado legislature, the Colorado Privacy Act was sent to the Governor for signature. The law is expected to be enacted and will become effective 1/1/2023. Colorado will be the third state to enact comprehensive privacy laws (following California and Virginia).

The Colorado law uses the terms, “Controller” and “Processor.” A Controller is an entity that “… determines the purposes for and means of processing personal data.” A Processor is an entity that processes personal data on behalf of a Controller. “Processing” means the collection, use, sale, storage, disclosure, analysis, deletion, or modification of personal data and includes the actions of a Controller directing a Processor to process personal data.

Personal Data is defined broadly to mean “…information that is linked or reasonably linkable to an identified or identifiable individual”; however, it does not include de-identified data or publicly available information.

The Colorado law exempts numerous entities and types of data from the statute, including

• Data maintained for employment records purposes; and
• A financial institution or an affiliate of a financial institution as defined by and subject to the Federal Gramm-Leach-Bliley Act and implementing regulations.

Therefore, we do not anticipate direct applicability to BOLI owners or programs. We will review the law more closely in the coming months.