If your company requires employees to use their own tools while on the job, now’s the time to make sure IRS isn’t throwing a monkey wrench into your reimbursement plan.

Your company might be getting much-needed tax-favored treatment under an Employee Tool & Equipment Plan, but IRS has just announced it’s stepping up enforcement in the area.

An accountable plan can help any number of industries (especially automotive, construction, agriculture), but IRS claims they all have one thing in common: Many of the tools plans being utilized aren’t meeting the requirements to be tax-favored accountable plans. Employees may be receiving the same amount of gross pay, but instead of it coming in as taxable compensation, it comes in as a non-taxable reimbursement.

So, whether you’ve already got a plan up-and-running or are planning to start one, expect the Service to take a much closer look at your company.

For a breakdown of IRS’ Employee Tool & Equipment Plans and what can help your company avoid a tax examination, you can visit the Fed site here.

Tags: Accountable, IRS, Reimbursements, Tax exemption