This program supports the University of St. Thomas’ compliance with the Internal Revenue Service’s (IRS) Code and Regulations.  This program provides the guidelines for determining the taxability of employee reimbursements.  This process applies only to employees of the University of St. Thomas.  It does not apply to reimbursements made to non-employees.

 

 

 

This policy has been established to provide guidelines on university reimbursement for those expenses incurred by university employees on business. It is university policy to reimburse employees for all expenses that are reasonable, necessary, and actually incurred for authorized university business.

 

Employees are expected to:

 

·         Exercise good judgment with respect to expenses, determining the most economical means of obtaining lodging, meals, transportation, supplies, etc.

·         Spend university money carefully and judiciously.

·         Claim reimbursement only for necessary and reasonable expenses (i.e., employees are expected neither to lose nor gain financially).

 

Supervisor / Person Authorizing the Expenses – the supervisor or other authorized person is more familiar with expenses incurred on behalf of their departments.  This individual is responsible for approving the expense reimbursements.  Therefore, these signers have a primary responsibility for ensuring compliance with this policy.  This responsible person must verify that expenses and expense reports meet the following criteria:

 

·         The expense was incurred while conducting university business;

·         The information contained on the expense report and in the attached documentation is accurate and in accordance with this policy;

·         The expenditure is charged to the proper index and account; and

·         Budget is available for the reimbursement.

 

Travel – Business travel expenses will be paid by the university if they are reasonable, appropriately documented, properly authorized, and within the guidelines of this policy.  Travel should be used to accomplish university business objectives in a cost-efficient manner.  Activities that justify the reimbursement of travel expenses include attendance at or conducting business meetings, conventions, conferences and seminars, or other functions related to the employee’s position. An employee must obtain prior approval for travel from his or her department head.  (See Sections 4 and 5 of this program for more guidance.)

 

Per Diems – The university does not permit the use or distributions of daily per diems while on travel.  Only actual expenses incurred that are reasonable and necessary, as well as appropriately substantiated, will be reimbursed to an employee.

 

Cash Advances - Advances are available only with respect to Foreign Travel, Group or Team Travel, or Student Travel.  In addition, an employee may be reimbursed for prepaid travel expenses prior to taking the trip.  These reimbursements are treated as advances.  (See Section 4 of this program for more guidance.)

 

Direct-Bill Arrangements - Individual employees or departments are not authorized to enter into verbal or written, direct-bill arrangements or contracts on behalf of the university. This includes but is not limited to restaurants, transportation services, hotels, catering, printing and copying.

 

Materials - Employees may purchase materials for business purposes and be reimbursed by the department.  Reimbursements for office supplies are limited to $50.  Reimbursements for other business materials are limited to $250.  Sales tax on such purchases will not be reimbursed.  Purchases in excess of these limits must be made through the purchasing process and may not be reimbursed to an employee.  (See Section 6.1 of this program for more guidance.)

 

Non-Reimbursable Expenses – The following items are listed to illustrate those types of expenses that the university would not reimburse to an employee through this program.  This listing is not intended to be all-inclusive.

 

·         Portion of air travel, train travel, auto rental, mileage, hotel costs, or meals for personal use (See Section 4.7)

·         Baby-sitter fees, kennel costs, pet or house-sitting fees

·         Home phone lines, DSL services, cable or internet access without prior Human Resources approval

·         Bus costs or mileage between their home and the University of St. Thomas (See Section 5.1)

·         Mileage between the Minneapolis and St. Paul campus (See Section 5.1)

·         Purchase of car rental insurance (See Section 5.1)

·         Parking tickets, traffic violations, or personal automobile repairs (See Section 5.1)

·         Upgrades (air, hotel, car, etc.) (See Sections 5.1 and 5.2)

·         Purchase of flight insurance (See Section 5.2)

·         Frequent Flyer Tickets (See Section 5.2)

·         Airline Club Memberships (See Section 5.2)

·         Costs incurred by failure to cancel reservations  (See Sections 5.1, 5.2 and 5.3)

·         Personal entertainment, in-room movies, video rentals (See Section 5.3)

·         Personal expenses including haircuts, shoe shines, saunas, massages and health club/recreational club fees (See Section 5.3)

·         Sales tax paid on purchases of office supplies and other business materials (See Section 6.1)

·         Furniture, fixtures, and equipment (See Section 6.1)

·         Carpet, paint, wallpaper, or other building or remodeling goods and services (See Section.6.1)

·         Memberships and subscriptions for the university (See Section 6.5)

·         Flowers for employees, except from the President’s Office and Human Resources (See Section 6.6)

·         Gifts to employees, departing employees, Christmas parties and gifts, and retirement gifts (other than those purchased through University Relations)  (See Section 6.7)

·         Charitable contributions  (See Section 6.10)

·         Payment of job candidate expenses  (See Section 6.11)

·         Payment to a third party for services rendered or reimbursement of expenses (See Section 6.12)

·         Payments to foreign individuals (See Section 6.13)

·         Credit card delinquency fees or finance charges (See Section 7 of this program)

·         Other non-business items

 

Substantiation - If the expenses of an employee are not substantiated with original detailed receipts and descriptions of business purpose, the amount reimbursed will be included in his or her Form W-2.  To be excluded from income, adequate substantiation is required for any expenditure, regardless of the reimbursement payment method.  Original documentary evidence such as receipts or paid bills is sufficient to support an expenditure.  Documentary evidence will be considered adequate to support an expenditure if it includes sufficient information to establish the amount, date, place and business purpose of the expenditure.  The substantiation must show both proof of purchase and proof of payment.

 

Review Process - A critical review of a business expense will be made to ascertain that the expense is necessary and reasonable to the functioning of the university.  Accounts Payable may ask for additional substantiation where more information is needed to establish a reasonable and necessary business purpose.

 

Employee Expense Report - The university requests that the Employee Expense Report be submitted promptly.  An expense report should be completed within 10 working days after the expenses are incurred or after completion of a trip.  Reimbursements of expenses submitted after 90 days from the date they were incurred will be treated as salary.

 

The Accounts Payable Manager must approve any exception to this policy upon proper showing of special circumstances warranting such exception.

 

 

 

2.1                 Employee Expense Report

 

The university complies with IRS standards and guidelines for an accountable reimbursable plan.  An Employee Expense Report must be completed in order for an employee to be reimbursed for any and all business expenses.  The instructions for completing the form are on the back of the form.  This form should be used for all expenses reimbursed to an employee.

 

At lease two distinct signatures are needed on the Employee Expense Report:  the employee’s and the person authorizing such expenses.  This generally is the employee’s supervisor.    For example:

 

Ø       Faculty and other academic department employees generally must obtain the Department Chair’s approval

Ø       Faculty Department Chairs must generally obtain their Dean’s approval. 

Ø       Deans must generally obtain their Vice President’s approval. 

Ø       Staff must generally obtain their direct supervisor’s approval.

Ø       Department Heads must generally obtain their Vice President’s approval.

 

If an employee is incurring expenses authorized by a different department from which he or she works, the employee must obtain the signature of the person authorizing such expenses.

 

Before signing the Employee Expense Report, the supervisor or other authorized person must verify that expenses and expense reports meet the following criteria:

 

·         The expense was incurred while conducting university business;

·         The information contained on the expense report and in the attached documentation is accurate and in accordance with this policy;

·         The expenditure is charged to the proper index and account; and

·         Budget is available for the reimbursement.

 

If a supervisor or authorized person is present when the expense is incurred (i.e., also is at the dinner), then that supervisor’s signature is not adequate and the approval must go up one level.  In other words, an employee cannot approve an expense for which he or she received a benefit. 

 

It is at the discretion of Accounts Payable to request Vice President approval on any employee reimbursement.

 

Documentation:  Itemize all expenditures by date and attach all original receipts.  Original detailed receipts must be submitted for all reimbursements.  Copies of receipts are not sufficient documentation.  In addition, the business purpose of each expense must be described on the reimbursement form.  Cash register receipts or detailed itemized receipts are required for multiple item charges. 

 

Information must be provided to establish the amount, date, place and essential purpose of the expense.  Substantiation must be provided to show both proof of purchase and proof of payment.  Many times, these both will be substantiated with a single original receipt.  However, sometimes an original receipt will not show the method of payment.  In those situations, the employee must also provide proof of payment.  The employee must provide a copy of a cancelled check or a copy of a credit card statement in addition to the original receipt.  Cancelled checks or credit card statements by themselves are not adequate substantiation, though they may need to be submitted to provide proof of payment.

 

Converting Foreign Currencies – Employee Expense Reports must be submitted in U.S. dollars with an explanation and translation of the foreign receipts and their conversions.  The currency conversion rate should be noted on the form.  Travelers must use the currency rates that were in effect when travel took place.  Therefore, currency exchange receipts should be saved and used for converting foreign currencies back to U.S. dollars on the expense report.  A spreadsheet is available through Accounts Payable to aid employees in detailing the conversion into U.S. dollars.  Please contact Accounts Payable at x2-6375 for more information.

 

2.2                 Examples of Documentation

 

The documentation needed for reimbursement of expenses, broken out in specific groups, is as follows: 

 

Reporting Ground Transportation Expense – (See Section 5.1 for more detailed information.)  When submitting Employee Expense Reports, the documentation required to substantiate ground transportation includes the following:

1)       For the use of personal cars, the number of miles to and from the destination.

2)       Original car rental agreement as well as the original payment receipt.

3)       For rental cars, original receipts of gas charges.

4)       For university vehicles, original receipts of gas charges.

5)       Separate taxi or shuttle receipts for each trip.

6)       Destination and business purpose of travel, including itinerary or agenda of trip.

 

Reporting Air Travel Expense – (See Section 5.2 for more detailed information.)  When submitting Employee Expense Reports, the documentation required to substantiate airfare includes the following:

1)       Airline tickets:  original invoice or airline itinerary showing charge and payment method.

2)       E-Tickets:  (a) airline receipt/itinerary showing proof of payment or (b) airline receipt/itinerary and charge card receipt.

3)       Foreign air travel:  daily agenda of trip.

4)       All air travel:  Destination and business purpose of travel.

 

Reporting Lodging Expenses – (See Section 5.3 for more detailed information.)  When submitting Employee Expense Reports, the documentation required to substantiate lodging includes the following:

1)       Original receipt from the hotel showing itemized breakout of expenses including room charge, applicable taxes, meals, movies, phone calls, etc.  (Only business-related expenses will be reimbursed.)

2)       Charge card receipt if the original receipt does not show a zero balance or “paid in full”.

3)       Business purpose of stay.

4)       Business purpose of non-room charges, including phone calls.

 

Reporting Meals and Entertainment Expenses – (See Sections 5.4 and 6.2 for more detailed information.)  When submitting Employee Expense Reports, the receipts required to substantiate meals and entertainment include the following:

1)       An original receipt showing total expense, including tip, the date, place, detail of items ordered, number of people served.

2)       The business purpose of meal or entertainment, including the destination and the names of the people attending the business meal or entertainment.

 

Reporting of Other Expenses – (See Sections 5.5 and 6 for more detailed information.)  When submitting Employee Expense Reports, the documentation required to substantiate any other expenses (including supplies, registration fees, sundries, membership dues, subscriptions, etc.) are the following:

1)       Original itemized receipt showing the detail of items purchased, and/or the original invoice, the order form, or registration form.

2)       Original charge receipt or other original payment receipt.

3)       Business purpose of expense.

 

2.3                 Timeframe for Reimbursement

 

Employees are encouraged to submit an Employee Expense Report within 10 working days after the expenses are incurred or after completion of a trip.  Reimbursements of expenses submitted after 90 days from the date they were incurred will be treated as salary.

 

 

 

               

The completed Employee Expense Report must be submitted to Accounts Payable, Mail # AQU204.  Accounts Payable will only process the reimbursement payment after it has received all the appropriate information.  If the reimbursement request is not completely filled out, it may be returned to the employee for further information. 

 

After the reimbursement form has been reviewed and approved for payment, it will be paid by Accounts Payable in a timely fashion.  Employees set up for direct deposit will receive a digitally formatted direct deposit statement via encrypted email.  All other employees will receive a check routed to them via inter-campus mail.  As a general rule, checks are not mailed to employees at their home address.

 

4.1                 Preferred Agency

 

It is the policy of the university that all travel be undertaken in the most economical mode consistent with these policies.  Faculty and staff are encouraged to make university travel arrangements with the following agency: 

 

   

                                            Vanguard Travel

                                                        Domestic & International Reservations                                952-392-3100

                                                        Toll-free/24 hour emergency traveler assistance            1-800-783-6028

                                                        Online Reservations                                                                       www.mycliqbook.com

 

                                Please note: When using Vanguard Travel, you will be charged a service charge to book your travel

                                accommodations with their agency. 

                                More information is available on the Purchasing Services website: www.stthomas.edu/purchasingsvcs.

            

 

4.2                 Team Travel

 

Athletic team travel and travel by coaches and athletic staff are subject to NCAA rules and regulations.  Therefore, any athletic team-related travel must be authorized by the designated staff member and appropriate budget person in the Athletics Department.

 

 

4.3                 Grant Travel

Travel funded through grants is subject to applicable regulations and/or the terms and conditions of the agreement.

 

4.4                 Student Travel

 

Students and Student Clubs traveling on behalf of the university and incurring reimbursable expenses should adhere to the policies found in the Student Policies and Procedures.

 

4.5                 Cash Advance Information

 

Cash advances are given to employees involved with Foreign Travel, Group/Team Travel, and Student Travel.  Group travel for the university is defined as students traveling with one or more staff or faculty member on the same trip.  (Group travel is not defined as a group of employees traveling together.)  No cash advances will be issued to non-employee or non-student travelers.

 

Cash advances are available through the Accounts Payable by completing a Cash Advance Request.  Contact Accounts Payable at x2-6375 for more information.  For Group/Team Travel, one employee must be designated to be responsible for the advance and will need to complete the required paperwork before receiving the money. 

 

A cash advance is a personal liability to the employee until he or she has provided the appropriate documentation and returned any excess funds.  Therefore, the department account will not be charged with the expenses until they have been substantiated after the trip.  The Cash Advance Request should specify the traveler’s destination, estimated costs and dates of travel.

 

The Cash Advance Request should be submitted at least fourteen (14) working days before the anticipated trip.  The funds requested will be provided no earlier than 5 days before the trip begins. 

 

The employee must sign the Cash Advance Request.  The person authorizing such expenses to be incurred must also sign the request.  At their discretion, Accounts Payable can also ask for Vice President approval.

 

All cash advances are to be settled within thirty (30) days after return from the trip by completing an Employee Expense Report and submitting it to Accounts Payable with appropriate substantiation.  Original receipts must be submitted.  Amounts owed to the employee will be processed in the normal course of business.  Per IRS guidelines, employees are not to retain unused portions of advance funds for future trips.  The unused portion must be returned to Accounts Payable by attaching a check to the reimbursement form. 

 

An employee may only have one cash advance outstanding at any given time.

 

Taxation - If the unused portion of the cash advance is not returned or the expenses are not substantiated within forty-five (45) days from the return of travel, those amounts will be taxable income to the employee and included in his or her Form W-2.

 

Once an unsettled cash advance has been added to the employee’s W-2, it cannot be reversed even if settled.

 

Delinquency Issues - Any person with a cash advance account in poor standing will not be allowed additional cash advances or reimbursements until their account is made current.  A cash advance account is deemed to be in poor standing when the amount has not been substantiated and/or any excess has not been returned to Accounts Payable within 30 days of the employee’s return from travel. Cash advance issues will prohibit an employee from receiving future cash advances.  Issues with cash advances will be turned over to Human Resources as an employment concern.

 

4.6                 Reimbursement of Prepaid Travel Expenses

 

If an employee incurs travel expense before the trip occurs, the employee has two options for reimbursement:

 

1.        After the employee takes the trip, he or she can be reimbursed by completing an Employee Expense Report.

·          

·         All original receipts for reimbursed expenses must be attached to the form.

 

2.        If the employee wishes to be reimbursed before taking the trip, he or she can complete the Prepaid Expense Request.

·         For tax purposes, the reimbursement is treated as an advance.

·         The employee is responsible for providing the appropriate substantiation and original receipts with the Prepaid Expense Request.

·         The expenses will be charged to the department at the time the Prepaid Expense Request is paid.

·         Within 30 days from the return of his or her trip, the employee must complete an Employee Expense Report and document that the expenses were in fact completely incurred (i.e., the trip was taken) as well as submit other appropriate original receipts.  If the appropriate substantiation is not made within this time period, the procedures laid out above in the “Taxation” and “Delinquency” parts of Section 4.5 will apply to such reimbursement.

 

For example, if an employee purchases airfare tickets in advance of the trip, or pays for lodging or registration fees in advance, he or she may be reimbursed by submitting a Prepaid Expense Request prior to the start of their trip.  In such cases, the reimbursement will be treated as an advance for tax purposes, though the expenses will be directly charged to the account at that time.  The employee will be responsible for completing an Employee Expense Report within 30 days from the return of their trip.  If the employee fails to complete the Employee Expense Report or otherwise fully substantiate the prepaid expenses within this timeframe, the expenses will be treated as taxable income to such employee.

 

The employee must sign the Prepaid Expense Request.  The person authorizing such expenses to be incurred must also sign the request.  At their discretion, Accounts Payable can also ask for Vice President approval.

 

4.7                 Personal Travel

 

Travelers may combine personal travel with university travel as long as the official trip serves a valid university purpose.  The employee must pay any and all additional costs of the personal portions of the trip.  The employee also has full responsibility and liability for any events that occur during personal portions of the trip.  (Saturday night stays for the benefit of the university are not considered personal travel.)

 

4.8                 Foreign Travel

 

The IRS has specific, complex rules pertaining to foreign travel when combined with personal travel.  There will be greater scrutiny and documentation required when submitting an Employee Expense Report requesting foreign travel expenses to be reimbursed.  Specifically, for trips in excess of 7 days, employees must attach an itinerary or agenda showing the daily details and business purpose of travel, including any dates for personal travel.  If personal travel is included with business travel, a portion of the reimbursed air travel expense may be taxable to the employee.  Prior to making travel arrangements, please contact Accounts Payable at x2-6375 for more information.

 

Obtaining appropriate documentation to substantiate expenses incurred can sometimes be difficult when traveling in foreign countries.  Accounts Payable has a spreadsheet employees can use to help keep track of their expenses on a daily basis.  Employees must keep all of their foreign currency conversion receipts so they will be able to identify the rates for reimbursement.    Employees are encouraged to contact Accounts Payable at x2-6375 with any questions.

 

4.9                 Spousal/Family Travel

 

No Significant Business Purpose:  In general, the expenses of a spouse, family or others accompanying the business traveler are not reimbursable.  The university will not reimburse a spouse’s expenses when she or he has no significant role or performs only incidental duties.  Such attendance does not constitute a valid university business purpose.  Reimbursed expenses where there is no valid business purpose will be included on the employee’s Form W-2 as taxable income and will only be reimbursed with proper Senior Vice President, Executive Vice President, or President approval.

 

Significant Business Purpose:  When a spouse or family member who attends a function has a significant role in the proceedings or is involved with fundraising activities, this constitutes a valid university business purpose.  Prior to travel, such expenses must be approved by the appropriate Senior Vice President, Executive Vice President, or the President.  Such VP or President must also put the business purpose of the spouse’s travel in writing and such detail must be attached to the employee’s reimbursement form.  The VP or President must also sign the employee’s reimbursement form for such expenses.  The spousal travel reimbursement rules are covered under IRS rules and regulations and are subject to high scrutiny.

 

Vice President approval is also required for other non-travel expenditures pertaining to spouses of university employees.

 

 

 

5.1                 Ground Transportation (Account Code 75102 or 75302)

 

Use of Ground Transportation – Employees are expected to exercise prudence in their selection of ground transportation at their destination.  For trips to and from the airport, the employee may use taxis, either from home or from the university.  The employee may also use personal transportation and be reimbursed mileage, either from home or from the university.  Taxi and shuttle receipts are needed for reimbursement.

 

Airport Parking – Employees may park at the airport or at an airport park-and-ride for a maximum of three days.  As another option, employees may leave their car at the university free-of-charge while traveling on university business, provided the car is registered with Public Safety & Parking Services at x 2-5100.  Please contact Public Safety & Parking Services for approval and information on appropriate parking locations.

 

University Vehicle - Employees may use a university fleet vehicle, if available. Fleet vehicles may be obtained through the Public Safety & Parking Services at x 2-5100.  When using a university vehicle for business travel, fuel and oil expenses will be reimbursed at the actual costs paid by the traveler, not the mileage rate. Public Safety & Parking Services has a vehicle use manual that states their restrictions.  Tolls and parking fees are also reimbursable with the appropriate documentation.

 

Personal Car - A personal car may be used when it is the most practical and economical method of transportation.  Normally, this involves trips within 300 miles (one-way) of the employee’s workplace. 

 

Employees using their personal automobile for business travel will be reimbursed at the standard IRS mileage reimbursement rate rather than for actual expenses.  This rate was set at $.36 for 2003 and $.375 for 2004. Parking and tolls are also reimbursable with appropriate documentation.

 

Employees may not be reimbursed for bus costs or mileage between their home and the University of St. Thomas.  These costs are personal commuting expenses.   In addition, employees may not be reimbursed for mileage between the Minneapolis and St. Paul campus.  The shuttle bus should be used for such travel.

 

Employees may be reimbursed for mileage in the following situations:

 

·            Traveling from one campus to another (other than between the Minneapolis and St. Paul campuses) for business meetings or instructing courses (the shuttle bus should be used between the Minneapolis and St. Paul campuses);

·            Traveling to business meeting away from your regular office;

·            Adjunct faculty teaching at a location other than the Minneapolis or St. Paul campuses may be reimbursed for mileage from their main (non-UST) job to the appropriate university campus for instructing courses.  If adjunct faculty do not go directly from their main job to the campus, they will not be reimbursed more than the amount it would have cost them to go directly from their main job to the campus.  If adjunct faculty have no other outside job, they may be reimbursed for the lesser of the mileage calculated (a) from home to the campus or (b) from the program’s campus (either the Minneapolis or St. Paul campus) to the other campus.

 

Please use the following table to calculate mileage between campuses.  The mileage listed is one-way.

 

	St. Paul	Minneapolis	Chaska	Gainey	Airport / Mall of America
St. Paul	X	8	30	73	7
Minneapolis	8	X	25	70	11
Chaska	30	25	X	55	25
Gainey	73	70	55	X	60
Airport / Mall Of America	7	11	25