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TaxMomNJ, Senior Tax Advisor
Category: Tax
Satisfied Customers: 245
Experience:  7 years experience with tax preparation company, over 500 hours of tax courses taken
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We are an office technology company and provide gas allowances

Customer Question

We are an office technology company and provide gas allowances to all 30 sales representatives who are employed here. If the sales representatives track mileage and report odometers, can they avoid paying taxes on the gas allowance? What kind of programs need to be implemented to report this information to the government?
Submitted: 7 years ago.
Category: Tax
Expert:  TaxMomNJ replied 7 years ago.

Hello,Customer You have a very good question. There are different reimbursement plans a company can use to determine how an employee's reimbursement is treated when it comes to taxes.


An accountable plan is one in which, reimbursement is not subject to federal taxes.


These are the three requirements for an accountable plan:

  1. There must be a business connection and the expense must be reasonable.
  2. There must be reasonable accounting for the expenses.
  3. All excess reimbursements must be repaid in a reasonable time.

If these three requirements are not met, the plan is considered to be a nonaccountable plan, in which the reimbursement is subject to federal taxes (including social security and medicare taxes).


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