IRS Issues Guidance on Tool Plans

In some industries, employees are required to bring their own tools to work as a condition of employment. Auto repair shops are a prime example. Employers of such businesses often partake in an "accountable plan" that is designed to allow the employer to compensate the employee for using his own tools, in a manner that is tax free to the employee. To qualify, the expense reimbursement plan must meet a three part test: there must be a "business connection" between the expense incurred by the employee in purchasing the tool, and the service the employee provides to the employer; "substantiation" for the expense, which entails far more than a copy of a receipt; and a provision that any excess paid to an employee above what is substantiated, is returned to the employer.   To view the full announcement from the IRS, click here. 

No Comments

Leave a comment
Comment Information

Contact the Law Office of Williams & Associates

For more information about our tax law services, or to discuss your tax matter, call our Sacramento office at (916) 488-8501 or toll free at (800) 684-7147. You may also send us an inquiry via email.

Contact the Firm

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Office Location:

3600 American River Drive, Suite 135
Sacramento, CA 95864

Toll Free: 800-684-7147
Phone: 916-488-8501
Fax: 916-488-8196
Sacramento Law Office Map