500.1 - General
There are four basic types of expenses for which employees may be reimbursed by the University. The documentation and timing requirements relating to expense reimbursement requests are essentially the same, but there are some differences in procedures, depending on the type of expense being reimbursed. In descending order of frequency, these expense types are:
- Purchase of miscellaneous goods and/or services
- Travel expenses
- Entertainment expenses
- Moving expenses
As long as the employee meets the following requirements, reimbursements are generally non-taxable under "accountable plan" rules:
- Expenses must be incurred in connection with the employee's duties
- Expenses must be substantiated within 60 days of the date the expense was incurred
- Any excess reimbursement must be returned to the University within 120 days after the expense was incurred
All requests for expense reimbursements must be approved by the appropriate individual(s) before submission to Accounts Payable for processing. Employees may not approve reimbursement requests for expenses they have incurred themselves.
500.2 - Miscellaneous Goods and/or Services
Whenever possible, a University purchasing card should be used for miscellaneous goods and/or services. There are two benefits to using a purchasing card in these situations. First, employees do not have to utilize personal resources to make the purchase, then submit a request for reimbursement. Second, because purchases made with a University card are considered under Kansas sales tax law to be payments made directly by the University, such purchases are exempt from Kansas sales tax.
However, there are many situations where the use of a purchasing card is impractical or impossible. In these cases, the employee is required to pay sales tax on the purchase, even though the University is reimbursing the employee for the cost of the purchase. To be reimbursed, the employee must submit a completed payment voucher and original receipts documenting the date, time, place, amount and business purpose of the expenditure.
500.3 - Travel Expenses
Travel expenses relate to expenses incurred when an employee is considered "out of town" under IRS guidelines. Generally, in order for a trip to be considered out of town, an overnight stay is required. Employees must complete a travel expense report, obtain proper approval(s), and submit the report and associated original receipts to Accounts Payable.
If travel does not involve an overnight stay, auto expense (mileage or actual gasoline & oil) is generally a tax-free reimbursement. However, the cost of meals when an employee is not "out of town" is considered a personal expense by the IRS, and reimbursement of such meal expenses would result in taxable income to the employee. Accordingly, the University does not reimburse such meal expenses. However, in certain circumstances, a meal not considered a travel expense may be reimbursable as an entertainment expense. See Section 500.4 below.
500.4 - Entertainment Expenses
Entertainment expenses are generally meals at which a University employee hosts non-employee guests for a business-related purpose. Due to abuses of entertainment expense deductions, the IRS has very stringent requirements for substantiation of such expenses. Contact the Director of Finance for more information on these requirements, preferably before the entertainment has taken place. Entertainment expenses are reported on the entertainment expense report. As with other types of reimbursement requests, the report must be accompanied by original receipts.
500.5 - Moving Expenses
In certain circumstances, the University may reimburse newly-hired employees for moving expenses. Reimbursement of many types of moving expenses are tax-free to the employee, but there are many other moving-related expenses for which reimbursement is considered taxable income to the employee. To help classify moving expenses between non-taxable and taxable, use the moving expense report.
The WUTH is presented here in HTML format. Click on the links in the link box on the right to go to a specific section of the handbook. A printable version of the handbook in PDF format will be forthcoming in the future. Significant portions of the WUTH are adapted from The Texas A&M University System Tax Manual, the nonresident alien tax websites of Towson University, Cornell University, and The University of Missouri, and information provided by Arctic International LLC.