Taxability
Rules for Accountable Plan for Travel Reimbursement
The university’s travel expense reimbursement program meets the Internal Revenue Service (IRS Publication 463) definition of an accountable plan. As a result, expenses and reimbursements that conform to this policy are not reported as taxable income to the individual.
Under the accountable plan, business travel expense reimbursement must meet two requirements:
- Reimbursements must be made for business expenses only. A business expense is defined as: “A clear and understandable reason for travel that is specific enough to explain how the university benefits from the expenses being claimed (it should answer who, what, when, where, and why.”
- Travelers must provide a statement substantiating the amount, dates, use and business purpose of expenses within a reasonable time (normally not to exceed 60 days) after the expenses are incurred. Original receipts must be attached to the statement.
If for some reason the traveler is unable to provide an accounting for the expenditures within the time frame indicated above, the traveler should provide documentation as to the reason for the delay. Reimbursement is subject to the availability of funds, and the department responsible for providing the budget has the discretion of denying the reimbursement especially if the tardy expense reimbursement request crosses fiscal years.
Rules for Travel Advances Received for Group Travel
When a travel advance is involved, such as for group travel for athletics or study abroad travel trips, additional accountable plan rules are involved as follows:
- The advance is not disbursed to the traveler more than 30 days prior to incurring the expenses; and
- Any cash advance amount not used for business travel for which the advance is received is returned to the university within 60 days after the expenses were paid or incurred.
Failure to account for a travel advance will result in:
Past Due 60 days
- Suspension of travel advance privileges
Past Due 90 days
- Withholding of taxes on the advance from the employee’s pay check; inclusion in the traveler’s W-2 wages.