Sample Accountable Plan Template

(For Contractors, S Corps, and Small Businesses)

ACCOUNTABLE PLAN POLICY

Effective Date: [Insert Date]
Company Name: [Insert Business Name]
Prepared By: [Insert Owner’s Name or Title]

1. Purpose

This Accountable Plan is established pursuant to IRS Regulation §1.62-2 to reimburse employees and/or shareholders for business expenses that are ordinary, necessary, and directly related to the business of the Company.
Reimbursements made under this plan are not considered taxable income to the recipient and are deductible by the business.

2. Covered Individuals

This plan covers:

• Employees of the Company
• Officers and shareholders who perform services for the business

(For single-owner S corporations, this includes the owner-employee.)

3. Qualifying Expenses

Expenses must be business-related and substantiated to qualify for reimbursement. Examples include:

• Vehicle expenses (mileage or actual costs for business use)
• Home office expenses (portion of utilities, internet, rent, or mortgage interest directly related to business use)
• Telephone and internet (business-use portion only)
• Travel and lodging related to business activity
• Meals with clients or during business travel
• Office supplies, tools, and equipment used for business purposes
• Continuing education or professional dues

4. Substantiation Requirements

All expenses must be properly documented and submitted within a reasonable period after they are incurred.
Each reimbursement request must include:

• Date of the expense
• Amount of the expense
• Business purpose of the expense
• Supporting documentation, such as receipts, mileage logs, or invoices

Mileage reimbursements should include:

• Date of travel
• Destination and purpose
• Number of miles driven

(Use IRS standard mileage rate for the applicable year.)

5. Timing Rules

To comply with IRS guidelines, the following timing rules apply:

• Expense Submission: Expenses must be submitted within 60 days after they are paid or incurred.
• Return of Excess: Any advances or excess reimbursements must be returned within 120 days.
• Annual Review: The Company will review reimbursements annually to ensure compliance.

6. Method of Reimbursement

Reimbursements may be made through:

• Check, ACH, or payroll adjustment (recorded as a reimbursement, not wages)
• Expense reports or reimbursement forms submitted to the Company

The Company will maintain documentation supporting all reimbursements and store records for at least seven (7) years.

7. Nonaccountable Expenses

Expenses that are not properly substantiated or submitted outside of the time limits above will be treated as nonaccountable and included as taxable wages to the employee or officer.

8. Authorization

All reimbursements must be reviewed and approved by the Company owner, officer, or designated manager prior to payment.

9. Plan Amendment or Termination

The Company reserves the right to modify or terminate this Accountable Plan at any time. Any changes will be communicated in writing to covered individuals.

Acknowledgment

I have read and understood the Company’s Accountable Plan policy and agree to comply with its requirements.

Signature: ___________________________
Name: ______________________________
Date: _______________________________

⚙️ Optional Attachment: Expense Reimbursement Form