To: Campus Unit Finance Leads, University Business Managers
From: Manali Bettendorf, University Controller; Beau Jimmerson, Chief Procurement Officer; Jen Clark, Accounts Payables and Vendor Services; Rebecca Spanos, Travel and Payment Card Services; Walter Miller, Director of Payroll Services
Summary
The University is updating its enforcement of the IRS Accountable Plan effective Jan. 1, 2024. An accountable plan allows an employer to reimburse employees on a nontaxable basis when certain requirements are met. Accountable plan rules are detailed in Section 62(c) of the Internal Revenue Code.
Please encourage staff and employees to substantiate business expenses within 60 days or amounts may be taxable. No reimbursements will be granted if submission is more than 180 days after expense is incurred.
Policy and procedure updates are coming soon.
Details
Finance and Operations is committed to accurate and timely processing to ensure that all expense reimbursements received from campus meet the applicable IRS Accountable Plan requirements.
In order to meet the IRS Accountable Plan, the following conditions must be met:
- The expenses must have a business connection. The essential nature of business must be documented and substantiated in the request (bona fide business purpose, appropriate pre and post approval, itemized receipts, meeting agendas, notes etc.)
- The expenses must be substantiated and adequately accounted for within 60 days from when the expenses are paid or incurred. For travel, the University will use the trip end date, and for other expenses, the University will use the date the expense was incurred. The date the claimant submitted their expenses for reimbursement will determine if this requirement is met.
- Any excess reimbursements and travel advances should be returned within 120 days after the expense was paid or incurred. We will use the date the excess reimbursement or the advance was paid to the employee to determine if this requirement is met.
- Requests for expense or travel reimbursements submitted 180 days after expense is incurred will not be reimbursed.
If these conditions are not met, the applicable amount may be reported to Payroll Services as additional taxable income in box 1 of Form W-2 to the employee. Payroll taxes will also be deducted from the employee’s paycheck per application regulations and information on file.
Contact controller@unc.edu if you have any questions.
Previous Notices: Finance MCU Meetings Spring 2021, Spring 2022, Summer 2023