Employers can now use pre-tax dollars to provide an additional workplace benefit. Preferential tax treatment is now permitted for employer-provided identity-theft benefits, even if the employer has not experienced a data breach. Also, an employer may exclude the value of identity-theft services from an employee’s gross income and wages. This tax treatment does not apply to cash provided to employees in lieu of identity protection services or to the proceeds received under an identity-theft insurance policy. Also, employers must still consider potential state and local tax implications. More information is available here.
IRS: Pre-Tax Dollars OK for Identity-Theft Benefits