FAVR Insurance Compliance
FAVR insurance compliance is a tax rule on fixed and variable rate (FAVR) reimbursement programs. Unlike vehicle age compliance, vehicle cost compliance, and the 5,000 mile rule, FAVR insurance compliance is rarely applied.
For a driver to be in FAVR insurance compliance, they must carry at least the amount of insurance coverage that they are reimbursed for having. If they do not carry that level of coverage, their reimbursement will be tested for taxable income.
FAVR insurance compliance rarely applies because most companies set an internal insurance requirement and withhold reimbursement from drivers that do not meet it. Since reimbursement is withheld, drivers are not reimbursed for the higher level of coverage and no tax test is triggered.
Discover more about FAVR tax rules, and read the IRS guidelines for FAVR programs, as of 2019. It’s important to understand and remain up-to-date with all FAVR rules.
Or find out more about insurance compliance measures, including how Cardata’s experts can assist your company in making sure that drivers carry the correct insurance. To learn more about insurance compliance on FAVR programs, talk to a Cardata expert.