The IRS has now given employers further incentive to provide an additional workplace benefit to employees in the form of identity theft protection services.
On December 30, 2015, the IRS released Announcement 2016-02, Federal Tax Treatment of Identity Protection Services, which allows the value of employer-provided identity protection benefits to be excluded from an employee’s gross income and wages, regardless of whether the employer has experienced a data breach.
This announcement extends prior guidance provided in Announcement 2015-22, Federal Tax Treatment of Identity Protection Services Provided to Data Breach Victims, from August 2015, which dealt specifically with employees whose information may have been compromised as a result of a data breach. This prior announcement allowed for affected individuals to exclude from their taxable gross income the value of ID protection services provided to them by the breached organization.
Given the increased prevalence of data breaches, this is welcome news for employers who may wish to consider the opportunity to provide a relatively low-cost benefit that can give employees considerable peace of mind. The benefit can be provided without increasing a company’s own federal payroll taxes, and employees can receive these services without incurring any additional federal tax liability.
For More Information
If you are looking for enhancements to your benefit programs, Contact KMA Human Resources Consulting. We can provide our expertise in comprehensive benefit plan services for your business or organization.