In the past several months we’ve fielded numerous questions from Human Resources, Total Rewards, and Benefits professionals about identity theft protection being a non-taxable, not reportable benefit. What does it all mean? And, what’s the impact upon businesses ready to offer identity theft protection to their employees?
I’d like to take a moment to help address these questions and provide some useful information to help you decide if identity protection makes sense for your company.
Unfortunately, identity theft continues to rise. The good news is that more-and-more employers are stepping up to the plate to protect their employees and their businesses. A Willis Towers Watson study reported 70 percent of organizations will offer identity protection in 2018, making it America’s fastest-growing voluntary employee benefit. It’s a high-value perk that’s easy to roll out, and forward-thinking employers recognize how impactful it is to attract and retain talent today.
In December 2015, the Internal Revenue Service (IRS) announced that, even in the absence of a data breach, it will treat identity theft protection as a non-taxable, non-reportable benefit when offered by an employer to employees. What this means is that companies can deduct the cost of offering identity protection to their employees, and the benefit does not need to be reported on a Form W-2 as part of an employee’s gross income, should the employer pay in full or even in-part for the benefit.
The impact of this IRS policy is that employers can provide identity theft protection without increasing their federal payroll taxes (if employer-paid).
Taxable benefits, by contrast, are benefits provided to employees that the employer must add to the employee’s income each pay period. This helps to determine the employee’s total taxable income at the end of the year. Things like bonuses or group-term life insurance more than $50,000 are considered taxable benefits.
When one or more of your employees falls victim to identity theft, it can take them dozens to hundreds of hours out of the office to restore their good name. If the theft occurs due to your company experiencing a data breach, you’ll have an even bigger problem on your hands trying to maintain employee morale and loyalty. With identity theft protection from IdentityForce, you get our Exclusive Breach Guarantee. In the event of a breach we provide white-glove restoration services to any of your employees affected by the breach for 12 months – all at zero cost to your company.
Protect Your Employees, Protect Your Business
Are you considering adding identity theft protection as an employee benefit? Download the Javelin Strategy & Research 2017 Identity Protection Scorecard to see a comprehensive analysis of 18 identity theft protection providers.