employee receives tax free pay for rig rent

[outwest]

Oops! Should be Rev PROC 2002-41

Which I found while reading Rev Ruling 2002-35....

Doug

[Armando Beaujolais]

I'll be danged and stand corrected. The way I read it, Rev PROC 2002-41 provides rules for accountable plans that give employees with welding rigs $13 an hour if the employee provides his own fuel, or $8 an hour if the employer provides the fuel.

That means it's a tax-free payment to the employee, and $15,000 for the year is in line assuming a lot of time spent welding.

Nice work folks. I never woulda thunk it.

[taxmandan]

Yes, but....

2002-41 specifically applies only to "eligible employers" who are performing services on "transportation mainline pipeline." It describes this as "up to the first metering station or connection." So this won't apply to just any employee with a welding rig working on bridges, buildings, etc. They still have to use Sec 162(a) rules.

[Unregistered]

It seems to me that Rev Rul 2002-35 clearly states that unless the compensation paid to the employee meets the requirements to be an accountable plan, then the payments are wages. I don't see how a flat rate paid out as described by the original poster could be considered to meet the accountable plan requirements.

[Unregistered]

It seems to me that Rev Rul 2002-35 clearly states that unless the compensation paid to the employee meets the requirements to be an accountable plan, then the payments are wages. I don't see how a flat rate paid out as described by the original poster could be considered to meet the accountable plan requirements.

I agree. If it was a $15,000 flat fee payment, it wouldn't qualify as a standard hourly rate for an accountable plan. It has to be the prescribed hourly rate and other accountable plan requirements need to be met. Key word "accountable."

I was just dead set in "wrong," and was surprised to find out there's a special provision for welding rigs. The $15,000 had to be an approximate amount or a coincidence in order for it to work. If it was just an educated guess by the employer, the accountable plan rules are broke.