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The Business Case for CEO Security: IRS Code 132 and Tax Savings
In the first few weeks of 2025, boards of directors have started asking what steps a company is taking to protect their CEO. What’s more, the mitigation strategies for improving the CEO’s security posture may be tax deductible. While this may include executive protection agents and camera systems, there are other ways to mitigate risk. Not everyone needs a 24/7-armed protective detail. Other options that provide favorable tax treatment to the business could include exclusively traveling by private aircraft, a dedicated driver, and/or scrubbing the CEO’s personal information off the Internet.
A tragic event involving a high-profile executive in late 2024 has heightened concerns about personal security for CEOs and board members. Companies are now prioritizing risk mitigation strategies and revisiting security policies to ensure the safety of their leadership. However, many organizations may not realize that some of these measures can be structured in a way that qualifies for tax deductions under IRS Code 132, specifically the “working condition fringe” exemption.
Understanding IRS Code 132 and Executive Security
IRS Code Section 132 allows certain security-related expenses to be considered “working condition fringe benefits,” meaning they are deductible by the company and not counted as taxable income for the executive—provided they are deemed necessary for the executive’s job performance. The IRS has historically recognized security concerns for high-profile executives as a valid business expense, particularly when there is a credible threat.
Companies can leverage this provision to cover a range of security measures, including:
- Physical Security Enhancements – Installing security systems at an executive’s residence or providing on-site security personnel.
- Secure Transportation – Providing a company-paid driver or requiring the CEO to travel exclusively by private aircraft.
- Cybersecurity Measures – Removing personal information from public databases to reduce the risk of doxxing or targeting.
Justifying Security Measures as Business Expenses
For these expenses to qualify under IRS Code 132, companies must demonstrate a legitimate business purpose. Typically, this includes conducting a security risk assessment by an independent third-party security expert that identifies potential threats to the CEO or board members. If the assessment confirms a heightened risk, the company may be able to substantiate the need for security measures as necessary for job performance. As always, all tax strategies should be reviewed by a company’s legal and accounting tax professionals.
Recent events have underscored the growing risk to executives, making it more critical than ever for companies to take proactive security measures. Given the increased focus on executive safety, now is the time for companies to review their security strategies and align them with tax-advantaged policies.
What’s the Most Important Step Companies Should Take in 2025? Conduct a comprehensive Independent Security Study (ISS).
Conducting an ISS starts with an evaluation and analysis of the nature and credibility of existing and future threats to the executive by an independent third-party expert. Some clients have the misconception that they must be famous to be a target. By reviewing open-source information across a variety of public and proprietary databases, and both traditional and social media, we can determine the availability of the executive’s personally identifiable information. Even if an executive keeps up with their digital hygiene, there is always that one family member (whether a teenager or grandma) that shares entirely too much information online. These seemingly harmless shares could in fact create a large security vulnerability.
In conjunction with the online threat profile analysis, a comprehensive physical security assessment is conducted. In this phase, assessors conduct an evaluation of the defensibility, architecture, electronic security systems, infrastructure dependencies, operations, staffing, communications, alarm monitoring, and response elements of the overall security posture at the executive’s residence(s), primary office, and any corporate transportation hubs and assets (i.e., aircraft, hangars, watercraft, docks, vehicle storage).
The Bottom Line
With CEO security now a pressing concern, companies must act swiftly to protect their executives while also being mindful of cost efficiency. IRS Code 132 offers a potential way for businesses to implement necessary security measures without imposing additional financial burdens on their leadership. By understanding how to leverage tax-deductible security strategies, companies could enhance executive safety while maintaining compliance with federal tax regulations.
As boardrooms continue to ask tough questions about security in 2025, now is the time for businesses to take action. Investing in executive protection is no longer just a precaution—it’s a business necessity. This proven process has helped provide safety and peace of mind to many clients. To uncover your potential threats and mitigate gaps in your security program, seek an independent third-party expert, like Guidepost, with a depth of subject matter experts who can provide customized solutions to your unique needs. Our specialized team includes former CIA, FBI, and intelligence professionals who bring unparalleled expertise in risk mitigation and security planning. In addition to keeping your senior executives secure, you just might obtain a tax benefit by doing so.
Cody Shultz
Senior Director
Cody Shultz serves as a director of investigations and private client protection for Guidepost Solutions and is based in the D.C. office. Having served with the Central Intelligence Agency, he is regularly called on to advise ultra-high net worth (UHNW) individuals and family offices as a strategic advisor for executive protection, security, privacy, and reputational decisions in response to public and private crises, particularly those that related to AI and deepfakes.
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