Ezel / IRS Rulings / 200945056

Recharacterizing wages violates the accountable-plan rules

Number
200945056
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Adjusted Gross Income Defined
Topics
Income and deductions
Code sections
§ 62
Ruling dated
September 16, 2009
Publicly released
November 6, 2009
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Counsel advised that the proposed treatment was an impermissible recharacterization of wages. Counsel also concluded that it violated the business-connection requirement of an accountable plan. The advice noted that the IRS had issued formal Chief Counsel Advice on a similar issue involving a tool plan and could provide a copy for further assistance.

Ruling snapshot

  • Question: Does the proposed expense allowance comply with the accountable-plan business-connection requirement?
  • Outcome: Advice given
  • Key authorities: IRC § 62; accountable-plan business-connection requirement

Full text (IRS public release)

ID: CCA_2009091608552041 Number: 200945056
Release Date: 11/6/2009
Office: -----------------------------
UILC: 62.00-00

From: ---------------
Sent: Wednesday, September 16, 2009 8:55:30 AM
To: ----------------------------------------
Cc: --------------------------------------
Subject: RE: Expense Allowance

--------

This is impermissible wage recharacterization and violates the business connection requirement of an
accountable plan. Although in a somewhat different context, we have issued formal CCA on this issue
involving a tool plan. ---------can get you a copy of that and we can help with this specifically if you'd like.

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