The IRS has a long-standing revenue procedure which they refer to as a “FAVR Allowance”. FAVR is an acronym for Fixed And Variable Reimbursement. The IRS FAVR Allowance lays out a very specific methodology that companies may use to calculate an individual reimbursement rate for each of their drivers, based on the expected costs they incur for the business use of their personal vehicle.

The IRS states that if an employer follows this methodology to calculate an individual reimbursement rate for each driver, the reimbursement may be paid 100% tax-free by the employer to the employee. This means:

• No W2 reporting
• No FICA taxes
• No federal, state or local tax withholding

The CRS Program has been developed in accordance with the FAVR code enabling our reimbursements to qualify for 100% tax-free status. This results in greater savings for our clients and more money in the pockets of participating drivers.