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Security Program Assessments for IRS Section 1.132.5

Key decision-makers and leaders within corporations, both public and private, often receive extraordinary fringe benefits that may be treated as income and includable as compensation subject to tax. Under 26 CFR, Section 1.132.5, specific statutory exclusions exist if a company can demonstrate that a “bona fide business-oriented security concern exists” and if the “employer establishes, to the satisfaction of the (IRS) Commissioner, that an Overall Security Program has been provided concerning the employee involved.” An Overall Security Program, as defined by the IRS, will be deemed to exist where the employer conducts and implements the recommendations of an objective, independent security study.

IRS 1.132.5 Security Assessments

It is necessary to assign a senior consultant with extensive experience in Global Executive Risk and Protection Strategy, Security Risk Management, Organizational Design, and Security Operations to directly manage this engagement.

An established and bonafide risk management specialist must conduct a CFR 26 Section 1.132-5 Threat Assessment and Independent Security Study focused on the C-Suite Executive/s. The Threat Assessment, Independent Security Study, and the resulting recommendations will provide security risk insights and actionable security strategies while satisfying the requirements outlined in CFR 2 6 Section 1.132-5, gross income exclusions associated with “Working Condition Fringes.”

Key Considerations for IRS 1.132 Security Program and Independent Security Study

  1. Threat Assessment to include:
  • Historical threats
  • Threat information
  • Likely threats (probability versus impact), whether targeted, opportunistic, or collateral.
  • Geographically specific threats
  1. An independent security study to assess the security needs of the organization and the individual/s in question to comply with IRS 1.132.5 working conditions fringes requirements to include:
  • Residential Security Assessment
  • Office building and workplace security assessment
  • Daily transportation and travel assessment
  • JourneyManagement assessment

The end product should include (after research, interviews, and analysis) an informative report that provides a clear understanding of the threat to key leaders and then identify subsequent recommendations on how to protect and mitigate personal risk to an acceptable level. The final report should address broad and specific security control concerns and provide sound and justified recommendations.

ETS Risk Management are risk and security consultant specialists that support family offices, corporate clients, and high-net-worth individuals. ETS conducts IRS 132.5 security assessments. We have supported clients in the provision of independent security studies to provide objective assessment of all facts and circumstances. An unbiased, independent third-party consulting firm, ETS Risk Management, satisfies the IRS requirements for IRS 132.5 assessments. Our reports will give insights into security vulnerabilities and corrective measures and will satisfy IRS requirements.

Contact us to discuss more on how we have assisted other clients with IRS 132 assessments