Tax & Compliance
US IRS reimbursement structure that meets three tests to make the payment tax-free.
An accountable plan is the IRS reimbursement framework (Treasury Reg. 1.62-2) that meets three tests: business connection, adequate substantiation within a reasonable period, and return of excess. Reimbursements under an accountable plan are excluded from the employee's W-2, with no withholding and no FICA. It is the default model US employers use for business mileage.