14.12 Accountable Plan

Policy Information

Purpose and Summary

To establish the requirements for reimbursing employees for travel and business expenses under the University’s Accountable Plan. This policy provides guidance for common travel and business expense reimbursement situations but is not intended to address every circumstance. All reimbursements, including those not specifically addressed, must comply with applicable Internal Revenue Code (IRC) and Code of Federal Regulations (CFR) requirements to qualify for reimbursement under an Accountable Plan. Reimbursements that meet the requirements of this policy are generally not considered taxable income to the recipient. 

Source

CFR, including but not limited to 26 CFR §§1.62-2(c-h)

IRC, including but not limited to 26 U.S. Code §§ 62(c) and 274(d)

IRS Publications, including but not limited to 5137 

Scope

This policy applies to all University locations and units, including all University extensions, satellite locations, and off-site campus units, both domestic and international. 

Definitions

1. Accountable Plan: A method used to reimburse University employees for business-related expenses that satisfy CFR and IRC requirements by:  

   1. Having a Business Connection, being  
   2. Adequately Accounted For within a Reasonable Period of Time, and  
   3. Requiring any excess amounts to be returned within a Reasonable Period of Time.  

   When Accountable Plan requirements are met, the reimbursement of business-related expenses is not taxable income, nor subject to withholding or W-2 reporting.

2. Adequately Accounted For: Supporting business expense documentation includes amount, date of expenditure/dates of travel/time away from home, business address, and Business Purpose. A trip report, itemized receipt, paid bill or similar item is generally required unless expenses are reimbursed with per diem rates. These details and documentation must be supplied within 90 days to be within a Reasonable Period of Time for adequate accounting.
3. Business Connection: A direct link or relationship between an allowable business expense and the operations of the University. The expense paid or incurred is directly connected to the employee’s services. Business Connection differs from business purpose by describing how the expense directly relates to business operations versus describing the why or intent behind the expense.  
4. Reasonable Period of Time: As soon as possible after the initial expense or completion of travel, and:
   1. To be Adequately Accounted For: The IRS allows 60 days in practice, but as a complex and diversely organized entity, the University allows 90 days for adequate accounting.
   2. For return of excess amounts: 90 business days after the trip ends, or when the expense is incurred, whichever is later.
5. Travel Cash Advance: An advance issued to a Traveler seven days in advance of the trip to ease the burden of out-of-pocket expenses while conducting University business. The amount is determined based on a budget assessment of the trip. See 14.11 Travel Payment & Funding for additional details and alternative payment methods.

Policy

1. The University of Arizona reimburses employees under an Accountable Plan.  
2. Reimbursements outside of the Accountable Plan are taxable income, subject to withholding and reportable as wages on the employees’ W-2. 

Procedures

1. Employee expense reimbursements should be submitted through the Travel and Expense System within a Reasonable Period of Time.
   1. Return of excess amounts for Travel Cash Advances10 days. See 14.11 Travel Payment & Funding. Any excess amount not returned within 90 days does not meet the Reasonable Period of Time; therefore, subject to withholding or W-2 reporting.
2. All employee reimbursements exceeding 90 days are routed to the Account Manager for approval. This approval does not exempt the employee from any University tax reporting requirements.  

Related Information

14.11 Travel Payment & Funding  
University Card Training 
CFR
IRC
IRS Publications
Business Purpose Guide
Travel & Expense Frequently Asked Questions