Hit by a cyberattack? Your ransom payment to hackers may be tax deductible.
Don Williamson, a tax professor at the Kogod School of Business at American University, wrote a paper about the tax consequences of ransomware payments in 2017. Since then, he said, the rise of ransomware attacks has only strengthened the case for the IRS to allow ransomware payments as tax deductions.
“It’s becoming more common, so therefore it becomes more ordinary,” he said.
That’s all the more reason, critics say, to disallow ransomware payments as tax deductions.
“The cheaper we make it to pay that ransom, then the more incentives we’re creating for companies to pay, and the more incentives we’re creating for companies to pay, the more incentive we’re creating for criminals to continue,” said Josephine Wolff, a cybersecurity policy professor at the Fletcher School of Tufts University.
For years, ransomware was more of an economic nuisance than a major national threat. But attacks launched by foreign cybergangs out of reach of U.S. law enforcement have proliferated in scale over the past year and thrust the problem of ransomware onto the front pages.