An accountable plan is a plan that a company uses to reimburse its employees. If these plans adhere to IRS rules and regulations, the reimbursement of expenses are deductible to the business and are not included in the employee's taxable income. A great example of how this works is when an employee drives from the office to the post office to mail a package to a customer. The employee will submit the business miles driven to the employer for reimbursement. What makes the plan accountable is the submission of a report by the employee to the employer. The report can be a simple spreadsheet template with business miles, home office expenses, or business meals accompanied by receipts, a credit card statement, or a business memo documenting the business purpose of the expense.
When setting up an accountable plan, it is important to include the rules of the accountable plan in the company's bylaws. If you need help with crafting language for your accountable plan, please contact us. We can help you with the proper language that will satisfy IRS requirements.