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Privacy The Almighty Buck United States

IRS: Identity Theft Protection a Tax Deductible Benefit - Even Without a Breach (wordpress.com) 51

chicksdaddy writes: The U.S. Internal Revenue Service has announced that it will treat identity theft protection as a non-taxable, non-reportable benefit that companies can offer — even when the company in question hasn't experienced a data breach, and regardless of whether it is offered by an employer to employees, or by other businesses (such as online retailers) to its customers, the blog E for ERISA reports. In short: companies can now deduct the cost of offering identity theft protection as a benefit for employees or extending it to customers, even if their data hasn't been exposed to hackers.

The announcement comes only four months after an earlier announcement by the IRS that it would treat identity theft protection offered to employees or customers in the wake of a data breach as a non-taxable event. Comments to the IRS following the earlier decision suggested that many businesses view a data breach as "inevitable" rather than as a remote risk.

The truth of that statement was made clear to the IRS itself, which had to provide identity theft protection earlier this year in response to a hack of its online database of past-filed returns and other filed documents which ultimately affected over 300,000 taxpayers. The new IRS guidance could be a boon to providers of identity protection services such as Experian and Lifelock, though maybe not as much as one would expect. Data from Experian suggests that consumer adoption rates for identity theft protection services is low. Fewer than 10% of those potentially affected by a breach opt for free identity protection services when they are offered. For very large breaches that number is even lower — in the single digit percentages.

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IRS: Identity Theft Protection a Tax Deductible Benefit - Even Without a Breach

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  • by aaron4801 ( 3007881 ) on Monday January 11, 2016 @07:24PM (#51282747)
    Somebody has to cover the cost of fraud protection when it's the IRS doing the identity theft. [wowt.com]
  • where's the deduction verification?
    • It means that the company can count it as a straight expense. So it'd be put in the same pile as all the other things a company spends money on that isn't employment expenses - supplies, utilities, buildings, etc...

      If it was an employment expense, but deductible, it'd be like healthcare, which has it's own line.

      • wouldnt it be easier to simple make that service tax free? Why complicate things with a deduction after the fact????
        • wouldnt it be easier to simple make that service tax free? Why complicate things with a deduction after the fact????

          Think income tax, not sales tax. And yes, they made it 'tax free' because it's not reported as income for employees. Here's a trivia fact for you: If you're 'issued' a company car that you use for personal driving, it has to be reported on your W-2 and you will pay income tax on that privilege. This was caused by companies 'getting around' federal taxation by providing a huge portion of their employee compensation through 'benefits' instead of straight pay. Company car, company housing, free meals at t

  • Oh joy (Score:2, Insightful)

    by rsilvergun ( 571051 )
    another free break for corps and the rich. Thanks. Anyone else notice how everytime you go through a checkout they hit you up for some charity or another? Charities are all well and good but having my donation be some company's tax dodge really pisses me off...
    • Re:Oh joy (Score:5, Informative)

      by bobbied ( 2522392 ) on Monday January 11, 2016 @08:12PM (#51283063)

      another free break for corps and the rich. Thanks. Anyone else notice how everytime you go through a checkout they hit you up for some charity or another? Charities are all well and good but having my donation be some company's tax dodge really pisses me off...

      Not exactly.... This isn't a "tax doge", it's just making providing credit monitoring to employees and customers a non-taxable event for the receiver but retains the expense as a tax write off for the company.

      So if Target chooses to provide credit monitoring services to their employees and customers, Target gets to write it off as an expense (like they can now) and the employees and customers don't have to claim it as income (like they used to). Seems this benefits the customer and employees.

    • Charities are all well and good but having my donation be some company's tax dodge really pisses me off...

      It doesn't let them dodge any taxes though.

    • another free break for corps and the rich. Thanks. Anyone else notice how everytime you go through a checkout they hit you up for some charity or another? Charities are all well and good but having my donation be some company's tax dodge really pisses me off...

      That's not how it works. The company has to enter the money collected as revenue, and then give it to the charity - which is tax neutral, or they set up a separate account where all the money goes directly to charities - again, tax neutral.

  • I'd really like to know from all the "Everyone needs to pay their fair share!" people WHY THE FUCK THIS GOVERNMENT DESERVES MORE MONEY???

    Seriously?

    WHY do you want to give more money to the government of warrantless wiretaps?

    WHY do you want to give more money to the government of the TSA?

    WHY do you want to give more money to the government of the OPM data breach?

    WHY do you want to give more money to the government of an out-of-control tax collector?

    WHY do you want to give more money that puts tax cheats in c

    • The government that pretty much saved the world during WWII.

      The government that is pretty much the only thing standing between you and actual, honest-to-god, slavery at the hands of corporations.

      The government that provides food stamps so that you have at least a chance of not starving to death if you become unemployed.

      The government that built all the highways, bridges and other infrastructure that allows modern commerce to happen.

      The government that funded the creation of the internet which so much of mod

  • First we're told this:

    Fewer than 10%

    and later, this comparison:

    even lower — in the single digit percentages

    Less than 10% IS single-digit percentages. Without specific percentages we can't tell how much lower one is than the other.

  • So companies who have shabby security practices and lax protection of customer data get rewarded with a tax break as soon as their lack of security strikes?

    That's adding insult to injury. You not only get your data stolen by virtue of their incompetence, you also have to pay for it.

  • Securing data against intrusion and theft is really hard. If your data is an attractive target, you're basically putting yourself in a perpetual arms race which you can win only by continually investing a lot of money into it, and only by hiring really good people and listening to them. Some organizations don't want to spend money. Many don't want to listen to their security people when the security advice gets in the way of business goals.

    But that's the easy problem.

    The hard problem is securing data ag

  • by memzilla ( 2631423 ) on Monday January 11, 2016 @11:46PM (#51284055)
    It's outrageous that anyone should have to pay to prevent having false information added to their credit record. Financial institutions control what measures they use to authenticate who they give money to, so when those measures fail, financial institutions should take responsibility for their failures. Instead, financial institutions cooked-up the concept of 'identity theft' to shift responsibility for their authentication failures on to their own customers. If governments legislated consumer protection which penalized financial institutions that add false information to people's credit record (because the financial institution's measures failed to screen out an impersonator) financial institutions would clean up their act. Instead, financial institutions reap more and more profits by avoiding spending on effective authentication measures and by getting their customers to pay for the financial institutions mistakes. It's financial institutions that are in control of consumers' identities. It's not the criminals who impersonate the financial institution's customers and it's certainly not the innocent customer (whom the financial industry has convinced they are at fault because they didn't shred their garbage) that are in control of a consumer's financial "identity".
  • So why the hell isn't it tax deductible for individuals who pay for their own fraud protection?

  • The new IRS guidance could be a boon to providers of identity protection services such as Experian and Lifelock, though maybe not as much as one would expect. .. Fewer than 10% of those potentially affected by a breach opt for free identity protection services when they are offered.

    That is the boon to those services. The whole point of asking Congress to subsidize a particular industry's customers, is to increase the number of customers.

    If widget purchases are tax-deductible, then people will buy more widg

  • Most of the problems caused by Identity theft are directly caused by inept governments.

    1) We make it VERY hard to change social security numbers, which would deal with a lot of the issues.

    2) They refuse to offer effective, optional enhanced security methods as well.

    What they should do is offer a free "Secure Replacement Number", SRN, to anyone that is the victim of ID theft. Charge $50 to do it, get a picture (updated yearly), thumb print, and signature on the SRN card. Have the SRN card always start

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