Introduction:

 

The reimbursement of travel and entertainment (T&E) expenses must comply with IRS rules and regulations. Non-compliance may subject the USM Foundation and the individual to significant financial risks including tax assessments, penalties, and interest.

 

While the rules are too voluminous and complex to detail, the IRS requires an employer to establish and consistently administer an "accountable plan." Under an accountable plan, individuals can be reimbursed for expenses incurred, without negative tax consequences, when the following conditions are satisfied:

 

  • Advances and/or reimbursements are made for business expenses only
  • Advances and reimbursements are made within a reasonable period of time before or after the expenses have been incurred
  • Documentation is obtained prior to reimbursement and retained for potential IRS review substantiating:
    1. the reimbursed amounts and reasonableness thereof
    2. the timing of the reimbursement and the incurrence of the expense
    3. the business purpose of the expenses
    4. the timely return of any advances in excess of incurred reimbursable expense

 

The USM Foundation, as a charitable organization, also has a fiduciary responsibility to ensure its resources are used prudently and that individuals do not incur inappropriate or excessive expenses or gain financially.

 

Collectively the objectives of these policies, guidelines and procedures are to:

 

  • Ensure that reimbursable expenses are paid to individuals in a timely manner,
  • Ensure a clear and consistent understanding of the policies and procedures for the reimbursement of reasonable T&E expenses,
  • Ensure compliance with applicable external rules and regulations including those promulgated by the IRS,
  • Ensure that those who travel and entertain on behalf of the USM Foundation understand that the Foundation is not obligated to reimburse them for expenses that are not in compliance with these guidelines,
  • Ensure that those who incur expenses on behalf of the USM Foundation understand that reimbursements that may be considered taxable are generally not permitted. Any exceptions must be properly identified, authorized and reported to appropriate taxing authorities.

 

These policies apply to all individuals who are reimbursed for travel expenses by the USM Foundation.

 

Traveler and Entertainer Responsibility:

 

Individuals traveling and entertaining on behalf of the USM Foundation must exercise good judgment with respect to incurring T&E expenses and are expected to spend the Foundation's funds prudently. The individual requesting reimbursement is responsible for ensuring that his/her incurrence of the expense and related reimbursement request complies with all applicable policies, is properly authorized, and is supported with required receipts and other documentation. The signature on the reimbursement form of the individual requesting reimbursement affirms that these responsibilities have been met.

Payment Options and Reimbursement Deadlines:

 

Individuals are generally expected to use the USM Foundation’s Diner’s Club Credit Card or other personal credit cards to pay for T&E expenses subject to reimbursement. For expenses incurred using the USM Foundation’s Diner’s Club Credit Card, expense reports and receipts should be submitted within 5-7 business days of the monthly statement date.

 

For expenses incurred not using the USM Foundation’s Diner’s Club credit card, properly approved and documented reimbursement requests should be submitted to the Foundation within thirty (30) days of the end date of the business activity.

 

As a general rule, reimbursement requests submitted after six months (182 days) will not be paid.

 

Under limited circumstances, usually extended travel situations, T&E advances may be requested. Advances must be repaid within 30 days after the business activity.

Advance Approval for Travel:

 

All travel, except within the State of Maryland or the Washington DC metropolitan area must be pre- approved. Also, all overnight travel, regardless of location, must be pre-approved. The approval request should include:

 

 

  • The purpose of the travel and the names of the persons or entities with whom you will be meeting,
  • If the request is to attend a conference, the conference agenda should be included,
  • The destination,
  • The anticipated mode of transportation, and
  • Whether or not an overnight stay is required.

 

Any travel expense incurred without prior approval, whether using personal resources or the USM

Foundation Diner’s Club credit card, shall be the responsibility of the traveler. If such expenses were

incurred using the Diner’s Club credit card, such amounts must be reimbursed to the USM Foundation by the traveler within 10 days of receipt of the credit card bill by the Foundation.

 

Documentation supporting the pre-approval must be provided with any travel reimbursement request.

 

Changes to the pre-approved travel, if substantial and known in advance of the travel, should be submitted for approval. Otherwise, changes to pre-approved travel should be reasonable and grounded in a substantial business purpose.