The U.S. Internal Revenue Service has announced that it will treat identity theft protection as a non-taxable, non-reportable benefit that companies can offer – even when the company in question hasn’t experienced a data breach, and regardless of whether it is offered by an employer to employees, or by other businesses (such as online retailers) to its customers, the blog E for ERISA reports. In short: companies can now deduct the cost of offering identity theft protection as a benefit for employees or extending it to customers, even if their data hasn’t been exposed to hackers.
The announcement comes only four months after an earlier announcement by the IRS that it would treat identity theft protection offered to employees or customers in the wake of a data breach as a non-taxable event. Comments to the IRS following the earlier decision suggested that many businesses view a data breach as “inevitable” rather than as a remote risk.
The truth of that statement was made clear to the IRS itself, which had to provide identity theft protection earlier this year in response to a hack of its online database of past-filed returns and other filed documents which ultimately affected over 300,000 taxpayers. The new IRS guidance could be a boon to providers of identity protection services such as Lifelock. LifeLock will discount premiums up to 30% with employer paid plans. Contact your NBP representative today.