Buying and Paying
Business expenses may be reimbursed if an individual paid the expense from personal funds. However, the University prefers that business expenses are paid directly by the purchaser through other appropriate University buying and paying methods.
This policy establishes the three components required for reimbursement of allowable noncompensation business expenses:
- An allowable business expense
- Substantiation of the expense with receipts and expense report
- Approval of the expense
II. Who is Affected by this Policy
This policy affects all employees, students, independent contractors, and guests seeking reimbursement for necessary and reasonable noncompensation business expenses. Every individual who reviews, approves, or records financial transactions on behalf of the University.
An expense that is suitable or fitting for a particular valid business purpose.
A necessary, reasonable, and appropriate expense incurred for the primary benefit of University business and therefore permitted to be reimbursed or directly charged based on the permission of the University or by the terms of federally or privately sponsored agreements.
Minimum purchase or service required to achieve a particular business objective.
The original merchant receipt or invoice issued by the supplier or service provider to document and substantiate the business transaction. A digital image of the original receipt is allowable provided that it is legible and the paper receipt is destroyed.
An expense that is ordinary and reflects a prudent decision to incur the expense on behalf of University business. Not extreme or excessive.
Documentation to support an incurred business expense that includes the original receipt, documentation of business purpose, names of persons in attendance, and appropriate expense report for the incurred cost.
ALLOWABLE BUSINESS AND TRAVEL EXPENSES
Please consult the Business Expense Policy and the Travel Policy to determine whether a particular expense is an allowable expense charged against University or sponsored funds. Allowable business expenses may be reimbursed if an individual paid the expense from personal funds. However, the University prefers that business expenses are paid directly by using other appropriate University buying and paying methods.
SUBSTANTIATION AND ORIGINAL RECEIPTS
In order for a business expense to be approved and reimbursed, it must be properly substantiated. Original receipts for all expenditures greater than or equal to $50 are required. Receipts for expenditures less than $50 should not be submitted. If sponsor requirements are more restrictive, the more restrictive receipt requirement will take precedence. If a required receipt has been lost, a missing receipt affidavit must be submitted. Please see the relevant policy for a specific business expense for receipt and substantiation requirements: Business Expense Policy, University Credit Card Policy, or Travel Policy.
Reimbursement as a nontaxable payment can be made as long as the expense:
- qualifies as an allowable business expense according to the Business Expense Policy or Travel Policy; and
- all substantiation and receipt requirements are met.
The sections below establish University policy for reimbursement based on proper substantiation of the business expense, timely request for reimbursement, and payment approval.
APPROVAL AND REIMBURSEMENT
For each business expense reimbursement being requested, the valid business purpose of the expense must be stated, and two approvals will be needed: the individual who has incurred the expense and is requesting the reimbursement and the appropriate departmental approver.
- When the individual requesting reimbursement is a Department Chair or Program Head, the second approver will be that of the Dean of the Faculty.
- When the individual requesting reimbursement is the head of an administrative office, the second approver will be that of the appropriate Vice President or Senior Dean.
- When the individual requesting reimbursement is a Vice President or Senior Dean, the second approver will be that of the Executive Vice President or Vice President for Finance and Treasurer.
- The authorization for the second approver may be delegated in writing to an individual in a management position. When neither the Department Chair, nor Office Head, nor the individual’s supervisor, is available, the second approver will be that of the appropriate Vice President or Senior Dean.
- When original receipts are required, they must be submitted along with the completed Expense Report. Please see the “Substantiation and Original Receipts” section of the Business Expense Policy, University Credit Card Policy, and Travel Policy.
- Under no circumstance may a person authorize reimbursement, or payment of any type, to a family member or to someone to whom the person reports. Family should be interpreted in the broadest sense and includes blood, marital and other significant relationships.
DEADLINE TO SUBMIT EXPENSE REPORTS AND DOCUMENTATION –
Expense Reimbursement Deadlines
To be reimbursable, business expenses must be properly substantiated and submitted within certain time limitations. These time limitations determine both whether the cost may be reimbursed by the University as a business expense, and whether that reimbursement will be treated as taxable income to the individual.
The University has adopted an "accountable plan," which allows it to reimburse properly substantiated business expenses without including the reimbursement in the taxable income of the individual incurring the expense. "Accountable plan" standards established by the Internal Revenue Service (“IRS”) require that the expense must be an "ordinary and necessary expense" of operating a business, must be substantiated in writing within a “reasonable time” of the incurrence of the expense, and that all unsubstantiated amounts advanced must be returned within a “reasonable time.”
In order that expenses are recorded on a timely basis, the University encourages that reimbursable business expenses be substantiated within 30 days after the expense is incurred. Expenses incurred in advance of a trip, conference, or event should be substantiated within 30 days of purchase (e.g. airfare, conference fees, registration fees, advance deposits, etc.).
In order to comply with IRS requirements, the University has adopted the IRS standards for establishing reasonable time limitations for determining the tax treatment of reimbursements, as follows:
- If substantiation for the reimbursement is submitted within 60 calendar days of when the expenses were incurred, and if all other requirements of the University’s Business Expense Policy are met, the reimbursement will be treated as a nontaxable reimbursement of a University business expense.
- If substantiation occurs more than 60 calendar days after the expenses were incurred, the expense reimbursement request must include an explanation for the delay. At the discretion of the Dean of the Faculty or Vice President for Finance and Treasurer, reimbursement requests beyond the 60-day limit may be approved, and the reimbursement will be reported to the IRS as taxable income paid to the individual. Note that for expenses incurred while travelling, the traveler will have 60 calendar days upon returning from travel to substantiate and submit the expenses. This does not apply to expenses incurred before the trip (e.g. airfare) which must be substantiated and submitted within 60 days of incurring the expense.
The following guidelines appear in Treasury Regulation Section 1.62-2(g) to establish what will be considered a "reasonable time" period for purposes of the following:
- Advance Payments – Funds can be advanced up to 30 days before reasonably anticipated expenses are paid or incurred.
- Substantiation – Must be submitted within 60 days of when expenses are paid or incurred.
- Return of Excess Amounts – within 120 days after expenses are paid or incurred.*
*Note: Unsubstantiated advances, i.e., “excess amounts,” not returned to the University within 120 calendar days of when paid will be deducted from the individual’s pay. Notification will be sent to the employee at least two weeks in advance of the deduction. In extenuating circumstances, with the approval of the Dean of the Faculty or the appropriate Cabinet-level officer, the advance may be retained by the employee. In such cases, the advance must be reported to the IRS as taxable income to the individual.
10/4/19 - Updated procedure links.
1/28/19 - Removed link to Non-Travel Business Expense.
10/1/18 - Updated Executive Sponsor listing.
7/3/18 - Updated title of contact, fixed typo.
2/2/2015 - Clarification of 60 day policy.
2/25/11 - No change to policy or substance; revised organization and language for web-based policy library. “Expense Guidelines” document was separated into four policies: Business Expense Policy, Credit Card Policy, Travel Policy, and Reimbursement Policy.
5/14/10 - For expenses related to business meeting meals, a detailed business purpose for the meal is required along with proper documentation of attendees.
11/1/2004 - Approved.