Security Program Assessments for IRS Section 132
At its core, IRS 132 compliance, refers to a section of the Internal Revenue Service (IRS) code in the United States that governs the treatment of fringe benefits. 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 Assessment Requirements
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.
A CFR 26 Section 1.132-5 Threat Assessment and Independent Security Study, must be conducted by an established and bonafide risk management specialist. 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 26, Section 1.132-5 – gross income exclusions associated with “Working Condition Fringes.”
Key Considerations for IRS 1.132 Security Program and Independent Security Study Compliance
- Threat Assessment to include:
- Historical threats
- Threat information
- Likely threats (probability versus impact), whether targeted, opportunistic, or collateral.
- Geographically specific threats
- 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.
How We Can Help
At ETS Risk Management, our mission is to help businesses protect their most important assets while staying compliant with all relevant regulations. Through our security assessments and risk management studies, we ensure that your organization’s security measures are robust, compliant, and aligned with your overall operational strategy. Our team have extensive experience conducting IRS section 1.132.5 compliance assessments and have supported myriad clients in the provision of independent security studies and comprehensive reports.
An unbiased, independent third-party consulting firm, ETS Risk Management satisfies the IRS requirements for Section 132 assessments. Compliance with IRS 1.132.5 ensures that your organization properly reports and manages the provision of these benefits, minimizing tax liabilities and avoiding potential legal complications.
For further reading on ‘IRS Threat Assessments and Compliance‘ see our related articles.
Contact us to further discuss how we can help you navigate IRS 132 Compliance while optimizing your security protocols.
