Accountable Plan

[Unregistered]

Does anyone know of a good website or service that sells a generic accountable plan?

I know the ins and outs, regulations and rules, I am lazy and not confident in my legal document writing skills. I just want a simple but reliable template and then I can just enter my information and go from there. I've looked all over this crazy internet with no results---AAAAUUUAAHHGGHH!!!

TIA

[S T]

Cfs

CFS Small Business Tools Module has an Accountable Business Expense Reimbursement Plan (fill in the blanks)

Sandy

[OldJack]

So what is a plan?

So what do you want an accountable plan to say? In all my years of this business I have never seen a specific "accountable plan document" in use. Yes...reimbursement forms and employee HR employee manuals are/or could be considered accountable plans.

Usually for a small business the employer simply tells an employee to go do something for my business and I will reimburse you (the plan). The employee fills out some sort of "expense report" summarizing s/he whats to get reimbursed, attached proof documents/receipts, gets reimbursed, and you have met the requirements of an accountable plan.

However, for executives, corporate minutes sometimes resolve to reimburse or hold harmless the employee for certain types of expenses. Someone could point a finger at that and call it an accountable plan.

[WhiteOleander]

I have a client right now who has a mail audit for 2004. They are auditing employee business expenses, 2106-Sch A.
One of the things the client has to give the IRS is a copy of the company's reimbursement plan.
Not sure how well the t/p will be obtaining these. He travels and this makes it difficult for him to contact the old employers.

[Snaggletooth]

Knocking on Wrong Door

Ollie-Ollie-Oleander, I think the IRS has got the shoe on the wrong foot.

It is the EMPLOYER who should have to furnish this "plan" under audit, and not the employee. In absence of satisfying the IRS, the EMPLOYER should have reported reimbursements on the employee's W-2. It's not unusual for the IRS to be knocking
on the wrong door.

Can anyone out there postulate as to why IRS virtually NEVER audits employers and concentrates its investigations on individuals and small parties who virtually cannot fight back and have no political connections? Maybe I've answered my own question.

Maybe you've heard enough of me, but if you read further you are doomed into hearing what a "plan" should be or should not be.

Sections 401 and 125 require a literal "plan" co-administered by an employer and financial institution prior to allowing a deduction for retirement contributions and health insurance. In fact, insurance companies have these "plans" already approved by the IRS and will determine the operating conditions for an employer whom they are selling to. This is a formal and written plan. The employer can accept these conditions or reject them and develop their own "plan" for IRS approval if they so desire.

I don't see any requirement for such a "plan" to be formalized to simply reimburse employees. Old Jack above has the same concept that I do. Of the verbiage "accountable plan", the "accountable" is far more important than the "plan." An expense report should bear dates, names, receipts, and purpose prior to reimbursement by an employer. Failure to do so subjects the employee to possible treatment as income and possible loss of expense by the employer.

If I were your client, I would give the IRS the name and address of the former employer, and tell them to go do their own dirty work.

[Jiggers]

Not necessarily incorrect!

The taxpayer has the burden of proof that he can deduct the expenses on the 2106/Schedule A. You can't deduct any employee expenses that you want, they have to be "for the convenience of the employer". I believe that the IRS is looking for a statement from the employer that these expenses are necessary and that the employer does not reimburse for them.

[Unregistered]

To White Oleander

We also have a client involved a mail audit process and the IRS also wants them to produce a copy of their employer's reimbursement plan. The bad news, her employer is now out of business and she cannot reach any of her former bosses.

I wish the IRS would leave the little man alone and stop collecting money for a privately owned Fed. It sickens me.

I thought I'd throw that last line in to provoke some discussion.

[WhiteOleander]

The taxpayer has the burden of proof that he can deduct the expenses on the 2106/Schedule A. You can't deduct any employee expenses that you want, they have to be "for the convenience of the employer". I believe that the IRS is looking for a statement from the employer that these expenses are necessary and that the employer does not reimburse for them.

I think this is exactly the point the IRS is trying to get to. This t/p is a real "fly by the seat of your pats" guy. And if he doesn't like a law, he just ignores it. So, it will be interesting how well he can document his deductions.

[Bees Knees]

The "employer's convenience" rule applies to depreciation of listed property, such as auto, computers, cell phones, etc. [IRC Section 280F(d)(3)], for Office-In-Home expenses [IRC Section 280A(c)(1)], and the exclusion of meals and lodging provided to an employee on the employer's premises [IRC Section 119]. The term is not used in any other place in the code.

That means all other business deductions on Form 2106 and Schedule A have to meet the standard "ordinary and necessary" test of Section 162(a) that any other business deduction has to meet.

You could, for example, have an employee purchase a calendar for his office because his employer is too cheap to buy one and doesn't think the employee needs one, but the employee argues he does, and therefore deduct the cost on Schedule A. The calendar was not for the "employer's convenience," but it certainly was an ordinary and necessary expense.


What you can’t deduct on Schedule A is expenses that are liabilities of the employer and not the employee. Such as a sole shareholder of an S corporation paying corporate expenses out of his pocket because the corporation doesn’t have the money. Such expenses could be capitalized as additional payments for stock, or reimbursed under an accountable plan, but they would not be deductible by the shareholder as business expenses if they are expenses the shareholder as an employee is not liable for. Such as the cost of a corporation renting office space, or paying the phone bill, etc.


In contrast, a partner can deduct such costs of the partnership, provided the partnership agreement says so.

[OldJack]

I had never really thought about it Bees... I appreciate the nice analysis. Its one of those things we do without really thinking about why its this way or that.