FAQs about business expense substantiation and tax implications

Anonymous — Thu, 01 Jun 2023 20:17:19 +0000

FAQs about business expense substantiation and tax implications Anonymous (not verified) Thu, 06/01/2023 - 14:17

On January 1, the Office of University Controller (OUC) issued a revised Business Expense Substantiation & Tax Implications Procedural Statement, which is now being implemented by the Procurement Service Center (PSC).

The underlying message, however, has not changed: certain expenses that are not properly substantiated within 90 days of the transaction date, or the trip end date when related to business travel, will be reported as taxable income on the employee’s pay advice and W-2.

Here at the 91��Ҹ� Campus Controller’s Office (CCO), we’ve received many questions from our valued partners about this change and how it might impact day-to-day processes. We always encourage folks to reach out to the PSC for additional information on the procedure itself, however we can answer some common questions in this newsletter.

How do I know if my expenses will have tax implications?

For all commercial card transactions (e.g., procurement card, travel card, and airfare card), the employee (cardholder, traveler, or travel arranger), any delegates, the AO assigned to the PCard holder, and the HR supervisor, will all receive automatic reminders from Concur 30, 60, and 75 days from the transaction date (or a trip’s end date if related to travel) if the substantiation requirements in the revised Business Expense Substantiation & Tax Implications Procedural Statement have not been completed. These automatic Concur reminders will include an attachment listing the specific transactions that must be substantiated.

If the expenses are not substantiated within 90 days, they will be automatically reported as taxable income on the pay advice and W-2 of the relevant employee.

After an expense has been fully approved and paid, if it did not meet the required substantiation requirements, the employee will receive an automatic email notification from Concur alerting them to the tax implications of the expense.

What if I receive a Concur substantiation reminder for a trip that has not yet occurred?

In some circumstances, you may receive Concur notifications for transactions related to a trip that has not yet occurred. In those situations, please create a Travel Reconciliation expense report, and assign the trip-related transactions to that report. Please include the future dates of travel in the report header.

What if I receive a Concur substantiation reminder, but I already submitted substantiation documentation to a delegate?

As noted by the OUC in the Expense Substantiation and Tax Implications Procedure, simply providing documentation to a delegate for the creation of a report does not constitute substantiation and submission under the procedure.

Please ensure the expenses are substantiated in Concur and submitted into the system workflow before the 90-day deadline.

Delegates do not have the ability to submit expense reports on behalf of employees.

What if I coordinate travel arrangements for students?

If you are a travel coordinator for non-employees, like students in a university club, please use the non-employee report for all expenses (including travel card transactions) relating to the non-employee travel.

What if my Travel Card includes expenses that are not related to an official business trip?

For any expenses made on the Travel Card that are not related to an official business trip, the transactions must be assigned to an Employee Non-Travel Expenses report and submitted within 90 days of the transaction date of the expense. Notifications for unassigned/unsubmitted pre-paid expenses paid by Travel Card and/or Airfare Card will continue to be sent until the transactions are either assigned to a report with future trip dates as appropriate, or a report for a trip that has already completed is fully submitted in Concur.

Can I seek an exception to the new procedure?

In very rare cases, CCO may escalate requests for an exception to this procedure to the Office of University Controller’s Director of Tax. We may escalate requests when an employee has made a demonstrable and good faith effort to complete their valid expense report in Concur within the required 90-day period, but exceptional circumstances outside of the employee’s influence or control prevented the expense report from being processed as non-taxable.

CCO may reject exception requests when the expense report was submitted in Concur by an employee more than 90 days after the cost was incurred, and when:

The employee claimed to be unaware of the PSC’s substantiation requirements; or
The employee claimed to be unaware that the cost had been incurred; or
The employee claimed the department was at fault for a delay in completing the report in Concur, and the delay could have been prevented by the employee with reasonable care and diligence.

How are exceptions to the procedure processed?

If your exception request is approved by the OUC’s Director of Tax, the approval will be forwarded to the PSC by the CCO immediately after receipt. The CCO will include you in emails sent to the PSC on your behalf for notice.

The PSC sends data relating to taxable business expense reimbursements to Payroll for processing on the 15 of every month. If your exception request is granted on or after the 15 of the current month, the approved exception will be processed by Payroll in the following month/pay period.

Who should I contact if I have questions or concerns?

We encourage our campus partners to communicate the expense substantiation requirements to employees early and often; and ask for help early, if you have any questions or concerns.

If you are unable to complete your expense report on a timely basis because of delays by delegates or colleagues, please be diligent in contacting your department for assistance.

If you are unable to complete a timely expense report for system-related reasons, please reach out to the PSC for guidance.

For questions surrounding the procedural requirements and how they might affect your unique circumstances, please reach out to the PSC or CCO for additional guidance.

On January 1, the Office of University Controller issued a revised Business Expense Substantiation and Tax Implications Procedural Statement, which is now being implemented by the Procurement Service Center. Review some of the most frequently asked questions.

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Business expense substantiation and tax implications

Anonymous — Thu, 01 Dec 2022 20:42:01 +0000

Business expense substantiation and tax implications Anonymous (not verified) Thu, 12/01/2022 - 13:42

Take action now!

We encourage you to visit the new Finance Procedural Statement: Business Expense Substantiation & Tax Implications page to:

Review the revised procedural statement.
Check out the FAQ page and the overview slide deck.
Confirm your understanding with the Test Your Knowledge quiz.

Let the OUC know you’ve completed the test and you may win a coffee gift card!

Questions?

Use the feedback form at the bottom of the Finance Procedural Statement Business Expense Substantiation & Tax Implications page.

The 91��Ҹ� has developed policies related to the processing of commercial credit cards (procurement card, travel card, airfare card), cash advances and employee reimbursements that meet the IRS definition of an accountable plan.

Under CU’s accountable plan, employees are required to substantiate the business purpose of the expense, provide any required receipts/other documentation, and reimburse the university (if appropriate) within specified timeframes in order to avoid having the payment/reimbursement included as part of the employee’s taxable income.

The CU System Procurement Service Center (PSC) and Office of University Controller (OUC) have recently researched and clarified aspects of the current Business Expense Reimbursement policy (for many years a PSC Procedural Statement, now a Finance Procedural Statement). The result is the revised Finance Procedural Statement Business Expense Substantiation & Tax Implications, which is planned to take effect on January 1, 2023. You can link to the new procedures and a number of related resources from the Office of University Controller finance procedures page.

The 91��Ҹ� has developed policies related to the processing of commercial credit cards, cash advances and employee reimbursements that meet the IRS definition of an accountable plan.

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