14.12 Accountable Plan

Accountable Plan

1. The University of Arizona reimburses employees under an “accountable” business expense reimbursement plan.  Reimbursements or other expense allowances made under an accountable plan generally are nontaxable and do not have to be reported by the employer on the employee’s Form W-2.

2. This summary is meant to provide guidance for the majority of situations related to employee travel and business expenses, but it is not exhaustive. Any disputed expenses, whether or not specifically addressed in this summary, must meet applicable requirements of the Internal Revenue Code and Treasury Regulations in order to qualify for reimbursement under an accountable plan.

3. In order to qualify as an accountable plan, payments for expenses must meet the requirements of Internal Revenue Code Sections 62, 161, 162, 274, etc., as applicable, and related Treasury Regulations. These requirements include:

   1. Business connection requirement -- Advances, allowances or reimbursements are only for specified deductible business expenses that are paid or incurred by the employee in connection with his/her services as an employee.

   2. Substantiation requirement -- The employee must substantiate each business expense with a detailed record, such as a trip report or log, and documentary evidence, such as itemized receipts or paid bills, specifying the following:  

      1. The amount of each separate travel or business expenditure

      2. Dates of departure and return,  or dates of expenditure

      3. Number of days away from home spent on business, if travel

      4. Address of business

      5. Business purpose

4. Return of funds requirement -- If an advance was received, the employee must return to the employer, within  10 days after the trip ends, any amount in excess of the expenses substantiated.