by Beth Manzi, PEF Services

In February 2012,  the IRS issued a revenue procedure regarding the electronic delivery of Schedule K-1 and/or personal information and provides specific standards for an “effective delivery” of a K-1 schedule.  These include prior affirmative consent from the investor, that the investor is willing to receive an electronic version of the schedule and confirmation that the investor has the ability to receive it electronically.  Several other standards are also contained in the guidelines.

The IRS procedure is another in a continuing trend among regulators to protect private information. Recently, the Commonwealth of Massachusetts enacted a regulation establishing minimum standards to be met with the safeguarding of personal information contained in both paper and electronic records.  These standards require Schedule K-1s to be encrypted if sent by e-mail, among other requirements.

The use of a portal is strongly recommended for investor communications.  PEF’s Investor Library, our proprietary web-based application, is a secure portal, accessed by investors and their permitted advisors, which provides anytime access to documents in an organized folder system. The Investor Library ensures that viewing and transferring (downloading) of documents is always encrypted. Our clients take comfort in knowing that PEF works diligently to keep its systems and procedures in compliance with state and federal regulations.