Does the Independent Security Study satisfy §1.132-5 on its own?

The ISS is one of two paths the regulation provides for establishing an overall security program. The study must be paired with consistent application of its recommendations, retained documentation, and periodic reassessment.

What happens if the IRS audits the executive's security perk?

The ISS is the foundational document examiners will request. A defensible study includes clear independence language, explicit reference to §1.132-5, documented facts and circumstances, and recommendations tied to identifiable risk.

Why don't you sell executive protection or other security services?

Because we cannot credibly study what we sell. The regulation's independence requirement exists for a reason. Our structure is our answer to it.

How long does a study take?

Standard engagements run twelve weeks from kickoff to delivery. Expedited delivery is available for compressed timelines driven by proxy filings, litigation events, or changes in executive status.

Can one study cover multiple executives?

Yes. A single governing study can document the employer's overall security program and address facts and circumstances executive by executive in structured appendices.

Who conducts the work?

Senior practitioners with federal protective, investigative, or intelligence experience — augmented by digital risk and OSINT analysts. Every engagement is led by a senior partner who signs the study.

What is an Independent Security Study?

An Independent Security Study is a formal, third-party report conducted under Treas. Reg. §1.132-5(m) that documents the facts and circumstances justifying an employer's executive security program. It defines the overall security program and establishes the defensible record required for the employer to exclude executive security benefits from the executive's taxable compensation as a working condition fringe benefit.

Who qualifies as an independent third party under §1.132-5?

The regulation requires the firm performing the study to be independent — meaning it does not sell executive protection, guard services, monitoring systems, or any of the security measures the study might recommend. A firm with a financial interest in the recommended security measures cannot credibly author an independent study of those measures. The independence requirement is structural, not just a disclosure obligation.

What triggers the need for an Independent Security Study?

An ISS is typically triggered by one of four events: a proxy filing season requiring perquisite disclosure analysis, an IRS audit or inquiry involving executive compensation, a board or compensation committee review of executive security perquisites, or a significant change in the executive's threat environment. Legal counsel and tax directors are usually the first to identify the need.

How is an Independent Security Study different from a security assessment?

A security assessment is an operational document focused on vulnerabilities and recommendations. An Independent Security Study is a regulatory compliance document that must also document a bona fide business-oriented security concern, assess risks objectively, make reasonable recommendations, and be prepared by an independent third party. The ISS is what the IRS examiner will request; the security assessment may inform it but does not replace it.

Can a company's existing security vendor conduct the Independent Security Study?

An existing security vendor may conduct the physical assessments that inform an ISS. The study itself, however, should not be authored by a party that sells the recommended measures. Many employers engage their existing vendor for operational assessments and a separate independent firm for the ISS itself. The two are complementary.

What specialized reports does an Independent Security Study engagement produce?

A full engagement produces specialized reports covering physical security (residential and corporate office assessments), digital risk (online footprint, OSINT, and data broker analysis), and PII exposure, along with stakeholder interviews and governance review. These reports are synthesized into the final Independent Security Study, which includes the regulatory determination and overall security program language.

How often should an Independent Security Study be updated?

Tax counsel typically treat an ISS as current for approximately three years. Reassessment is recommended sooner if material changes occur — including changes in the executive's threat environment, a significant public event (litigation, media exposure, activist attention), changes in residential or office location, or a change in executive status.

What is the IRS safe harbor for personal aircraft use under §1.132-5(m)(4)?

The regulation provides a safe harbor for personal flights on employer aircraft used in connection with a security program. The value of the flight is determined at 200% of the Standard Industry Fare Level (SIFL) rate rather than the full fair market charter rate. This safe harbor only applies when the security program meets the §1.132-5(m) requirements, including the Independent Security Study requirement.

Does the IRS and SEC treat executive security differently?

Yes. The IRS analyzes executive security under §132 to determine whether the benefit is excluded from taxable income as a working condition fringe. The SEC analyzes the same security expense under Item 402 of Regulation S-K to determine whether it must be disclosed as a perquisite in proxy filings. A benefit can simultaneously be a non-taxable fringe benefit under §132 and a disclosable perquisite under SEC rules. The two analyses are parallel but distinct.

What documentation does the IRS expect if it audits an executive security benefit?

Examiners typically request the Independent Security Study, evidence of consistent application across similarly situated executives, the employer's overall security program documentation, and any threat assessment or incident history relied upon. Studies that include clear independence language, explicit regulatory citations, documented facts and circumstances, and recommendations tied to identifiable risk have historically withstood examination.

Tax Treatment

The Security-Based Aircraft Exclusion: How the §1.132-5(m) Safe Harbor Works

By Senior Partner · April 2026 · 7 min read

Employer-provided aircraft is among the most scrutinized executive compensation items in the IRS's toolkit. The taxable value of personal aircraft use - computed under the Standard Industry Fare Level (SIFL) rates or the charter rate method - has been the subject of enforcement actions, restatements, and proxy disclosure failures. When security is cited as the basis for aircraft use, the analysis gets more complicated, and the stakes get higher.

Treasury Regulation §1.132-5(m) addresses this directly. It provides a specific exclusion for employer-provided transportation, including aircraft, when the use is tied to a documented bona fide business-oriented security concern and the ISS recommends it. Understanding when this exclusion applies - and when it doesn't - is essential for any company where aircraft and executive security intersect.

Why aircraft comes up in security programs

Executive protection programs address how the executive moves. Ground transportation is almost always a component - a trained driver, a secured vehicle, controlled routing. For executives whose threat profile includes exposure at commercial airports and terminals, or who travel frequently to high-risk geographies, ground transportation controls alone aren't sufficient. Non-commercial aircraft removes the executive from the predictable environments of commercial travel: TSA checkpoints, gate areas, scheduled flights with published passenger lists.

When an ISS documents that the specific bona fide concern affecting an executive includes risk vectors associated with commercial air travel - specific intelligence, credible threat patterns, or documented targeting in public transit environments - the recommendation to use employer or charter aircraft for security reasons follows from the analysis. That recommendation is what opens the path to the exclusion.

What the exclusion covers

Under §1.132-5(m)(4), the value of non-commercial aircraft travel provided to an executive as part of a qualifying overall security program is excludable from the executive's gross income as a working condition fringe benefit. This is the same exclusion that applies to ground transportation and other security measures under the regulation - extended to the aircraft context.

The exclusion applies to travel where the security-based recommendation is the documented reason for the non-commercial aircraft use. It does not apply to personal travel, family travel unconnected to the documented concern, or aircraft use for reasons of convenience or corporate policy not grounded in the security analysis.

The value at stake is significant. A single cross-country flight on a mid-size business jet, valued at charter rates, can represent $30,000 to $60,000 in imputed income. An executive who uses company aircraft heavily for documented security reasons - say, 50 or 60 flight segments per year - has potential W-2 exposure in the hundreds of thousands of dollars if the exclusion isn't properly structured. Getting this right matters in dollar terms, not just compliance terms.

The safe harbor amount

Separate from the full exclusion, §1.132-5(m)(5) provides a safe harbor for smaller security-related transportation amounts. The safe harbor limits the amount that qualifies for exclusion under a less-complete security program structure. This provision is most relevant for companies that have an overall security program but have not commissioned a formal ISS.

Companies with a qualifying ISS are not limited to the safe harbor - they can exclude the full documented security transportation costs that the study recommends. The safe harbor is a ceiling for situations where the documentation structure is less complete. It's not the target; it's the floor beneath which a partial program can still generate some exclusion.

For companies with an ISS in place and aircraft use specifically recommended by the study, the relevant provision isn't the safe harbor - it's the full exclusion under the qualifying program framework.

What the ISS recommendation needs to say

The aircraft exclusion doesn't arise automatically from a qualifying ISS. It arises when the ISS specifically recommends non-commercial aircraft use as a security measure for documented reasons.

That recommendation needs to be: specific about which travel is covered (all travel, certain categories, specific geographies), grounded in the threat analysis (the study should connect the recommendation to the documented facts that make commercial travel risky for this executive), and implemented consistently (if the study recommends non-commercial aircraft for domestic travel, using commercial aircraft for domestic travel creates the same inconsistency gap that Example 5 describes for other program components).

Vague language in the study - "the executive should consider non-commercial options where security concerns warrant" - doesn't support the exclusion with the same strength as a specific recommendation tied to specific documented facts. On examination, the IRS will ask whether the aircraft use matches what the study actually said. The study language and the usage record need to align.

Personal use versus security-based use

The most common complication in executive aircraft programs is mixed use: flights that serve both security-documented and personal purposes. An executive flying to the family vacation property on company aircraft may have a documented security concern that makes commercial travel risky, but the destination is personal.

The regulation's exclusion follows the business connection, not the aircraft itself. Travel that is business-related or security-recommended is excludable under the applicable frameworks. Travel that is personal - absent a specific documented security basis for that travel - is taxable compensation valued at SIFL or charter rates.

Companies with ISS-backed aircraft programs need a tracking system that distinguishes security-based travel from personal travel for each flight segment. That record is what supports the exclusion and limits imputed income to the portions without a qualifying basis.

The ISS should address this directly if the executive's usage pattern includes personal flights. A study that recommends non-commercial aircraft for documented security reasons, combined with a flight log that shows 40% of flights are clearly personal, requires that the personal portion be computed and included in income. Companies that exclude the full value of aircraft use without a documented basis for each segment are the ones that face problems when the IRS requests the flight records.

The proxy disclosure interaction

As with other executive security benefits, the IRS exclusion and the SEC proxy disclosure requirement are separate questions. Aircraft use that qualifies for W-2 exclusion under the security program framework is still subject to Item 402 of Regulation S-K if it constitutes a perquisite under the SEC's standard.

The SEC's long-standing position is that aircraft use for personal travel is a perquisite and must be disclosed regardless of tax treatment. Security-based aircraft use that is "integrally and directly related" to the executive's duties - travel for corporate business in security-recommended aircraft - may not require separate itemization as a perquisite. Security-based use that is personal in nature (traveling to a personal destination in employer aircraft because commercial travel is considered risky) remains a perquisite for SEC purposes.

Disclosure counsel should review the flight record and the ISS recommendation structure together. The IRS and SEC analyses both need to be run on the same facts, and they may produce different answers for the same flight segments.

The practical structure

The companies that handle aircraft and security correctly typically have three things in place: an ISS with specific aircraft recommendations tied to documented threat facts, a flight classification system that codes each segment as business, security-recommended, or personal, and a regular review cycle that ensures the classification and the study recommendations stay aligned as usage patterns change.

The ISS is the foundation. Without a specific recommendation grounded in the threat analysis, the security-based exclusion isn't available, and the full value of personal and mixed-use segments is income. With the ISS in place, the exclusion is available for the portions that qualify - which, for executives with significant security-based travel needs, can represent a material reduction in W-2 income.

This post is for informational purposes and does not constitute tax or legal advice. Readers should consult qualified tax and legal counsel regarding the treatment of specific programs.

AVREN ADVISORY

Independent Security Studies under Treas. Reg. §1.132-5

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