News

Employer-provided identity theft protection leads to tax questions

Q&A with Brandon Long

published in The Oklahoman | September 4, 2015

Employee benefits attorney Brandon Long was interviewed by The Oklahoman about new guidance recently issued by the Internal Revenue Service regarding the taxability of identity theft protection services provided by employers to their employees.  In many cases, such services are provided by the employer after the company experiences a data breach of its information systems.  In other cases, the services are provided as part of the employees’ benefits packages.

“The new IRS guidance clarifies that when an employer provides identity theft protection services to employees whose personal information may have been compromised in a data breach of the employer’s or employer’s agent or service provider’s record-keeping system, the value of the identity protection services doesn’t have to be included in the employees’ gross income and wages,” said Long.

Alternatively, if an employer provides the services as part of an employee’s compensation benefits package, the value of the services is included in the employees’ taxable gross income and wages, he explained.  Examples of services include credit reporting and monitoring services, identity theft insurance policies, and identity restoration services.