The University of ArizonaThe University of Arizona
Financial Policies & ProceduresFinancial Policies & Procedures
 

14.12 Accountable Plan

Purpose: To provide guidelines and procedures for travel for The University of Arizona employees, students and affiliates.
Policy Owner: FSO Operations - Travel


  1. The University of Arizona reimburses employees under an “accountable” business expense reimbursement plan.  Reimbursements or other expense allowances made under an accountable plan generally are nontaxable and do not have to be reported by the employer on the employee’s Form W-2.
  2. This summary is meant to provide guidance for the majority of situations related to employee travel and business expenses, but it is not exhaustive. Any disputed expenses, whether or not specifically addressed in this summary, must meet applicable requirements of the Internal Revenue Code and Treasury Regulations in order to qualify for reimbursement under an accountable plan.
  3. In order to qualify as an accountable plan, payments for expenses must meet the requirements of Internal Revenue Code Sections 62, 161, 162, 274, etc., as applicable, and related Treasury Regulations. These requirements include:
    1. Business connection requirement -- Advances, allowances or reimbursements are only for specified deductible business expenses that are paid or incurred by the employee in connection with his/her services as an employee.
    2. Substantiation requirement -- The employee must substantiate each business expense with a detailed record, such as a trip report or log, and documentary evidence, such as itemized receipts or paid bills, specifying the following:  
      1. The amount of each separate travel or business expenditure
      2. Dates of departure and return,  or dates of expenditure
      3. Number of days away from home spent on business, if travel
      4. Address of business
      5. Business purpose
  4. Return of funds requirement -- If an advance was received, the employee must return to the employer, within  10 days after the trip ends, any amount in excess of the expenses substantiated. 

  5. Expense reimbursements should be submitted to FSO Operations as soon as possible after the initial expense or completion of travel, and within a reasonable period of time. IRS guidance states that reimbursements submitted within 60 days will be treated as having been accounted for within a reasonable period of time. However, the university is a complex organization with diverse operations and unique circumstances in all its disciplines. As such, there is sufficient justification to have an additional 30 days added to the reasonable period in the University’s Accountable Plan Policy. The following is additional guidance for employees:

    1. Reimbursement requests submitted within 90 days will be considered qualified and nontaxable under the accountable plan. Reimbursement requests submitted after the 90th day will generally be nonqualified, and taxable to the payee. Nonqualified reimbursements are processed through payroll to collect the appropriate taxes and remitted to the IRS.
    2. An exception may be requested by preparing and submitting a written justification and corrective action plan, approved by the department head and college dean / unit vice president (or designee), along with the expense reimbursement to FSO Operations. Approved exceptions will be treated as qualified and non-taxable; otherwise, the payment will be treated as nonqualified. Multiple exception requests from an individual or unit will be subject to additional reviews and approvals.