Quick Review
Employee tax identity theft can affect more than an individual employee. Employers may also need to account for time away from work, HR and payroll involvement, and employee financial stress.
Key findings:
- Resolving identity theft may involve agency contacts, documentation, identity verification, and follow-up.
- Employers can model potential productivity and administrative costs using their own workforce assumptions.
- Gallup’s replacement-cost estimates can help employers consider hypothetical retention scenarios, but they do not show that a specific benefit will improve retention.
- Tax Guardian Protect+ is an IRS-focused tax identity monitoring and alert service for individuals. Employer program details and pricing should be confirmed with Tax Guardian.
- The calculator described in this article is intended for planning scenarios, not as a prediction of incidents, savings, or retention outcomes.
A New Channel for Evaluating Tax Identity Protection
Employee tax identity theft is often viewed as a personal financial problem. However, when an employee discovers suspicious IRS activity, an unexpected tax filing issue, or possible misuse of their identity, resolving the situation can require significant time and attention.
For employers, the potential impact extends beyond the individual. Employees may need time away from work, HR and payroll teams may become involved, and financial stress may affect the employee experience.
Understanding these potential costs can help business leaders evaluate employee protection benefits as part of a broader workforce strategy.
1. Lost Employee Productivity
Resolving identity theft can involve contacting government agencies, gathering documentation, verifying identity, and following up on unresolved issues.
Some of that activity may take place during working hours, creating a potential productivity cost for employers.
A simple way to estimate that exposure is to consider:
- The number of employees in the organization.
- The assumed percentage who experience a relevant identity theft incident annually.
- The average time spent resolving an incident.
- The portion of that time occurring during working hours.
- The employee's loaded hourly compensation.
For example, an employer with 500 employees and an average annual salary of $60,000 could model the financial impact of different incident rates and resolution times.
The resulting estimate is a planning scenario, not a prediction of how many employees will experience tax identity theft.
2. HR, Payroll, and Management Costs
Employees dealing with tax identity issues may seek assistance from their employer, particularly when questions involve W-2 information, employment records, payroll documentation, or personal information.
Depending on the situation, HR, payroll, management, or IT personnel may spend time helping employees understand what information is available and which steps to take.
Employers can estimate these administrative costs by multiplying the time spent assisting affected employees by the loaded hourly cost of the personnel involved.
This calculation should include only actual or reasonably anticipated employer involvement. Not every tax identity theft incident requires employer assistance, and employers should avoid counting the same hours in multiple cost categories.
3. Employee Financial Wellness and Retention
Financial wellness has become an important consideration in employee benefits planning. When employees experience financial uncertainty or identity-related problems, the resulting stress can extend into their working lives.
For employers, this raises a broader question: What is the financial value of retaining employees and offering benefits that support their financial well-being?
Gallup's workforce research estimates that replacing an employee can cost approximately 40% of annual salary for frontline workers, 80% for technical and professional employees, and 200% for managers and leaders.
Consider a company with 500 frontline employees earning an average salary of $50,000.
A one-percentage-point reduction in annual turnover would represent five fewer employee departures. Using Gallup's 40% replacement-cost estimate, that hypothetical improvement would represent $100,000 in avoided replacement costs.
This demonstrates the financial importance of retention. It does not establish that any particular employee benefit, including Tax Guardian Protect+, will produce that improvement.
Employers should evaluate identity protection alongside their broader benefits strategy, employee preferences, and retention objectives.
4. The Cost of Offering Employee Tax Identity Protection
Tax Guardian Protect+ provides IRS-focused tax identity monitoring and alerts designed to help individuals stay informed about suspicious activity involving their tax identity. Learn more about PROTECT+ Workforce.
For employers, Protect+ is available beginning at 100 employees for $17,940 annually, equivalent to $14.95 per employee per month.
When evaluating the investment, employers should consider more than the subscription price. Relevant questions include:
- How many employees would be covered?
- What existing identity protection benefits are available?
- Do those benefits include IRS-focused monitoring?
- How would employees learn about and use the protection?
- How does the investment align with the organization's financial wellness and employee benefits strategy?
An employer with 100 covered employees would have an annual Protect+ investment of $17,940. Pricing for larger employee populations should be confirmed through an approved quote.
5. Estimating Your Organization's Potential Financial Exposure
Every organization has a different workforce, compensation structure, turnover rate, and employee benefits strategy.
That is why Tax Guardian developed an Employer Impact & Benefits Calculator.
The calculator allows employers to explore four areas:
- Employee productivity: Estimate the potential work time associated with resolving identity theft incidents.
- Employer administrative costs: Model the possible involvement of HR, payroll, management, and IT personnel.
- Retention economics: Understand the financial value of hypothetical reductions in employee turnover using published replacement-cost benchmarks.
- Protect+ investment: Calculate the estimated annual cost of providing employee tax identity protection.
The calculator uses adjustable assumptions and distinguishes hypothetical scenarios from verified research. It is intended to support business planning rather than predict actual incidents, savings, or employee retention improvements.
6. A More Comprehensive Approach to Employee Protection
Traditional identity protection conversations often focus on credit monitoring, financial accounts, and identity restoration.
Tax-related identity threats introduce additional considerations involving IRS records, tax filings, and the misuse of personal information.
For employers, understanding these risks is part of evaluating the overall employee protection and financial wellness experience.
While no protection program can eliminate every identity theft risk, organizations can take a more informed approach by evaluating their current benefits, identifying potential coverage gaps, and helping employees understand the resources available to them.
Calculate Your Potential Employer Impact
How much could employee tax identity theft affect your organization?
Use the Tax Guardian Employer Impact & Benefits Calculator to explore potential productivity costs, employer administrative expenses, employee retention economics, and the annual investment required to offer Protect+.
[Calculate Your Employer Impact]
Or schedule a consultation with Tax Guardian to learn how Protect+ can complement your employee benefits and protection strategy.
Research and methodology
The calculator draws on published research and employer-provided assumptions. Relevant sources include:
- Gallup, Employee Turnover Is Preventable, but Often Ignored
- U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation
- Society for Human Resource Management, Employee Benefits Research
- Federal Trade Commission, What to Know About Tax Identity Theft
- Internal Revenue Service, Identity Theft Central
Methodology disclaimer: Calculator outputs are illustrative estimates based on user-entered values, published workforce cost research, and adjustable scenarios. General identity theft research is not treated as a verified tax identity theft incidence rate. Retention scenarios are not proven outcomes of Tax Guardian Protect+. Actual costs and results vary by employer, incident, and circumstances.
Frequently Asked Questions
What is employee tax identity theft?
Employee tax identity theft involves suspicious IRS activity, a tax filing issue, or possible misuse of an employee's identity. Resolving an issue may require the employee to contact agencies, gather records, verify identity, and follow up.
How can employers estimate potential productivity costs?
Employers can model potential exposure using the number of employees, an assumed incident rate, average resolution time, the portion of that time occurring during working hours, and loaded hourly compensation. The resulting estimate is a planning scenario, not a prediction.
Does Gallup's replacement-cost research show that identity protection improves retention?
No. The replacement-cost estimates provide general workforce benchmarks for hypothetical planning. They do not establish that Tax Guardian Protect+ or any other specific benefit will improve retention.
How is Tax Guardian Protect+ priced for employers?
This article provides a price for an employer with 100 covered employees and notes that pricing for larger populations should be confirmed through an approved quote. Employers can contact Tax Guardian to discuss program details.
For additional information and IRS guidance, visit IRS Identity Theft Central.
Disclaimer: Tax Guardian Software Solutions provides access to legal services offered by the Tax Guardian Network. None of the above corporate entities, nor its officers, employees, or sales associates directly or indirectly provide legal services, representation, or advice. Any forms provided are not legal advice and should not be construed as such. You should consult with a lawyer to confirm the form meets your needs. Use of this website and the services is subject to Tax Guardian Software Solutions terms of service and data protection addendum.
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