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Business Expense Reimbursement Policy Template


The following resolution was duly adopted by management of (Company Name) at a regularly scheduled meeting held on (Date).

Whereas, income tax regulations 1.162-17 and 1.274-5T(f) provide that employees need not report on their tax return expenses paid or incurred by them solely for the benefit of their employer for which they are required to account and do account to their employer and which are charged directly or indirectly to the employer; and

Whereas, income tax regulation 1.274-5T(f) further provides that an adequate accounting means the submission to the employer of an account book, diary, statement of expense, or similar record maintained by the employee in which the information as to each element of expenditure (amount, date and place, business purpose, and business relationship) is recorded at or near the time of the expenditure, together with supporting documentary evidence, in a manner which conforms to all the ?adequate records requirements? set forth in the regulation; and

Whereas, (Company Name) has had a reimbursement policy pursuant to the regulations mentioned above and desires to continue operating under such policy; be it therefore resolved, that (Company Name) hereby adopts an accountable reimbursement policy pursuant to income tax regulations 1.162-17 and 1.274-5T(f) upon the following terms and conditions:

1.    Adequate accounting for reimbursed expenses. Any person now or hereafter employed by (Company Name) shall be reimbursed for any properly approved ordinary and necessary business and professional expense incurred on behalf of (Company Name), if the following conditions are satisfied: (1) the expenses are reasonable in amount; (2) the employee documents the amount, date, place, business purpose (and in the case of entertainment expenses, the business relationship of the person or persons entertained) of each such expense with the same kind of documentary evidence as would be required to support a deduction of the expense on the employee?s federal tax return; and (3) the employee substantiates such expenses by providing (Name of person in charge of accounting records) with an accounting of such expenses no less frequently than monthly (in no event will an expense be reimbursed if substantiated more than 60 days after the expense is paid or incurred by an employee).

2.    Reimbursements not funded out of salary reductions. Reimbursements shall be paid out of company funds, and not by reducing pay checks by the amount of business expense reimbursements.

3.    Reimbursable business expenses. Examples of reimbursable business expenses include local transportation, overnight travel (including lodging and meals), entertainment, books and subscriptions, education, and professional dues.

4.    Tax reporting. (Company Name) shall not include in an employee's W-2 form the amount of any business or professional expense properly substantiated and reimbursed according to this policy, and the employee should not report the amount of any such reimbursement as income on Form 1040.

5.    Excess reimbursements. Any company reimbursement that exceeds the amount of business or professional expenses properly accounted for by an employee pursuant to this policy must be returned to (Company Name) within 120 days after the associated expenses are paid or incurred by the employee, and shall not be retained by the employee.

6.    Expenses not fully reimbursed. If, for any reason, the company?s reimbursements are less than the amount of business and professional expenses properly substantiated by an employee, (Company Name) will report no part of the reimbursements on the employee?s W-2, and the employee may deduct the unreimbursed expenses as allowed by law.

7.    Inadequate substantiation. Under no circumstances will (Company Name) reimburse an employee for business or professional expenses incurred on behalf of (Company Name) that are not properly substantiated according to this policy. (Company Name) and staff understand that this requirement is necessary to prevent the company?s reimbursement plan from being classified as a non-accountable plan.

8.    Retention of records. All receipts and other documentary evidence used by an employee to substantiate business and professional expenses reimbursed under this policy shall be retained by (Company Name).

(Detailed policy/procedure documents may be used in addition to this fully accountable expense reimbursement policy to provide further explanation and guidance regarding reimbursement guidelines and processes.)

Attest: ______   Secretary of the Board



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Grand Rapids, MI 49546
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