August 15, 2009
IRS Provides Guidance on Tool Reimbursement Plan in PLR 200930029
Filed under: News
Vision Payroll

In Private Letter Ruling 200930029, the Internal Revenue Service (IRS) ruled that a taxpayer’s expense reimbursement arrangement (the Plan) satisfied the accountable plan requirements of §62(c). The taxpayer in question expanded its business to include a new division that sells professional tools and equipment and repairs and maintains the tools. The technicians who repair the tools “are required to provide and maintain their own tools and equipment for performing the repair and maintenance work.” Under Regulations §1.62-2(c)(1), payments under a reimbursable plan are not taxable if the plan “meets the requirements of business connection, substantiation, and returning amounts in excess of substantiated expenses.” Since the taxpayer’s plan meets these requirements, “all payments made under the Plan in accordance with the terms of the Plan will be excluded from the Technician’s income and will not be wages subject to the withholding and payment of employment taxes.” Contact Vision Payroll if you have any further questions on accountable plans.


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