What is an Executive Protection Program?
An executive protection program is air travel, airport protection, ground transportation, and a traveling protective detail to ensure the safety of company executives, especially if they travel internationally. The IRS will tax the gross income of those executives for transportation security costs—unless you can show a bona fide business-oriented security concern for the executive protection provided.
Executive protection is due in part to the Internet and social media, with sensitive information about executives, such as private residences, family members, salaries, and compensation packages, not only accessible to employees, but also to the public. If a company’s stock is not performing well, a disgruntled shareholder may focus his or her anger on a CEO as the person responsible for this downturn. This frustration could lead to a serious threat, possibly an act of violence, and a reason for executive protection.
Our Executive Protection Assessments examine these types of threats and identify potential vulnerabilities through a detailed analysis of the current executive protection program and operations.
Constructed to comply with all IRS Title 26 statutory requirements along with FAA regulations, the executive protection assessment address areas such as:
- Physical and technical security supporting the select executives
- Air and ground transportation
- Policies and procedures (e.g., background screening and security awareness)
- Family members of select executives
- Information sharing and intelligence (e.g., law enforcement liaison)
- Emergency preparedness
An Executive Protection Assessment or Independent Security Study, as it is referred to in Title 26, must be completed by an independent third party. If the study finds a “bona fide business-oriented security concern” exists, it allows the company to treat certain costs associated with the company’s executive protection program as legitimately deductible expenses from the executive’s gross income for tax reporting purposes.
- It is important to understand that the IRS compliance does not require a full-time 24/7 executive protection operation. The study can determine an executive protection program can be considered to exist if the following conditions are satisfied:
A security study is performed by an independent security consultant;
- The security study is based on an objective assessment of all facts and circumstances;
- The recommendation of the study is that an overall executive protection program is not necessary and the recommendation is reasonable under the circumstances; and
- The employer applies the specific recommendations contained in the executive protection assessment to the employee on a consistent basis.