IRS guidance backs treatment of identity protection services as an employee benefit
TAX BLOG |
With the increasing concerns over security and privacy—from corporate hacking to credit card fraud to IRS taxpayer ID theft—you may be considering (or find yourself being required to consider) whether to offer identity protection services to your employees.
Previously, the IRS allowed favorable tax treatment of the value of credit reporting and monitoring, identity restoration, or similar services provided to employees when the organization had been victim of a data breach. Recently, that guidance was expanded to include identity theft services provided to employees or others as a preventive measure.
Favorable tax treatment in this case means that the value of the services is not included in the gross income of the impacted individual. This makes identity theft a potential value-added benefit similar to health insurance premiums paid by the employer.
Monitoring and recovery services can provide peace of mind to your employees as well as make it easier for them to stay focused at work in the unfortunate event that your company, or an individual employee, does fall victim to this crime. Preventive services can be a welcome employee benefit in today’s market. The IRS seems to agree.
For information about protecting your business data through security and privacy measures, consider assessing your critical security and privacy risk areas.