Expense Reimbursements

Scope

Describes the University’s Accountable Plan for reimbursement of authorized business expenses.  The Accountable Plan rules apply to all reimbursements of authorized business expenses, including both travel and non-travel related.

Reason for Policy

In accordance with IRS regulations, the University has an Accountable Plan that allows it to reimburse employees for authorized business expenses with no effect on taxable compensation.

Policy Statement

The requirements for an Accountable Plan are that an employee must:

1. Have paid or incurred business-related expenses while performing services for the University,
2. Properly account for or substantiate the expenses within 90 days after the expenses are paid or incurred,
3. Return any reimbursement in excess of amounts substantiated within 120 days after the expense is paid or incurred.

To satisfy the first requirement, there must be a business connection or purpose for the expense and the expense must qualify as a deductible expense according to IRS regulations.

The second requirement is met when the employee documents the expense within 90 days after the expense is paid or incurred. 

The third requirement is met when the employee returns to the employer any reimbursement that is in excess of the amounts substantiated or properly accounted for within 120 days after the amount was paid.

If one or more of the above three requirements are not met, the reimbursement to the employee will be included in the employee's wages, subject to tax withholding, and reported to the IRS and to the employee on the applicable form.

Non-employees
The substantiation requirements of this policy also apply to non-employees (e.g., independent contractors and students) on University business. If the non-employee does not properly account to the University for their reimbursed expenses, then any advance or reimbursement will be reported as income to the IRS and to the non-employee on the applicable form.

Definitions

Accountable Plan – a reimbursement arrangement that requires employees to substantiate their business-related expenses to the University within a reasonable time and to refund any excess reimbursement within a reasonable period

Accountabilities

Departments:

• Verify that all necessary documentation is submitted for the reimbursement request
• Validate that the expense is a valid business expense for the University
• Encourage  requests for reimbursement be submitted within 90 days of being paid or incurred

University Employees:

• Follow University policies and procedures for allowable expenses when submitting requests for reimbursement
• Request reimbursement within 90 days of the expense being paid or incurred
• Supply documentation supporting the business expense

Additional Details

Forms

Finance Forms – Travel and Expense Reimbursement

Related Information

Policy 22311 on Moving Expenses
Policy 22603 on Allowable Travel Expenses
Policy 22604 on Cash Advances in Travel Status

History

Revised July 1, 2019 to update the taxability of late expense report submissions.  Expenses over 90 days old will be taxed without exception in order to comply with IRS regulations.  (Extended submission to 90 days).

Policy Number 22310 - Revised and Effective 12/12/2017

Formerly Business Policy Manual - 218 – Accountable Plan Business Expense Reimbursements (revised 2/18/2005)

Procedure

Accounts Payable Shared Services – Travel and Expense: www.umsystem.edu/oei/sharedservices/apss/travel_and_expense