Security Systems and Fire Protection Systems - Tax Incentives

Written by: Don Stephens

If you're a seasoned business owner, you've likely tried to hone in on every tax deduction you're entitled to. With the revision to the IRS tax code Section 179, small to medium-sized businesses now have something to look forward to.

Prior to the revision, Section 179 allowed businesses to deduct up to $500.00 in property expenses during the same tax year. Though this allowed businesses to deduct expenses such as repairs and equipment costs, expenses such as security systems (such as CCTV cameras) and fire protection systems (such as fire alarms and indoor fire sprinklers) were not considered an expense that could be written off.

Changes to Section 179 explained

Here's a simple explanation of how the IRS tax code Section 179 works. The tax code allows businesses to deduct the full price of any equipment or qualifying property they have either purchased or financed during a given tax year. Thus, businesses are encouraged to make investments that increase their revenue.

Before the revision, businesses could not exceed more than $500,000 in deductions. Post revision, the deduction cap has been raised to $1,000,000 but with one caveat -- businesses can only qualify for the deduction if they spend less than $2.5 million on qualifying purchases. That means large businesses are almost immediately disqualified due to their massive annual budgets. However, most small to medium-sized businesses typically fall within this range of annual spending.

Now, qualifying businesses will be encouraged to make significant improvements (in a single tax year) and make the purchases they've likely been holding off from due to a lack of incentives. Qualifying expenses now include security systems and fire protection systems.

 

Security Systems

Every business benefits from a security system. Before the change to the tax code, businesses were essentially discouraged from investing in systems that protected the safety of their customers and employees. Now that businesses can deduct the costs of security systems, they're now fully incentivized to take advantage of the latest and greatest technology currently in the market.

Security systems are essential to every business because even smaller operations have something to protect. This can include customer information, inventory, property and much more. With a security system in place, business owners can rest assured they have an added layer of protection against thieves.

 

Security systems range from sophisticated biometric scanners to sensitive alarm systems. One of the most practical security systems available are CCTV camera systems. Not only do cameras provide surveillance for any given business, but they often act as deterrents. Often the mere sight of a security camera will make a bad guy think twice before engaging in mischief.

 

Fire Protection Systems

Organizations such as the NFSA (National Fire Sprinkler Association) have fully taken advantage of the revisions to the tax code, making promotional videos that stress the need for increased fire safety. With slogans such as "retrofit with fire sprinklers and deduct" the industry has certainly embraced the tax revision full heartedly.

The NFSA cites several instances in which fires have devastated businesses and taken countless lives. The Iroquois Theater fire in Chicago in 1903 claimed more than 600 lives. Another 500 people were killed in the Coconut Grove Nightclub fire in Boston, MA in 1942. More recently, 100 people were killed and many more injured in the 2003 Station Nightclub fire in West Warwick, RI.

Essentially, tragedies like these can be avoided with the implementation of proper fire protection systems. With the new revision, business owners will be more likely to invest in systems to avoid future tragedies from occurring.

Generally speaking, the most common fire protection systems you'll find within a business are fire alarms and fire sprinklers. Further still, there are four types of fire sprinkler systems that businesses should be aware of: Pre-action systems, dry pipe systems, wet pipe systems, and deluge systems. Businesses should do their homework to see which system is best for their situation.

Even CCTV camera systems can play a role in fire safety. CCTV cameras can be used to monitor the main circuits in a commercial building, generators, exit routes and high fire risk locations. You could say surveillance cameras can serve as a fire protection system in their own right.

 

What some districts are doing to keep citizens safe

Every district likely has their own way of encouraging their citizens to invest in security systems, but Washington D.C. stands out in the way it incentivizes its residents to purchase and install security cameras in a bid to increase surveillance around the District to deter crime.

This is how the program works -- private citizens, businesses, nonprofit organizations and religious institutions are given rebates to purchase and install security cameras on their property. The only catch is they must register the camera with the Metropolitan Police Department (MPD).

The rebate covers $200 per camera, with a max cap at $500 per residential address (apartments, condo hotels, home offices, etc.). Religious institutions, businesses, and nonprofit organizations have a maximum rebate of $750.

You can read the bill in its entirety here.

With the revision to Section 179 fully implemented, expect to see many small to medium-sized businesses improve their security and fire protection systems. In combination with the activities going on in Washington D.C., 2018 is truly turning into a year where many businesses will see significant upgrades to safety measures.