Guidelines & Procedures

REIMBURSEMENTS

FORM: Check Request Form or Mileage Reimbursement Form.

For reimbursement of any business-related expenses incurred personally. Prior authorization for any trip should be obtained from supervisor or department head.

APPROVED EXPENSE REPORTS

Must be accompanied by original receipts or other documentation substantiating the expenses. The following information is required for all meal and entertainment expenses:

  • The amount of the expenditure (for each meal).
  • The place (e.g. name of restaurant) where the business meal or entertainment took place.
  • The nature and purpose of the business discussion that accompanied the meal or entertainment (if the meal is for a University employee who is eating alone or with other University employees who are on travel status, this requirement is waived).
  • The name and company affiliation of each individual that participated in the business meal or entertainment.

Failure to comply with these substantiation and documentation requirements could result in the reimbursement being disallowed by IRS auditors and considered as income to you - the recipient.

In order for reimbursements to be non-taxable to its employees, PLNU must have what the Internal Revenue Service (IRS) calls an "accountable business expense reimbursement plan". "An accountable reimbursement plan" requires the following:

  • Proper substantiation of a business expenses;
  • The return of any amount advanced that exceeds the substantiated amount, within a reasonable time.
  • Any unsubstantiated and/or unreturned advance must be treated as employee wages and taxed accordingly.

PROPER SUBSTANTIATION

Proper substantiation requires employees to document the date, amount and business purpose of each expense and to have these expenses approved. If the expense is for meals and entertainment, in addition to date, amount and business purpose, documentation must also include the place (e.g. name of restaurant), and the names of any other persons for whom expenses were paid by the employee.

Return of Unused Advance

Unused amounts that exceed substantiated expenses within a reasonable time - the IRS has defined "a reasonable time" as follows:

  • An advance can be given no more than 30 days before the expense will be incurred by the employee.
  • The expenses must be substantiated and any unused advance must be returned no later than 60 days after the advance was given.

Unused Advances Not Returned in 60 Days

If substantiation and any unused advance are not received within 60 days after the advance occurred - the amount of the advance that is unsubstantiated or unreturned must be treated as employee wages and taxed in the pay period immediately following the date that this substantiation was required. Once this advance has been applied to wages and taxed accordingly, PLNU is prohibited from subsequently adjusting the employee’s wages or refunding the taxes withheld.

PLNU Responsibility for IRS Ruling

What happens if PLNU and it’s employees do not follow these rules?

If the IRS determines that PLNU does not have an "accountable plan", then all reimbursements to every employee will have to be treated as taxable wages, subject to withholding of FICA, Medicare, SDI and federal and state income taxes.

Thank you for your cooperation in helping PLNU comply with these IRS regulations. If you have any questions please contact us at Accounting@pointloma.edu