[Research] Business and Travel Expense Policy - RI Experience and Guidance

[Karen Widmaier]

Hello,

Just a little reminder regarding expense reimbursements:

 

From: robotics-support-staff-bounces at mailman.srv.cs.cmu.edu
[mailto:robotics-support-staff-bounces at mailman.srv.cs.cmu.edu] On Behalf Of
Cheryl Wehrer
Sent: Tuesday, September 11, 2012 1:40 PM
To: Ri-people
Subject: Business and Travel Expense Policy - RI Experience and Guidance

 

Dear RI People,

As you may know, the university implemented a new Business and Travel
Expense Policy effective March 14, 2011 (see
http://www.cmu.edu/finance/controller/bte/files/bte_policy.pdf
<http://www.cmu.edu/finance/controller/bte/files/travel_policy_index.pdf> .)
I am writing to share some of RI's experience with the policy and to provide
some important guidance.

*	Please submit all expense reimbursement requests to your
administrator promptly. Promptly is within thirty days of the occurrence of
the expense.  Under the new policy, expenses submitted in Oracle later than
90 days after the expense is incurred will be treated as
compensation/taxable income.  This is an IRS requirement (see explanatory
excerpt from policy website below).  We in RI average about five taxable ERs
per month due to late submissions. 
*	Expense reimbursement requests submitted to your administrator
greater than thirty days after the expense are in the "risk window" for tax
implications.  If you submit a reimbursement request past thirty days,
please actively monitor your expense report (ER) submission to ensure that
it is submitted in Oracle well before day 90.  Employees receive emails from
Oracle when ERs are submitted on their behalf by an administrator.  This is
your verification that the expense report has been submitted in Oracle.
*	We have continued emphasis on business justifications for expenses
for both expense reports and PCard transactions.  Report preparers will do
their best to fill in the blanks for you, but they may need information
beyond what you have typically provided in the past. Expense justifications
should include the answers to these questions: 

*	Who             Who was the purchase for?  Who are the affected
individuals?
*	What            What was purchased?  What does the purchase
represent?
*	Why (How)  Why was the item purchased?  Why did the event take
place? How does it relate to business?
*	When           When did the activity/charge occur?
*	Where          Where is the event held?  Where does the item reside?

If you have any questions, please don't hesitate to contact me or your usual
expense preparer or approver.

Thank you,
Cheryl

_______________________
Excerpt from:
https://cms-staging.andrew.cmu.edu/finance-controller/bte/faqs/taxes.html




Why are expense reimbursements taxable after 90 days?
<https://cms-staging.andrew.cmu.edu/finance-controller/bte/faqs/taxes.html> 


The IRS requires an employer to require its employees to submit business and
travel expenses for reimbursement by the employer within a reasonable period
of time following the incurrence of the expenses.  Otherwise, the
reimbursement is taxable to the employee.

The IRS has indicated that requiring an employee to submit an expense for
reimbursement within 60 days of the incurrence of the expense meets the
reasonable period of time test.   See additional information from external
tax advisors
<https://cms-staging.andrew.cmu.edu/finance-controller/bte/files/sd_tech_mem
o.pdf> .

After considering relevant factors, including benchmarking of peer
institutions, financial and sponsor reporting obligations, IRS-related
information and the frequency of faculty and staff travel, Carnegie Mellon
has determined that, to comply with IRS requirements, it would be
appropriate and within IRS requirements to require employees to submit
business and travel expenses for reimbursement by the University within 90
days of the incurring the expense or completing the travel.      

As a result, any request for reimbursement of an expense submitted more than
90 days following the date the expense was incurred or the travel was
completed will be treated as taxable to the employee (and subject to income
and withholding taxes).

-- 
Cheryl Wehrer | Associate Director for Finance and Administration | Robotics
Institute, Carnegie Mellon | 412-268-3744 | wehrer at cmu.edu

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