11 min · 2026-07-02

Accountable Plan Mileage Reimbursement: Tax & Payroll Guide

How accountable plans make mileage reimbursements tax-free to employees and deductible to employers — requirements and GPS documentation.

Three IRS accountable plan rules

1. Business connection — driving must be for employer benefit

2. Substantiation — adequate records within reasonable time

3. Return of excess — employee returns overpayments

Failure converts payments to taxable wages with payroll tax implications.

Automated logs provide substantiation backbone; employees still tag business purpose where required.

Define 30–60 day window for employees to return overpaid mileage after reconciliation.

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