Opinion ID: 771439
Heading Depth: 3
Heading Rank: 2

Heading: Accountable Plans

Text: 9 An employer may deduct from his gross income reimbursements for business expenses incurred by an employee under a reimbursement or other expense allowance arrangement with his employer. 26 U.S.C. 62(a)(2)(A). A plan that is covered under 62, and, therefore, is exempt from employment taxation, is considered an accountable plan under 26 C.F.R. 1.62-2(c)(2)(i) (2000). 3 A plan is accountable when (1) it covers only expenses with a business connection, see id. at 1.62-2(d); (2) all expenses are substantiated to the employer, see id. at 1.62-2(e); and (3) the employee is required to return to the employer any amount paid in excess of substantiated expenses, see id. at 1.62-2(f). See also Robertson v. Commissioner, 190 F.3d 392, 395 (5th Cir.1999). If a plan does not meet these criteria, it is considered nonaccountable and is subject to withholding and employment taxes. See id. at 1.62-2(c)(3)(i) & 1.62-2(c)(5).