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Article Date:
July 2007

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Expense Allowances Can Be Dangerous

Say you give an employee a $400 monthly car allowance or you reimburse overnight business travel using a per diem arrangement. If you are using allowances and per diems, you need to make sure:



The amounts paid are for tax-deductible expenses.1


The expenses are accounted for within a reasonable period of time.2


Any excess allowances or per diems are returned within a reasonable period of time.3

In revenue ruling 2006-56, the IRS ruled that if you use an expense allowance or per diem ... Log in to view full article.

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