Tax benefits for the executive when considering executive protection


Often time when selling our services to prospective clients we talk about the value of our service compared to the next guy. We get into the return on investment for hiring good quality executive protection. We might discuss options; security driving, close protection, residential security, corporate security, overt or covert, all the goods of executive protection. We probably forget one important benefit that has to do with budget. It is the fringe benefit of tax returns. No matter how we look at it budget is important especially to those executives running a large corporation. For this information look at Internal Revenue Service Tax Code 26 CFR 1.132-5.


If an employer provided their executive transportation for "bona-fide" business-oriented security concerns or if the executive purchased the transportation themselves to provide him or her additional security a deduction may be in order. If by chance a vehicle is provided and due to some security concern the vehicle is modified with security features then again a deduction may be in order.


So what constitutes a "bona-fide" business-oriented security concern? A threat of death or kidnapping of, or serious bodily harm to, the executive or a similarly situated employee because of the executive's status; or a recent history of violent terrorist activity (such as bombings) in the geographic area in which the transportation is provided.


What if the executive has an overall security program? One in which security is provided to protect the employee on a 24-hour basis? The employee must be protected while at the employee's residence, while commuting to and from the employee's workplace, and while at the employee's workplace. In addition, the employee must be protected while traveling both at home and away from home, whether for business or personal purposes. An overall security program must include the provision of a bodyguard/chauffeur who is trained in evasive driving techniques; an automobile specially equipped for security; guards, metal detectors, alarms, or similar methods of controlling access to the employee's workplace and residence; and, in appropriate cases, flights on the employer's aircraft for business and personal reasons.


An overall security program with respect to an executive is deemed to exist if these conditions are satisfied:

(A) A security study is performed with respect to the employer and the employee (or a similarly situated employee of the employer) by an independent security consultant;

(B) The security study is based on an objective assessment of all facts and circumstances;

(C) The recommendation of the security study is that an overall security program is not necessary and the recommendation is reasonable under the circumstances; and

(D) The employer applies the specific security recommendations contained in the security study to the employee on a consistent basis.


If a bona fide business-oriented security concern exists with respect to an executive the bona fide business-oriented security concern is deemed to exist with respect to the executive's spouse and dependents.


These fringe benefits apply to both Executives and Government Employees. Some of these descriptions were taken directly from 26 of the Code of Federal Regulations 1.132-5. These are just options and it is recommended that you talk to your accountant to see if these would apply to your circumstances.


Remember Executive Protection is more than just security it is a luxury service and as always stay safe and vigilant.




667 views0 comments

Recent Posts

See All