What are the conditions for an employee reimbursement plan to be considered accountable?

For an employee reimbursement plan to be classified as accountable, it must meet specific criteria to ensure that it is used solely for business purposes. One of the key conditions involves reasonable accounting and the timely repayment of any excess reimbursements.

When a reimbursement plan is accountable, employees must substantiate their expenses with proper documentation and must return any reimbursements that exceed the actual expenses incurred for business purposes. This ensures that the funds provided to employees are directly related to the costs they incurred while performing their job duties, promoting a fair and transparent process.

Meeting this requirement not only helps in maintaining compliance with IRS regulations, but also protects the employer and employee from any potential tax liabilities that might arise from non-compliance. Therefore, the necessity for reasonable accounting and timely repayment of excess reimbursements underlies the integrity and accountability of an employee reimbursement plan.