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as a reimbursement or other expense allowance
arrangement if--
(1) such arrangement does not require the
employee to substantiate the expenses covered by
the arrangement to the person providing the
reimbursement, or
(2) such arrangement provides the employee the
right to retain any amount in excess of the
substantiated expenses covered under the
arrangement.
C. Section 1.62-2, Income Tax Regs.
1. Overview
In pertinent part, section 1.62-2(c)(1), Income Tax Regs.,
provides: “[T]he phrase * * * [reimbursement arrangement] means
an arrangement that meets the requirements of paragraphs (d)
(business connection), (e) (substantiation), and (f) (returning
amounts in excess of expenses) of this section.” In pertinent
part, section 1.62-2(c)(2)(i), Income Tax Regs., provides that,
if an arrangement meets those requirements, “all amounts paid
under * * * [it] are treated as paid under an ‘accountable plan’”
(accountable plan). In pertinent part, subdivision (ii) of that
section provides that “only the amounts paid under the
arrangement that are not in excess of the substantiated expenses
are treated as paid under an accountable plan.” Payments under
an arrangement that does not satisfy one or more of the
requirements of paragraphs (d), (e), or (f) are treated as paid
under a “nonaccountable plan” (nonaccountable plan), and, even if
the arrangement satisfies those requirements, payments “in excess
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