Identity Theft Protection Services — Federal Income Tax Treatment

512px-US-InternalRevenueService-Seal_svgFor those unfortunate folks dealing with identity theft, here’s a ray of good news.  Snell & Wilmer’s tax and data privacy lawyers recently published a  Legal Alert  that explains recent announcements by the Internal Revenue Service on the subject of federal tax treatment of identity theft protection services.  The following paragraph provides a quick summary, while the full text of the Legal Alert can be viewed here.

The Treasury Department and the IRS are sensitive to the data security problems facing organizations, their employees and their customers and, as a result, have provided some welcomed taxpayer-favorable assistance. Specifically, the IRS will not assert that an individual must include in gross income the value of identity protection services provided by an organization to which the individual provided personal information (e.g., name, social security number (SSNs), or banking or credit account numbers), nor will the IRS assert that the value of such services must be included as wages or is otherwise reportable on an IRS Form W-2 or 1099-MISC.

 

This entry was posted in Data Breach, Government Regulations, Identity Theft, IRS.

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