Business Expense Policy

Statement and Purpose

Table of Contents

This policy outlines the procedures employees are required to follow for business expenses.

Certain terms in this policy are defined at the end of the policy.

Entities Affected By This Policy

All University faculty and staff.

Reason for Policy

Seattle Pacific University requires employees to provide specific information on expenses prior to reimbursement to ensure good stewardship of University funds, as well as to meet IRS requirements for expense reimbursements. IRS requirements exceed our own need for accountability, so the policies are built to meet IRS minimum requirements (see IRS Publication 463 [pdf] ).

Policy Version: 1.0

Responsible Office: Financial Affairs 
Responsible Executive:
Assistant Vice President for Financial Affairs

Effective Date: December 8, 2017
Last Updated:  
December 8, 2017 

The IRS Tax Code Basic Premise

The basic premise is easy and straightforward: if an employee receives any payment from an employer or receives any benefit provided by the employer, it is considered compensation and, as such, is taxable unless specifically exempted by the IRS tax code. Any payment includes salary, honorariums, gifts or expense reimbursements. The IRS tax code does give employers specific guidelines to exempt expense reimbursements from employees’ taxable income by establishing an Accountable Plan. Expense reimbursements made under an accountable plan are excluded from income and need not be reported on Form W-2. The following describes SPU’s plan and the employees’ reporting requirements.

Accountable Plan

Seattle Pacific University reimburses employees for business expenses and those expenses that relate to entertainment, operational travel and professional travel, provided there is a clear business connection. For accountable plan purposes, purchasing card (P-card) expenditures are also considered reimbursement-related transactions until the time the monthly statement accounting is received by the Controller's Office. In order to prevent reimbursement from being included in taxable wages, IRS rules require an employee to provide adequate accounting to the employer for business expenses. This payment documentation, including _card expenditure documentation, must be submitted within 30 days after expenses incurred by the employee or after the monthly P-card statement is received. If documentation is received over 60 days past the date the expense is incurred or P-card statement is received, the reimbursement or P-card charge will be considered a taxable reimbursement to the individual claiming the reimbursement or holding the P-card. These expenses are considered out of compliance with the University's accountable plan. Business expenses are substantiated by adequate records or sufficient evidence corroborating an employee's own written and oral statements.

Timely submission of Expenses

Expense reimbursements and Purchasing-Card (P-card) documentation are due within 30 days of the expense or receipt of the statement. Expense reimbursements and P-card documentation received 60 days or more after the expense is incurred or statement received will be treated as a taxable reimbursement to the individual claiming reimbursement or holding the P-card. These expenses are considered out of compliance with the accountable plan date-related safe harbors.

Reimbursements will not be provided if turned in later than 6 months after the expenditure was incurred. P-card incurred expenses will be withheld from your next paycheck if turned in later than 6 months beyond the statement date.
All expenses, reimbursements and P-card reconciliations must be turned in by the 2nd close at year-end (approximately July 15th) to be considered timely. Expense reimbursements will not be provided if turned in after this deadline and P-card expenses outstanding for the fiscal year will be withheld from your next paycheck if not submitted by the 2nd close.

Definition of “Adequate Record”

An adequate record includes an account book, expense report or similar item recorded at or near the time of the expense. Itemized receipts are necessary for lodging and other expenditures. A credit card statement is not considered an adequate receipt for IRS purposes. If a transaction is under $50 and a receipt is difficult to obtain, it is allowable to document the expense and note the lack of receipt.

For travel expenses incurred away from home, the traveler must record the following:

  • The cost of each expenditure for transportation, meals and lodging, including incidentals.
  • The date of departure and return, and the total number of days spent away from home on business purposes.
  • The destination or location of travel.
  • The business purpose of the travel.
  • The person(s) entertained.
  • The business relationship of the person(s) entertained.
  • The presence of the employee requesting reimbursement.

Conference Agendas--For travel that is conference related, a conference agenda must be submitted as part of the documentation.
The University reimbursement form and reporting requirement are designed to meet management objectives and to fulfill the “adequate” accounting rules of the IRS.

Expense Advances

The University provides permanent employees and authorized student leaders with the opportunity to obtain the necessary cash for purchases or travel expenditures in the form of Expense Advances. Advances are given to the employee immediately prior to departure or needed use and are considered loans until an adequate accounting for the expense is made by filing a reimbursement voucher. A reimbursement voucher must be filled out within the 15 days following the completion of expenditure or return from travel. If the reimbursement voucher is not completed within 30 days of the travel, the amount will either become taxable income to the employee or deducted from the employee’s next paycheck. This University reporting requirement protects SPU employees from the IRS requirement that all excess amounts be either returned or added to the employee’s wages and be subject to tax and withholding requirements.

University Purchasing Cards

(See Purchasing Card Policies & Procedures)

Frequent travelers and individuals with spending authorization are provided with University purchasing cards to be used for individual user profiles, which describe the cardholders’ approved expenditure needs. The profile may be exclusively for travel and entertainment purposes or exclusively for purchases of goods, or it may include travel, entertainment and the ability to purchase goods. The employee cardholders must provide adequate accounting for all charges made on these cards, just as with cash expenditures. All rules of adequate accounting outlined above apply to purchasing card payments. Institutional purchasing cards may only be used for the execution of University business. The explanation of purchasing card charges must be provided within 30 days of the time that the monthly statements are received. The timely accounting of these charges is the responsibility of the cardholder, and, like other unsubstantiated expenses, if the accounting is not completed within the time allowed, the amounts charged will either become taxable income to the employee or deducted from the employee’s next paycheck and the use of the card will be withdrawn.

Vice presidents, deans or directors may request purchasing cards for themselves or members of their staff. Contact the purchasing card administrator in the PD for an application.

Definition of Terms

Please see our Policy Glossary for definitions of terms used in this policy.

Related Policies and Procedures