The IRS is watching — Why having an accountable plan is so important

Description

Abstract: An “accountable plan” comprises policies and procedures for handling and reimbursing employee business expenses according to IRS guidelines. Without such a plan, these expenses must be included in the employee’s gross income, and the amounts are subject to employment taxes and withholding. If a practice fails to report this income and pay the appropriate taxes, it could become subject to back taxes and penalties. This article describes typical employee business expenses and explains the substantiation requirements for an accountable plan.