The first wave of companies audited for their tool reimbursement plans are about to be joined by many others. See which industries are next on the hit list: IRS first targeted car dealers and repair/auto body shops for special attention regarding the tool reimbursement plans they offered employees.

Now the Service is extending the net to include the agriculture, aviation and construction industries.  

So what are the feds looking for? Companies that have “reimbursement” plans that don’t require their employees to substantiate tool expenses and/or return excess reimbursements to their employers. 

Plans like that have been touted in many industries as a cost-saving measure. (It’s a gain to the employee, and the company saves by reducing its employment taxes.) Problem is, many companies didn’t realize (or just didn’t care) that they were basically buying into a scam. 

Tags: Audits, IRS, T&E, Tool reimbursement