What Is an Accountable Plan?

An accountable plan is an employer reimbursement policy that meets IRS requirements — meaning reimbursements for business expenses are not treated as taxable income to the employee. To qualify, employees must have a business purpose for expenses, submit timely documentation (receipts), and return any excess reimbursement. Without an accountable plan, reimbursements are treated as additional wages subject to payroll taxes. Setting up an accountable plan is simple and saves both employers and employees money. It's especially useful for vehicle and travel reimbursements.