A Time to Remember that Employer-Provider Data Breach Benefits are not Taxable
Hardly a week goes by without another announcement of a high-profile data security breach. The list of data breaches impacting high-profile employers and their employees just in 2017 is long. Protecting our sensitive data is becoming a top priority for us all. Recognizing this need, employer-provided identity theft protection is one of the fastest growing employer-provided benefits. Willis Towers Watson found that, while around 35% of employers offered this benefit in 2015, as many as 80% of employers will offer the benefit by 2018. The fact that employer-provided identity theft protection can be offered by employers as a nontaxable benefit adds to its attraction for employees. Under IRS Announcement 2016-02, employees need not include the value of this benefit in income and employers are not required to report the value of the benefit on the employees’ Form W-2. The nontaxable benefit includes identity theft insurance, identity restoration services, credit report and monitoring services and similar services.