Accountable Plan

Date of Original Implementation: August 2011

Date of Last Revision: October 2011

Purpose:

To establish requirements for compliance with Cambridge College’s (the “College”) accountable plan.

Additional Authority:

Internal Revenue Code Sections 62(a)(2) and 62(c).

Scope:

Applies to any individual paid or reimbursed for a College business expense.

Policy Statement:

In accordance with IRS regulations, the College has an accountable plan that allows it to reimburse employees (and in certain cases non-employees) for authorized business expenses with no impact on taxable compensation. The accountable plan rules apply to payments, reimbursements, or advances for authorized business expenses both travel and non-travel related. This policy applies only to the taxability of reimbursements and does not address allowable expenses or the requirements for submitting expense reimbursements.

Accountable Plan Requirements:

A. To comply with the College’s accountable plan, an employee must:

1. Have paid or incurred business related expenses while performing services for the College. To satisfy this requirement, there must be a business connection or purpose for the expense and the expense must be both ordinary and necessary.

2. Properly account for and substantiate the expenses within 60 days after the expenses are paid or incurred.

a. To satisfy this requirement, an employee must document and request reimbursement for business expenses within 60 days after the expense is paid or incurred.

b. Travel related expenses must be accounted for within 60 days after the last day of a trip.

c. Expenses are accounted for by completing the form(s) prescribed by the College.

d. Expenses are substantiated with original, itemized receipts, or when not available a printed receipt from the internet showing proof of purchase and payment.

e. Per diem reimbursements for meals may be paid without supporting documentation up to the maximum allowed by the College’s travel policy.

3. Return any payment, reimbursement, or advance in excess of amounts substantiated within 60 days after the expense is paid or incurred. To satisfy this requirement an employee must repay the College any reimbursement or advance in excess of the amounts properly substantiated within 60 days after the advance or reimbursement was received.

B. If one or more of the above requirements are not met, the payment, reimbursement or advance to the employee will be included in the employee’s wages, subject to tax withholding, and reported to the IRS and the employee on the applicable form. Reimbursement or payment requests submitted more than 120 days after the transaction will not be processed.

C. The substantiation requirements of this policy also apply to non-employees (e.g. independent contractors) conducting College business. If a non-employee does not properly account for the College for their expenses, the expenses will be considered taxable income and reported to the IRS and the non-employee on the applicable form.

 

Individual Responsible for Revision and Implementation: Vice President for Finance and Administration and Controller.