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IRS Addresses Tax Treatment of Identity Protection Services Provided to Data Breach Victims

Aug 27, 2015

​HR360, Inc.

Services Generally Not Included in Data Breach Victims' Gross Income

The IRS has issued guidance regarding the taxability of identity protection services provided at no cost to customers, employees, or other individuals whose personal information may have been compromised in a data breach.

Background
In response to data breaches of personal information, organizations often provide credit reporting and monitoring services, identity theft insurance policies, identity restoration services, or other similar services (collectively "identity protection services") to the customers, employees, or other individuals whose personal information may have been compromised as a result of a data breach. These identity protection services are intended to prevent and mitigate losses due to identity theft resulting from the data breach.

New Guidance

Under theguidance,the IRS willnotassertthat:

The guidance does not apply to:

Click here to read the text of the guidance.

To learn more about the tax consequences of various employer-provided benefits, visit our Employee Benefits section and click on your topic of interest in the left-hand navigation menu.

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