An accountable plan is one under which you reimburse your employee for employment-related expenses. The employee is requiredto “adequately account” for the expenses. This means you must receive an expense record (account book, diary, expense statement, etc.) along with receipts and other documentation indicating the expense amount, time and place, business purpose, and business relationship to anyone else involved (e.g., a client, supplier, etc.).

For the plan to qualify as an accountable plan, it must also require the employee to pay back any excess payments received. For example, say you pay $1,000 under an expense account arrangement and the employee incurs $800 in expenses. In order for the plan to qualify as accountable, it would have to require you to return the $200 not spent.

You are required to have a written plan. A sample plan and sample corporate resolution is below. Please modify as needed and, if you have questions, seek professional counsel.