IRS: You can reimburse remote employees for internet access

Good news: Your company can safely reimburse remote employees for their home internet access without jeopardizing your compliance.

The IRS chief of employment tax examination in the Small Business/Self-Employed Division recently weighed in on this timely tech topic.

Of course, as with anything with the Taxman, there are conditions. Here’s how to reimburse for home internet access and still stay in compliance.

3 steps keep your plan accountable for internet access

For A/P to be able to reimburse home internet access as a business expense, your company must follow regular accountable plan rules. That means:

1. Employees must have a business reason for using the internet access. And yes, working from home counts as an acceptable one.
2. They must substantiate that business use. Cable or phone bill would have to be submitted, along with the percentage used for business specified.
3. Employees would have to return any excess reimbursement within a reasonable window of time.
   

Note: This is different from the way you can treat employee personal cell phones and data plans. There must be a business reason for using those, but employees don’t have to account for the business/personal use split.

It also differs from the way you can handle company owned devices that get some personal use (counts as a de minimis fringe – no substantiation required).

With work from home not going away anytime soon and becoming permanent for some, now’s the time to revisit your policies to make sure employees understand what’s expected so you’re in compliance on all fronts.

Need more information?

Premier Learning Solutions is offering a workshop, IRS Rules for Reimbursing Remote Worker Business Expenses.

Available on-demand

It covers:

• What “services” an organization should provide to remote employees so they can perform their job duties
• Which expenses employers can reimburse and under which conditions
• The difference between what’s taxable and reportable according to the IRS
• What cost factors a company needs to consider in providing internet, cell phones, etc. to its remote employees

The speaker is Pamela Fagan Shull, president of Audit Business Services, Inc.  She is a management consultant and compliance auditor to government, business, and associations with global perspective.

Click here for registration and more information.