IRS audit - can't get Employer Reimbursement Policy

[Judy rocks]

My client is being audited by the IRS. They are paid on a W2. The clients employer does not have a written reimbursement policy for his position nor will they write a letter. They say they have no policy for his position. His position in their email is "executive consultant" but it doesn't state this anywhere in the contract. The client has a contract that doesn't go into any detail about his status. He does Development work for a film studio. This is for a mail in audit.

[JohnH]

The policy should be written, but I'm not sure that's a requirement. There just has to be a policy. In this case you just need to handle it the best way you can. Does the client have any emails or texts stating anything about reimbursements? Perhaps messages saying he can or can't get reimbursed for certain expenses he submitted? In the absence of a formal written policy, that would be pretty good support. Also, does he get any sort of transmittal with his reimbursement checks? If nothing else, he should provide copies of whatever he submitted to claim reimbursement. The fact that they paid what he submitted would constitute a policy of some sort.

[TAXNJ]

The policy should be written, but I'm not sure that's a requirement. There just has to be a policy. In this case you just need to handle it the best way you can. Does the client have any emails or texts stating anything about reimbursements? Perhaps messages saying he can or can't get reimbursed for certain expenses he submitted? In the absence of a formal written policy, that would be pretty good support. Also, does he get any sort of transmittal with his reimbursement checks? If nothing else, he should provide copies of whatever he submitted to claim reimbursement. The fact that they paid what he submitted would constitute a policy of some sort.

John, is what you are suggesting helped you in an audit?

Reason is that the IRS almost always, when auditing employee business expenses that are not reimbursed, asks for a letter from the employer that they do not reimburse them.

Maybe or maybe not the below may shed some light to the Original Poster:

http://dontmesswithtaxes.typepad.com/USTaxCourt_deWerff.SUM.WPD.pdf

[JON]

Policy

The few times I have had this I ask for a letter from the employer that outlines the expenses (what they are) and stating they are not reimbursable, but are necessary for their position. I also tell any client who is going to deduct such expenses that if audited it is the first thing they ask for, before any question of substantiation. It has been that way even in a previous century.

[JohnH]

John, is what you are suggesting helped you in an audit?

Reason is that the IRS almost always, when auditing employee business expenses that are not reimbursed, asks for a letter from the employer that they do not reimburse them.

Maybe or maybe not the below may shed some light to the Original Poster:

http://dontmesswithtaxes.typepad.com...ff.SUM.WPD.pdf

Looks like I misunderstood. I thought they were getting reimbursement, but the company doesn't have a written policy. From what you just asked, I now realize this may be a situation involving unreimbursed employee business expenses. In that case, my comments are not relevant.

[TAXNJ]

Looks like I misunderstood. I thought they were getting reimbursement, but the company doesn't have a written policy. From what you just asked, I now realize this may be a situation involving unreimbursed employee business expenses. In that case, my comments are not relevant.

It could be relevant. Don't know. Hopefully there is a way around this issue the Poster raised.

Don't know what the title the Poster says "Executve Consultant" would do since it is a W-2 employee position so do not think the employee is self employed. Sometimes companies have some fancy titles but don't know what and why the Poster states the position title in the post unless it has some meaning for the audit.

[Judy rocks]

No reimbursement letter

It could be relevant. Don't know. Hopefully there is a way around this issue the Poster raised.

Don't know what the title the Poster says "Executve Consultant" would do since it is a W-2 employee position so do not think the employee is self employed. Sometimes companies have some fancy titles but don't know what and why the Poster states the position title in the post unless it has some meaning for the audit.

All we have is a couple emails from Human Resources saying. (1) we don't have a reimbursement policy for your position (2) we have one for Independent Contractors but "I believe" your position is as an Executive Consultant. (3) Corporate legal will not authorize a letter.

So we are back to no letter just 2 somewhat cryptic short emails.

[Judy rocks]

expenses

All we have is a couple emails from Human Resources saying. (1) we don't have a reimbursement policy for your position (2) we have one for Independent Contractors but "I believe" your position is as an Executive Consultant. (3) Corporate legal will not authorize a letter.

So we are back to no letter just 2 somewhat cryptic short emails.

The clients W2 employer does not reimburse any expenses. This is standard in the industry for his position. We don't want the expenses reimbursed - just the letter for the audit.

[taxmom34]

why not use the email from HR, says the same as a letter would

[taxmom34]

just thinking about this, why the audit? did client submit in his return a large work related expense that exceeded the 2% on schedule A? that could be why the CP2000.

[TAXNJ]

The clients W2 employer does not reimburse any expenses. This is standard in the industry for his position. We don't want the expenses reimbursed - just the letter for the audit.

reply poster TAXMOM raises some good points (Posters seem to have more facts then they can place in a post).

Help us out, where has your own research taken you?

Since you are in California and if client is in California, this MAY or MAY NOT apply BUT 1st consult an Attorney.

NOTE THE WORD "MAY BE" in the following. The employer may be required by law to reimburse the employee for work-related expenses) Ask the Attorney if Cal. Labor Code Sec. 2280 applies.