SECTION 1. PURPOSE AND SCOPE

Q-1. Must an employer use this rev- enue procedure to reimburse employees for rig-related expenses?

A-1. No. Use of the rule described in this revenue procedure is not mandatory, and an employer may, outside the scope of this revenue procedure, reimburse actual expenses under an arrangement that meets the accountable plan requirements of § 62(c) of the Internal Revenue Code (Code) and regulations thereunder. Alternatively, an employer may reimburse employee business expenses under a nonaccountable plan (defined in Answer 6), or may choose not to reimburse employee business expenses.

Q-2. What is the tax treatment of amounts deemed substantiated under this revenue procedure?

A-2. If the other requirements described in Answer 5 are satisfied, the amounts substantiated in accordance with this revenue procedure are treated as paid

under an accountable plan. Thus, the amounts are not reported as wages on Form W–2 and are exempt from the withholding and payment of income and employment taxes. Also, no return of information ( e.g., Form 1099) is required for payments made under an accountable plan. § 1.6041–3(h)(1).

Q-3. Which employers may use the deemed substantiation rule provided in this revenue procedure?

A-3. This substantiation rule may be used by any “eligible employer.” An eligible employer is any employer that hires employee rig welders or heavy equipment mechanics and requires, as a condition of employment, that the rig welders and heavy equipment mechanics provide a welding rig or mechanics rig and use the rig in performing services as an employee employed in the construction, repair, or maintenance of transportation mainline pipeline. The business of transportation mainline pipeline construction or repair includes the construction, maintenance, or repair of transportation mainline pipeline up to the first metering station or connection. This includes mainline pipeline whether it transports coal, gas, water, or other transportable materials, vapors, or liquids. The first metering station or connection means the point where a valve, consumer connection, or town border station divides mainline transmission lines or higher pressure lateral and branch lines from lower pressure distribution systems.

Q-4. For which vehicles and equip- ment may eligible employers use the deemed substantiation rule provided in this revenue procedure?

A-4. Eligible employers may use the deemed substantiation rule in this revenue procedure only to reimburse employees for expenses related to the use of welding rigs and mechanics rigs described in Answer 9.