Daytime Travel and Meals

Transcription

1 Daytime Travel and Meals Holly Burlingame, CSBA WASBO Instructor and Curriculum Developer 1

2 Daytime Travel Mileage Commuting Meals Receipts Per Diem Overnight Travel (if time allows) IRS Regulations, Federal Grant Rules, Best Practices, NSD examples Accounts Payable Department Role 2

3 IRS Rules on non-taxable fringe benefits If you pay more than IRS allows it s a taxable wage Federal allowable costs ( ) Must show 1) Participation of the individual is necessary to the federal award; AND 2) The costs are reasonable and consistent with the entity s written travel policy State Constitution on gifting of public funds Feeding employees can fall under gift of public funds Washington State Law (RCW and WAC) District Policy and Procedure Collective Bargaining Agreements 3

4 Accounts Payable staff play a key role in the internal controls over travel claims: No preapproval process such as purchase requisition. Rules are complex and claimants and supervisors don t always understand them. Supervisors sign their authorization assuming A/P will catch any problems. Travel expense claims have a high level of risk of fraud. 4

5 Tips: Have well documented procedures Provide easy access to procedures for all staff Annual reminders Procedures on the web Reference procedures on Travel Expense claims forms Remind supervisors annually of their responsibility in approving claims 5

6 Tips: Provide Accounts Payable staff with the tools to do the job: A/P staff should know the rules. A/P staff should provide feedback on designing rules and forms. A/P staff should be empowered to question claims. 6

7 Develop a process for claim reviews: Develop an Expense Claim Review slip. Work with school office managers on teacher claims. Work with central admin assistants on principal s claims. What about your boss or the superintendent??? Highest level of scrutiny by state auditors. Need high level support for all procedures. Work with your supervisor if exceptions are found. Get a high level administrator to approve any exceptions. 7

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9 If your employees use their personal vehicles for work related travel, they are entitled to claim mileage. Examples: Travel between schools Travel to evening events, away games, etc. Travel to meetings IRS has very specific rules on when it s work related and when it s commuting. 9

10 Remember, if you pay more than the IRS allows, it s a taxable wage. Northshore has tied it s policy and CBAs to IRS regulations to avoid taxable wages. 10

11 IRS requires documentation of the business purpose of the trip. Rules: Claim form must provide a description for each trip. Accounts Payable should not accept meeting as a description. Needs to say something like WASBO AP Conference or Attend IEP hearing Claim form must provide details: destination, dates, and miles. Tips: Require monthly claims. Require approval by someone who can verify legitimacy of trip. 11

12 IRS does not allow commuting miles. Commuting is the miles from home to the employee s primary work location and back. Rules: From home back to school for a night meeting or event is commuting per IRS regulations. To/From home to work on a weekend for overtime is commuting. From home back to another school or location is not commuting and is OK. 12

13 Examples of Commuting: Principal returns to her school in the evening to supervise at a football game. Can the Principal claim mileage from home to school? No. Second trip is still commuting. 13

14 Examples of Commuting: School Psychologist works a regular daily schedule covering three schools. Can he claim mileage? Yes. But only between schools. No to or from home miles can be claimed. 14

15 Examples of Commuting: Administrator leaves home in Issaquah to attend a workshop in Tumwater. Can administrator claim mileage from home to Tumwater? Yes. Tumwater is not the employee s primary work location. 15

16 Examples of commuting: Administrator s primary work location is in Renton and she lives in Issaquah. She leaves her home in Issaquah, drives past Renton without stopping at work, drives to a workshop in Tumwater. Can she claim mileage from Issaquah to Tumwater? Yes. IRS rules would allow this. However, district may have a specific policy against it. 16

17 Examples of commuting: A occupational therapist does not have a regular place of business. He drives daily to various student homes and is reimbursed for his mileage. Is the mileage from his residence to his first work location considered commuting? Yes. Reimbursements for the daily travel between the employee's residence and the first work location, and last work location and home are taxable as wages because the occupational therapist does not have a regular place of business. Reimbursements for travel between the work sites are not taxable. 17

18 Currently the IRS mileage rate is 54 cents per mile in Down from 57.5 cents in IRS typically updates this rate annually in January based on an annual study of the fixed and variable costs of operating an automobile. 18

19 Rules: If districts reimburse for higher than the IRS rate, the difference is considered a taxable wage. Districts can always pay less than IRS rate. Tips: Districts may wish to tie their policy or CBAs to the IRS rate. Require employees to file claims monthly. 19

20 Accounts Payable review is key to good internal controls. Accounts Payable staff should watch for: Mileage from home to work. Description of travel. Mileage on non-student days. Unreasonable mileage? Mileage chart or MapQuest. Correct mileage rates for the time of travel. Approval signature is from direct supervisor. Accounts Payable should be empowered to question claims. 20

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22 Three types of meals/three sets of rules: 1) Meals purchased by and provided by the district 2) Meal Reimbursements Not associated with overnight travel 3) Meal Reimbursements With overnight travel 22

23 The district purchases and pays for a meal for a group of employees. Example: The district issues a purchase order to a local catering company to purchase 150 lunches for teachers. 23

24 Governing Regulations: IRS regulations do not apply. No direct payment/reimbursement to employee WA State Constitution pertaining to Gift of Public Funds public expenditures made without consideration, even though minimal, violate the constitution. (AG Opinion) District s Food and Beverage Policy Federal Grants Guidance if charging a federal grant. 24

25 Rules: Consideration means that the district receives something of value/benefit in exchange for the product or service provided. Feeding volunteers, for example, is OK because they have provided free labor (consideration). Tips: Have a clear policy defining the criteria for providing meals to staff. Have a preauthorization form documenting the criteria met for providing meals to staff. Don t allow restaurant meals at local restaurants. 25

26 Northshore School District s Policy: A modest meal may be served in special circumstances where it is clearly in the district s best interest (consideration) that participants remain on site and on task. This means that the agenda and accomplishments of the goal do not provide a break or change in topic which would allow participants to leave and pursue their own meals. All meals must have prior authorization from the administrator with budgetary responsibility. 26

27 Federal Rules -Subpart E- Cost Principles: o Conference meals are allowable only when it is reasonable and necessary to the completion of actual work. o A working lunch may be allowable if the conference must conduct sessions at that time to keep the number of conference days to a minimum. o Snacks and other meals typically are not reasonable and necessary because these costs can be purchased by attendees using non-grant funds and the snacks are not essential to the conference objectives. o Districts should carefully document that a working lunch is both reasonable and necessary. 27

28 Accounts Payable should watch for: Invoices from catering companies and restaurants Are staff being fed? Completed Food and Beverage Form (if required). Criteria meets district policy. Purchasing Card transactions Watch for local restaurants. Employee expense reimbursements Watch for Principals purchasing lunches for all teaching staff on the last day of school. No consideration. 28

29 Employee purchased a meal and seeks reimbursement by the district. The meal is not associated with overnight travel. IRS Rules Apply Must be based on actual expense (not meal per diem) Must be a meal with a meeting. Business must be conducted during the meal; and Meals must be served at the business site. If the district reimburses beyond the IRS criteria, the reimbursement is considered a wage and must be taxed. Claim must show business purpose. 29

30 Examples: Administrator and teacher travel to Port Townsend to visit CTE program. They stop for lunch at a restaurant. They return to the district the same day. Can they be reimbursed for lunch? No Administrator attends the Puget Sound Business Manager s Luncheon Meeting in Renton and business is conducted during a catered lunch. The administrator pays $12 for the lunch and is given a receipt. Can the lunch be reimbursed? Yes 30

31 Rules: Require meeting agendas be attached to the claim. Require receipts. Tips: Follow IRS criteria to avoid making a payroll adjustment. Require monthly reimbursement claims. Have clear procedures, forms, and communicate often. 31

32 Northshore s Procedure: Based on actual, reasonable expenditures and requires receipts. Reimbursement for meal expenses incurred in the boundaries of Northshore School District is generally not reimbursed. Exception may be authorized by superintendent/designee when the claimant is required to attend a meeting as a district representative. Meals must qualify as non taxable under IRS regulations. Meals served during a business meeting and at the business site qualify. Copies of agendas are required. 32

33 Employee is traveling overnight on district business. IRS rules apply Meal per diem Actual Expenses Or a combination of both per diem and actual 33

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35 Travel is defined by the IRS as overnight/head hits the pillow. A different set of rules apply. Higher level of public scrutiny. Example: A principal attends a three-day reading conference in Chicago. 35

36 IRS Regulations Employee must be required by the employer to stay overnight away from the employee s tax home. Must be a business connection. Must have adequate accounting by whomever incurs the expense. Date Time Place Amount Business Purpose 36

37 IRS Regulations (continued) Includes the cost of: Travel to, from and at the business location Lodging, meals and incidental expenses Laundry, dry cleaning and Other business expenses Substantiation Method Actual Expense method Per Diem Method Or a combination thereof 37

38 IRS Regulations Receipts are not required Only for overnight travel Per diem reimbursement must be at or below the federal rates 38

39 Per diem consists of: 1) Lodging Per Diem 2) Meal Per Diem Lodging and Meal rates vary by City. See publication 1542 or 39

40 Based on IRS rates per city. Can pay less than IRS city rates. If you pay more than IRS rates, it s a taxable wage. Meal per diem includes taxes and tips. Prorate meal per diem on days of departure and return by any reasonable method. Can use ¾ rule (example: $46 per day for meals; pay ¾ of this on departure and return days. OFM method ties prorating to time of departure: Must leave 3 hours before regular start time to qualify for all three meals. 40

41 Northshore s Procedures: o The traveler may be reimbursed for meal expenses after the traveler is in travel status for three hours beyond the traveler s regularly scheduled working hours for any one day. Example: An employee who regularly starts work at 7:30 a.m. must leave home by 4:30 a.m. in order to qualify for breakfast per diem. 41

42 Accounts Payable should watch for: Beginning and ending dates of conference ties to dates of meals claimed. Departure and arrival times for prorated meal per diem. Meals already provided by the conference (allow exception for continental breakfast). Correct meal per diem rates based on the destination city or district allowed rate. 42

43 Receipts are required. Accounts Payable should watch for: Missing receipts. Receipts that include alcohol. Excessive tipping (standard is 10 to 20%). Additional meals. If a group receipt is submitted, verify that all attending are district employees or students. Credit card receipts without itemization. Meals already provided by the conference (allow exception for continental breakfast). 43

44 Actual receipts require significant auditing for the Accounts Payable staff. Receipts get lost by the traveler. Receipts must be filed and archived by Accounts Payable staff. Per diem controls excessive spending. Per diem is standard practice in many businesses. 44

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46 Use the rate of city where employee is spending the night. Lodging tax and energy charges are not part of lodging and may be reimbursed in addition to lodging. May need actual receipts to reimburse for additional charges. 46

47 Need actual receipts TIPS Not a big advantage to using lodging per diem. Have policy pertaining to number of nights before and after a conference. Northshore uses the night before the conference starts. Have a policy for how far an employee must travel before an overnight stay is allowed. OFM uses a 50 miles rule from primary work or primary residence. Audit receipts for additional charges such as additional nights, extra charges such as movies, room service, additional family members. 47

48 Northshore s Procedures: Reimbursement for overnight lodging is allowed when the conference or travel destination is located more than fifty (50) miles (most direct route) from the closer of either the traveler s official residence or official workplace. 48

49 Northshore s Procedures continued Exceptions to 50 mile rule: If the staff member is acting in a custodial or supervisory role for students who are lodging overnight and it is part of their official duties, overnight lodging is authorized. If there are extenuating circumstances, a waiver request describing the special circumstances that warrant the waiver can be submitted to the superintendent. 49

50 Northshore s Procedures continued Reimbursement for lodging is limited to the reasonable actual costs. Lodging rates approved will be at a reasonably priced hotel/motel; conference rates preferred. Receipts are required. 50

51 Registration Commercial transportation (air fare) Airport parking Airport shuttle Baggage charges Rental cars Hotel parking 51

52 Require preapproval of all overnight or out-of-state travel. Estimate entire cost of trip. Tip: Don t allow Travel Advances No longer common business practice. allow exception for ASB student trips. High risk for fraud. Reconciliation of advances to actual. Reconciliation of bank account. 52

53 Requires Board Resolution to establish Imprest Checking Account. Employee advances by check to employee only. Settlement of actual expenses to advance must be done on or before the 15 th day following the close of the travel period. Any default in accounting for or repaying an advance, then 100% due plus 10% interest. See Accounting Manual Chapter 3, page (RCW 42.24). 53

54 IRS, Taxable Fringe Benefit Guide (2013) Lodging and meal rates Travel policy best practice benchmark WASBO Teaching Faculty 54