IRS Accountable Plan

Scope:

These requirements apply to all travel for University business regardless of funding source.

Definitions:

Accountable Plan:
Nontaxable to the traveler. Amounts paid under an accountable plan are not wages and are not subject to income tax withholding and payment of Social Security, Medicare, and Federal Unemployment (FUTA) taxes.
Non-accountable Plan:
Taxable reimbursement to traveler

Authority:

  • IRS Regulation CFR31.3121(a)-3(c)
  • IRS Sections 62(a)(2) and 62(c)
  • IRS Revenue Ruling 2006-56
  • IRS Employee Reimbursement Plan

Links:

Requirements:

In order to qualify for the accountable plan and not be taxed on travel, there are three rules that must be followed:

  1. There must be a business connection to the expenditure.
  2. There must be "adequate" accounting by the recipient within a reasonable period of time. (For overnight travel, the travel expenses shall be turned in to the University within 60 days from the date of return. For one day travel including mileage only, expenses shall be turned in for a limit of 2 months; for example, mileage for July 1, 2009 - August 31, 2009.)
  3. Excess reimbursements or advances must be returned within a reasonable period of time (e.g., for Athletics team travel or international travel, if a travel advance was provided, the traveler has 60 days from the date of return to reimburse the University for the travel advance.)

If these three rules are not followed, travel reimbursement will fall under the non-accountable plan and will be reported to Payroll as taxable income.

Failure to Comply:

All expenditures being reimbursed must be for business purposes only or will not be reimbursed. All travel expenses shall be turned in to the University within the reasonable time stated above or may be subject to become taxable income under the IRS regulations.