News & Insights

Security Programs Win Big in the New Tax Plan

Security Programs Win Big in the New Tax Plan

Insights & Perspectives

The role of a security consultant is as diverse as the risks and challenges organizations face. In my experience, the “physical security team” is often the last group to secure funding when financials are good and the first to lose it when they go bad. It is for this reason that I was excited to learn that the newly approved tax plan has the potential to significantly benefit security programs. If you’ll give me just a few more minutes of your time, and continue reading, I’ll explain further.

In my career, the closest I ever came to an “organizational blank check” for security was my time with the AIG Emergency Readiness Program and as the firm’s Offshore Security Compliance Group Manager.  Money for equipment, consultants, training, and travel seemed to be without limit and the security organization’s capabilities rivaled those of many government organizations.  I still have the commemorative coin I received from management the year the firm topped the Security 500®.  Anyone who has been alive for the last decade knows how abruptly the financial tides at AIG turned, and with that, how the investment in security programs waned. 

Security, like many other parts of the economy, seemed slow to recover. This has not been helped by the levels of complacency and defeatism that have developed over the past few years. The resulting settlement on nothing needs to be done or nothing can be done often reaches the highest levels of leadership. This state has been further compounded, in recent years, with changes in the threat landscape, increased media coverage of information system breaches, and greater dependence on technology in our lives and businesses, making it no surprise that the emergence of funding for cybersecurity capabilities within organizations has become an undeniable force. 

Unfortunately for many “physical” security organizations, the funding for improvements in security technologies, even those tasked with securing critical information assets, seems to be lagging in comparison to investments in network analytics, Network Operations Centers, and Security Information and Event Management (SIEM) software. Acquiring funds to maintain or replace a security program may not be an arduous effort following the signing into law of H.R. 1, the Tax Cuts and Jobs Act, P.L. 115-97. This new law includes provisions that redefine “Qualified Real Property” (Subsection (f) of Section 179 of the IRS Tax Code) to include fire protection and alarm systems and security systems, which may have a positive impact on this trend. According to an article by the Security Industry Association (SIA), which advocated strongly for the new provisions, the change “empowers businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year.” Their article goes on to indicate that “under former IRS regulations, security and fire protection systems were excluded from Section 179 deductions, forcing customers to depreciate these costs over the 39-year depreciation life for buildings.”

I need to take a moment and let everyone know that I am not a tax professional or accountant. That said, the true benefits of this change should be reviewed with your finance team and/or tax professionals.  At first glance, it appears that this change will have a very positive impact on the Return on Security Investment (ROSI) calculations.  Many of you must provide ROSI information and justifications when submitting for funding of new projects. This change should, in an ideal world, provide for a greater chance of project approval.  With that in mind, 2018 may be a great time to relook at your deployed security systems for improvement opportunities. If your security department budget has already been approved for the year, you haven’t missed the boat.  I would suggest, in this case, that 2018 may be an ideal time to conduct gap analyses or broader threat and risk assessments to determine areas and assets that may not have been afforded sufficient protections in the past due to budgetary restrictions. This will allow for the development of a very strong business case for your security department budget for the 2019 fiscal year.   

About the Contributor

Matthew R. Dimmick, PSP, CPD. With over 24 years of experience, Matthew is an accomplished Security Professional with extensive domestic and international experience in the development, design, implementation, and management of programs involving all aspects of physical security, security operations, compliance, VIP protection, emergency planning, and crisis and project management. He currently works as a Principal Consultant for Introba providing security and resilience consulting services within the Command, Control, and Communications team.  His career began in the US Army as a Military Police Officer, Dog Handler, and WMD (CBRN) Counter-Terrorism specialist as a founding member of the NJ National Guard’s 21st Civil Support Team (light). 

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