Employers can now provide an additional workplace benefit using pretax dollars.
The IRS on Dec. 30, 2015, released Announcement 2016-02, Federal Tax Treatment of Identity Protection Services, which allows preferential tax treatment for employer-provided identity theft benefits regardless of whether the employer has experienced a data breach.
In August 2015, the IRS had released Announcement 2015-22, Federal Tax Treatment of Identity Protection Services Provided to Data Breach Victims, which dealt specifically with employees and others whose personal information may have been compromised in a data breach. This announcement allowed those affected by a breach to exclude from their taxable gross income the value of identity protection services provided to them by the breached organization.
