What is IRS 132 Assessment?

August 13, 2021

Does your corporation expend funds protecting the founder, CEO, or a member of the Board of Directors? Or perhaps the focus is on the Head of Research and Development upon which the corporate intellectual property is based.Regardless, corporations should hire a professional security consultant to provide outside expertise to assess and document the key elements pursuant to US Code Title 26, Section 132. Corporations will find that this assessment provides valuable support for:

  1. Achieving the optimal treatment of the expenditures, for both the corporation and the person receiving the fringe benefit.
  2. Gaining a better understanding of your risk environment for key corporate leadership.

For corporations the IRS has designated certain fringe benefits as necessary to the safety of employees, partners, and directors, and as such eligible for special treatment. 26 USC 132 allows for corporations to have an assessment conducted by an outside, independent third-party to articulate certain circumstances to justify the special treatment of those security-related fringe benefits.

Key Elements of IRS-132 Assessment

Key elements of the assessment should include: threat assessment, estate protections, office and suite security, ground and air transport (local and out of area), insurance, and ongoing threat management.Within these key elements several specific items must be addressed: initial baseline threat assessment, travel accommodations, nature of air travel (commercial or private), cyber, protective personnel and security drivers and their training, operations and procedures, and security technologies.The security program at both the home and the office should address the broad categories of people, technology, and policies/procedures.Be sure to consult tax and legal experts on all matters relating to fringe benefits and their tax treatment.  It is also important to know that tax and legal issues surrounding 26 USC 132 change, and current guidance should be sought.However, as industry security professionals it is important to know that this benefit exists, and to share it with your finance and governance leaders to help them optimize the expenditure of corporate resources, and comply with tax and other regulatory guidance.Red Five frequently conducts these assessments in support of corporations facing growth, entry into new markets, rising threats in existing business lines, situations where public scrutiny is increasing, and where perhaps key leadership now need new or additional protections.Site visits, interviews, open source research, and investigative support should all be a part of the work process in conducting these IRS 132 assessments.If you have questions about how a third party security assessment can benefit your company, please contact us.

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