Employee Business Expenses and the Accountable Plan Rules


Summary

This practice note discusses the "accountable plan rules" under Treas. Reg. §§ 1.62-2(c)(5), (h)(2), 31.3121(a)-3(b), 31.3306(b)-2(b), and 31.3401(a)-4(b). Employers that reimburse employees for the expenses they incur as a result of travel or other business on behalf of the employer (reimbursement of personal expenses almost always being taxable) must adhere to these rules or the amounts will be treated as taxable wage payments to the employee, subject to applicable federal income tax withholding (FITW), Social Security and Medicare taxes (all FICA taxes, as applicable), state income tax withholding, federal unemployment (FUTA) and state unemployment (SUTA) taxes, and Form W-2 reporting.